Kemps makes a strategy shift from to fulfilling customer needs to be the best cost producer of dairy products in the industry. Its existing system of production costs, however, are not able to cover the costs associated with handling special flavor, small production orders, as well as comprehensive supply options and order processing. The company is introducing a new system - a time-driven activity-based costing - that captures the complexity of its activities, and gives managers a fresh look at the profitability of orders, products and customers. While the equation is simple and accurate is the cost impact of all options on the specific production order. Managers use this information to improve processes, to agree on new terms with customers, and try to win new business. The company is currently facing a number of important decisions on how to establish new relationships with key customers. "Hide
by Robert S. Kaplan Source: Harvard Business School 10 pages. Publication Date: Aug 03, 2005. Prod. #: 106001-PDF-ENG
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