Cost Management Midwest Office

JASON ZHANG GRISSOM ZENG HARRY LAM RICKY LO

1007609874 1155024921 1008600851 1155024902

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Presentation Structure

• Part I Introduction - Harry

• Part II ABC Model Calculation - Jason
• Part III Customer Managing - Ricky • Part IV Improvement & Strategy - Grissom
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Part I. Introduction

• Part I Introduction

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Part I. Introduction

Who we are?
• Regional distributor of office supplies • Writing implement (such as pens, pencils and markers)

• Specialty paper for printing machine
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Part I. Introduction

How we operate?
• Collaborate with different suppliers • Self own distribution center( warehouse + data processing system)

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Part I. Introduction

How we operate?
• Unload  Cartons  Warehouse

• Receive order  Accumulate the cartons Shipment
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Part I. Introduction

How do we price our product?
• Warehousing, order processing and transportation fee  16% marking up • General selling, administrative expense ,allowance  6% marking up • Desktop delivery  additional premium (up to 5% markup)

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Part I. Introduction
Category of Delivery Costing
• Commercial Truckers • Desktop Delivery
Commercial Truck
Typical option
Non- Direct Delivery N/A

vs

Desktop Delivery
New option
Direct Delivery Extra Truck and Drivers

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Part I. Introduction
Category of Order Entry Costing
• Manual Entry • Electronic Data Interchange (EDI) + Internet website
Manual Entry Orders Arrival Time of Validity Check Manual Different vs EDI Automatic Same

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Part I. Introduction
What problems we are facing?
• Financial result in 2003

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Part I. Introduction What problems we are facing?
• Sales increase Loss in record • Costs Raising • Ways of regaining the profitability

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Part I. Introduction

Research Direction

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Part I. Introduction

Five representative orders

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Part I. Introduction
Cost drivers
Activity Warehouse Space People to move carton Commercial Freight