成本報(bào)務(wù)與行為價(jià)值

資源公司的基于活動(dòng)的成本計(jì)算應(yīng)用總括緒言成本報(bào)務(wù)分析（CTS）行為價(jià)值分析（AVA）運(yùn)作的信息化的管理—化學(xué)藥品制造商的實(shí)例基于行為的成本計(jì)算是一種核查成本的方法，它可以通過(guò)不同的方法提供經(jīng)營(yíng)決策ABC

(Activity-Based

Costing)AVA

(Activity-Value

Analysis)CTS

(Cost-to-Serve)Operational

Management行為成本計(jì)算是一種方法，它按照組織的活動(dòng)來(lái)為這個(gè)組織的費(fèi)用創(chuàng)立一個(gè)經(jīng)濟(jì)向?qū)D目標(biāo)： “做正確的事”—?jiǎng)?chuàng)立一個(gè)用于銷(xiāo)售/市場(chǎng)和成本管理 “現(xiàn)在降低成本”—在一個(gè)特定的組織單位中， 做正確的事---

為操作管理提供更多精確的成本信息

決策方面的，對(duì)于真正的活動(dòng)、產(chǎn)品、顧客服務(wù)， 通過(guò)一種積極的客觀的簡(jiǎn)單易行的方法， ，包括預(yù)算、績(jī)效度量和行為進(jìn)步

費(fèi)用的理解 來(lái)實(shí)現(xiàn)目標(biāo)成本減少

活動(dòng)范圍： 所有受產(chǎn)品，顧客，供應(yīng)商以及取得共識(shí)的管理活動(dòng) 所有特定組織單位完成的行動(dòng) 所有組織單位完成的被應(yīng)用于行為操作管理的活動(dòng)

影響的行為

組織范圍： 所有當(dāng)?shù)?組織單位覆行的范圍內(nèi)的活動(dòng) 物定組織單位降低成本的目標(biāo) 所有應(yīng)用了行為管理的組織單位

成本范圍： 所有組織范圍內(nèi)的費(fèi)用 組織范圍內(nèi)的可控成本：不包括不可控成本，

組織范圍內(nèi)的所有費(fèi)用

比如貶值，長(zhǎng)期租賃，合同

詳細(xì)水準(zhǔn)： 30-50高水平的活動(dòng)，對(duì)于受產(chǎn)品和客戶(hù)沖擊的

大量活動(dòng)（多于幾百）允許成本被分配于 大量活動(dòng)（多于幾百）允許做詳細(xì)預(yù)算和績(jī)效控制

活動(dòng)有一定的偏差 特定最終產(chǎn)品，成本減少可以通過(guò)減少/

消除最終產(chǎn)品和活動(dòng)來(lái)實(shí)現(xiàn)

周期： 每6個(gè)月到2年更新一次 一次性事件 將根據(jù)定期的績(jī)效報(bào)告來(lái)更新的數(shù)據(jù)與對(duì)成本和有效行

為步驟所制定的標(biāo)準(zhǔn)可預(yù)算來(lái)做比較 efficiencymeasures

信息體系： 構(gòu)建在標(biāo)準(zhǔn)軟件包的獨(dú)立模式 同左 鏈接或綜合了財(cái)務(wù)和程序數(shù)據(jù)系統(tǒng)的用戶(hù)化體系

Activity-BasedManagement(ABM)行為成本計(jì)算的應(yīng)用ApplyingActivity-BasedCostingIntroductionIntroductionCost-to-ServeAnalysis(CTS)Activity-ValueAnalysis(AVA)OperationalandITManagement-ChemicalManufacturerExampleVariableMfg.CostFixedMfg.Cost成本服務(wù)和邊際經(jīng)濟(jì)學(xué)在成本方面所提供的補(bǔ)充看法可以為做多種決策提供幫助典型的工廠成本結(jié)構(gòu)ILLUSTRATIVE變動(dòng)成本/邊際成本對(duì)邊際成本曲線(xiàn)的初步關(guān)注包括Fiber光纖Chemical化學(xué)藥品Energy能量variablematerials可變?cè)蟰ariablemaintenance可變維護(hù)成本運(yùn)行補(bǔ)特定比率或銷(xiāo)量水平量化成本在短期內(nèi)直接變動(dòng)邊際成本數(shù)據(jù)有用于：變動(dòng)成本的減少定價(jià)決策（增加的）按幅度安排生產(chǎn)資金方案的估價(jià)邊際成本數(shù)據(jù)不用于顧客和產(chǎn)品的總體比較注解—固定成本/CTS對(duì)成本服務(wù)分析中利用行為成本方法的初步研究包括直接勞動(dòng)和利益間接勞動(dòng)和利益固定原料固定維護(hù)多樣化服務(wù)管理費(fèi)用貶值成本運(yùn)行是一個(gè)多變的活動(dòng)成本在短期內(nèi)是固定的(對(duì)成本運(yùn)行不敏感)CTS方法有用于:確保定價(jià)能彌補(bǔ)產(chǎn)品和顧客的固定成本全面等級(jí)混合分配將客戶(hù)和產(chǎn)品進(jìn)行總體比較估價(jià)資金項(xiàng)目方案(假若成本分析會(huì)受到?jīng)_擊）CTS不用于增加定價(jià)和按幅度安排生產(chǎn)ApplyingActivity-BasedCostingCost-to-ServeAnalysis(CTS)RecommendedCTSPilotActivityScope

