In Your Face Reports--Dickeson
Forget utilization and "chargeable" hours. We must know where every hour of capacity went in use, misuse and nonuse stated in terms consistent with the enterprise plan. A machine changeover or make-ready is a cost driver, for example. It's an activity that eats a piece of the time resource of the company.
How much did makereadies on Press 456 cost us yesterday? Last week? Month? Quarter? Out comes the old two-by-four, the IYF Report that says, "Hey, lookie here, Buster, is this where you really want to spend your dough? Ain't no customer gonna give you a nickel for that makeready cost."
Many people seem to think that activity-based costing is just about tracking the unit cost of estimates or customer service as resource consumers and adding it to jobs and customers.
It certainly can be. Carry it as far as makes good sense to you and helps you make action decisions about your printing enterprise. But, for starters, I suggest you use it for paper and production resource measurement first. After that's in place and settled, move next on turnover velocity of inventories and receivables. Get that working.
Now, if you're greedy, start tracking estimates and customer service costs to jobs and customers. You may have to fire some unexpected people—customers you've been subsidizing—to create capacity for new customers. Instead of adding capacity, start adding profits.
SPPM (or ERP/ERM/ABC if you choose) is about the degree of success or failure, the competitiveness, the productivity, of the printing business. It's a system that mandates corrective actions. It measures the activities that consume the company resources—paper, time, etc.—in dollars, and spits them in your face.
—Roger V. Dickeson
About the Author
Roger Dickeson is a printing productivity consultant based in Tucson, AZ. He can be reached by e-mail at email@example.com, by fax (520)903-2295, or on the Web at http://www.prem-associates.com.