成本分析導(dǎo)向的建議活動(dòng)范圍Milloperations工廠運(yùn)作Sales/customerservice(bothlocalandfornationalaccounts)銷(xiāo)售/顧客服務(wù)（局部和全國(guó)的帳戶(hù)）Marketing市場(chǎng)Distribution分配Procurement獲取BusinessGroup/Headquartersadministrativesupport商業(yè)集團(tuán)/總部行政的支持Otheragreed-uponadministrativeactivities(e.g.,corporate-levelreportingrequirements)其它取得共識(shí)的管理活動(dòng)（例如：合作水平報(bào)告要求條件）成本服務(wù)分析方法的使用范圍可以擴(kuò)展到所有受產(chǎn)品和顧客影響的活動(dòng),以及取得共識(shí)的管理活動(dòng)PRELIMINARYApplyingActivity-BasedCostingCost-to-ServeAnalysis(CTS)建立對(duì)活動(dòng)和有關(guān)于產(chǎn)品和顧客的成本運(yùn)行的更好理解建立一個(gè)高水平的模式，而不是一個(gè)新的財(cái)務(wù)系統(tǒng)建立一個(gè)用于近期分析的信息基礎(chǔ)

總部成本費(fèi)用的運(yùn)作工廠成本管理目標(biāo)報(bào)務(wù)水平顧客細(xì)分定價(jià)生產(chǎn)線(xiàn)合理化用這種方法培訓(xùn)客戶(hù)人員使他們能：在全公司范圍內(nèi)擴(kuò)展分析和結(jié)果不久后重看該結(jié)果創(chuàng)立一個(gè)執(zhí)行初步經(jīng)營(yíng)事項(xiàng)的建議性文件，例如：擴(kuò)展向?qū)е凉S、交易、經(jīng)營(yíng)集團(tuán)從一些/所有交易，合作經(jīng)營(yíng)業(yè)績(jī)管理中綜合出結(jié)論定期重復(fù)研究開(kāi)始補(bǔ)充數(shù)據(jù)的跟蹤報(bào)告新的財(cái)務(wù)系統(tǒng)建立的同時(shí)結(jié)合成本報(bào)務(wù)分析

成本服務(wù)分析導(dǎo)向在幾個(gè)目標(biāo)建議的導(dǎo)向目標(biāo)PRELIMINARYApplyingActivity-BasedCostingCost-to-ServeAnalysis(CTS)導(dǎo)向的方法是簡(jiǎn)單易行的ApplyingActivity-BasedCosting確定范圍，選擇工廠和時(shí)間安排定義活動(dòng)（30-50）,成本運(yùn)行,主導(dǎo)產(chǎn)品,and主導(dǎo)顧客收集所需數(shù)據(jù)MapresourcecoststoactivitiesthroughresourcedriversMapactivitycoststoproductsandcustomersthroughcostdriversCalculatetotalandper-driver-unitactivitycostsCalculatealternate(CTS)profitabilityforpilotproductsandcustomersDevelopconclusionsandpathforward高水平的方法PRELIMINARYCost-to-ServeAnalysis(CTS)CTSanalysisenablestrueprofitabilitytobeviewedfromboththeproductandcustomerperspectives.ApplyingActivity-BasedCostingCTSProfitPerspectivevs.ConventionalPerspectiveILLUSTRATIVEProductViewCustomerViewBusinessViewBusinessGroupViewConventionalViewProduct

Variable

CostProduct-

Driven

CostProduct

CostProduct

Gross

MarginCustomer

Gross

MarginCustomer-DrivenCostCustomer/

Product

CostBusinessBaseCostNetRevenueNetRevenueNetRevenueNetRevenueNetRevenueBusinessOperatingMarginBusinessGroupBaseCostBusinessGroup

OperatingProfitMill

Variable

CostBusinessGroup

OperatingProfitMill

Fixed

CostStandard

Product

CostDistributionCostBusinessCostBusinessGroupCostBusiness

CostCost-to-ServeAnalysis(CTS)Aspecialtychemicalcompanygroupedactivitiesarounddriversrelatedtoeitherproductsorcustomers.DirectCostofActivityGroupingswithProductandCustomer-RelatedCostDrivers-

SpecialtyChemicalCompanyIndirectCost$180MM25ActivitiesProduct/CustomerDirectCost$417MM29ActivitiesMaterial$213MMManufactureIntermediates$81MM1ActivityProduct/CustomerSupportActivities**$123MM28ActivitiesTechnical$55MM3ActivitiesProductMixComplexity$11MM6ActivitiesGeneralCostDriversSales/Support$27MM8ActivitiesOrder$30MM11ActivitiesCustomersviaordersCustomersviaSalesdecisionsorcustomerrequestProductsvianon-volumedrivers(e.g.,#runs,#ingredients)CustomersviaMarketingdecisions$123MM$417MM$597MM**Excludesnon-U.S.andout-of-scopeexpenses.**Theseareactivitieswhicharedirectlydrivenbyproducts,clientactions,and/orcustomeractions.ApplyingActivity-BasedCostingEXAMPLECost-to-ServeAnalysis(CTS)Thenew(and,insomecases,surprising)insightsintothecostsofeverydaytaskshelpedthiscompanyselectareasoffocusforcostreduction.ApplyingActivity-BasedCostingEXAMPLEUnitDriverCostsofSelectedActivities-SpecialtyChemicalCompanyCost-to-ServeAnalysis(CTS)GrossProfitCTSContributionMarginConventionalGrossProfitvs.CTSContributionMarginbyCustomer-SpecialtyChemicalCompanyCUSTOMER1CUSTOMER2CUSTOMER3CUSTOMER4CUSTOMER5CUSTOMER6CUSTOMER7CUSTOMER8CUSTOMER9CUSTOMER10CUSTOMER11CUSTOMER12CUSTOMER13CUSTOMER14CUSTOMER15CUSTOMER16CUSTOMER17CUSTOMER18CUSTOMER19CUSTOMER20CUSTOMER21CUSTOMER22CUSTOMER23CUSTOMER24ThecustomerviewofCTSmarginvs.conventionalgrossprofitexhibitedsignificantvariationinrelativecustomerprofitability.%SalesDescendingSalesRevenueLargeCustomersSmallCustomersApplyingActivity-BasedCostingEXAMPLECost-to-ServeAnalysis(CTS)Thisinsightwasappliedtocustomersegmentationefforts.MoreAttractiveGreaterLeverageofCost-to-Serve-20%-10%0%10%20%30%40%50%(0.50)-0.501.001.502.002.503.00CTSContributionMargin/CustomerSupport(Non-Volume)ActivityCostsCTSContributionMargin%Revenue45321ApplyingActivity-BasedCostingEXAMPLECTSContributionMargin%vs.CTSContributionMarginIndex,ByCustomer-SpecialtyChemicalCompanyCost-to-ServeAnalysis(CTS)Forexample,specificstrategiescouldbedevelopedforaddressingcustomersineachgroup.ExampleStrategyGroupDropcustomerswithoutsignificantupsidepotential1Targetpriceincreasesand/orservicereductionstoimproveprofitabilitysignificantlyMeetwithlargercustomerstodiscusstheirserviceneedsvs.clientprofitneeds2Identifyopportunitiesformoderateprofitabilityimprovementthroughpriceincreasesand/orservicereductions3Explorepossibilityofexpandingbusinessthroughtargetedpricereductionsorexpandedserviceofferings4Verifyclientisnotovercharging/underservingandatriskoflosingbusinessExplorepossibilityofexpandingbusiness5ApplyingActivity-BasedCostingCost-to-ServeAnalysis(CTS)EXAMPLEMoreAttractiveGreaterLeverageofCost-to-Serve-20%-10%0%10%20%30%40%50%(0.50)-0.501.001.502.002.503.00CTSContributionMargin/CustomerSupport(Non-Volume)ActivityCostsCTSContributionMargin%Revenue45321Customer-SegmentStrategies-SpecialtyChemicalCompanySimilarly,applyingtheCTSresultstoproductswouldprovideusefulinputtoproduct-linerationalizationandotherproduct-policydecisions.ApplyingActivity-BasedCostingILLUSTRATIVEVariableContribution/Product-Driven(Non-Volume)ActivityCostsVariableContribution%ofRevenueMoreAttractiveGreaterLeverageofCost-to-ServeVariableContribution%vs.VariableContributionIndex,ByProductCost-to-ServeAnalysis(CTS)SeveralobservationsandimplicationsfollowedfromtheCTSpilot.Asurprisinglylargepercentageofnon-materialcosts(43%)isdedicatedtoactivitiesonwhichcustomersandproductshavenoimpact;closescrutinyofthevalueoftheseactivitiesseemswarranted.Grossprofitisnotanindicatoroftruecustomerorproductprofitability.Large-volumeproductsarenotsystematicallymoreattractivethansmall-volumeproducts.Largecustomersarenotsystematicallymoreattractivethansmallcustomers.Customerprofitabilityvariessignificantlywithingroupsofcustomersofsimilarsizeorsimilarmarket-segmentfocus.Bytrackingsomedatamoreformally,theclientcanextendCTSinsightstoabroadergroupofproductsandcustomerswithoutimplementingadetailedABCsystem.ObservationsandImplications-SpecialtyChemicalCompanyApplyingActivity-BasedCostingEXAMPLECost-to-ServeAnalysis(CTS)IntroductionCost-to-ServeAnalysis(CTS)Activity-ValueAnalysis(AVA)OperationalandITManagement-ChemicalManufacturerExampleAtypicalAVAapproachincorporatesanaggressivecost-reductiongoalwithanobjective,facilitatedprocessforidentifyingwaysofhittingthetarget.AVAApproachCreateprojectorganization,includingSponsors,SteeringCommittee,ProjectManager,facilitators,andprojectteamDetermineorganizationalandcostscopeforanalysisEstablishcost-reductiontargetmagnitudeandmaximumtimeframeforcaptureCreategroundrulesforapprovalofreductionideas,trackingofbenefits,andconflictresolutionSelecthistoricaltimeframeforexpensedataDefineorganizationalsub-unitstoprovidethebasisforAVADefineMissions,Activities,andEndProducts(MAE’’s)foreachorganizationalsub-unitIdentify“customers”forendproductCollectbaselineexpenseandend-productquantitydataEstimatemaximumcapacityforendproductsineachsub-unitAssignFTE’’sandexpensestoactivitiesandend-productsineachsub-unitAssessthevalueofendproductsamong““customers”DefineProjectCreateAVAModelGenerate/Validate/RefineCost-ReductionIdeasImplementApprovedCostReductionIdeasConductidea-generationworkshopstogeneratecost-reductionideassufficienttomeetthetarget:EliminateendproductsSimplifycontentandreducefrequencyEvaluatesourcingoptionsInvestigateimplicationsofeachideawithend-product““customers”Conductidea-refinementworkshopsPresentrecommendedcost-reductionprogramtoSteeringCommitteeAppointimplementationleadersLayoutspecifictimetableforcostreductionwhichcapturesbenefitsasquicklyaspossible,whileminimizingnegativeimpactsonend-product“customers””Trackactualcostreductionvs.timetable;reportmonthlyHoldimplementationleadersaccountableforperformanceILLUSTRATIVEApplyingActivity-BasedCostingActivity-ValueAnalysis(AVA)Atonelargeindustrialclient,AVAwasusedtoassessthevalueandcostofkeyendproductstoidentifyspecificactivitiestosimplifyorstreamline.Identifiedthekey““endproducts”oftheFinancefunctionwithemphasisonFinancialPlanningandCostAccounting/AnalysisareasEstimatedthecostandvalueofeachendproductCostassignedusingABCmethods(personnelcosts)andallocation(non-personnelcosts)Valueassignedusingresultsofusagesurvey(usagebycustomersindecisionmaking)Focusedeffortonthehighercost/lowervalueendproductsHeldfocus-groupdiscussionstoidentifywaystosimplify/streamlinethesetoffocusendproductsDiscussedideasfrombrainstormingandbestpracticesfromothercompaniestoconfirmandenrichwaystosimplify/streamlinethefocusendproductsExampleAVAEffortEXAMPLEApplyingActivity-BasedCostingActivity-ValueAnalysis(AVA)Task1:InterviewkeyFinanceexecutivestoverifycoreFinanceissues,documentmissionsforeachfunctionorsub-function(whydoestheunitexist?),andidentifyinitialsavingsopportunitiesTask2:Provideanoverviewofeachfunction’sbudgetsplitbetweenpayrollandnon-payrollcosts;splitpayrollbypositionandnon-payrollbycostcategory(type)Task3:Decomposefunctionintosub-functions(units)anddevelopacomprehensivelistofendproductsforeachsub-function;developaprioritizedlistofendproductsforeachsub-functionfromtheperspectivesofboththesub-functionandits““customers”Task4:Identifythesteps(activities)onemustgothroughtocreateeachendproductTask5:Allocateemployeetimebyjobpositiontoendproducts,andensure100%ofallemployeetimeiscapturedTask6:EstimatepersonnelcostsforeachendproductbasedonemployeetimeallocationsTask7:Calculatethetotalcostsofendproductsbyassigningnon-payrollitemsthataredirectlyattributabletotheactivityandallocatingothercostsonalogicalbasisTask8:Quantifythevalueofeachendproductbysurveyingcustomerstodeterminehowtheyuseitindecisionmaking(e.g.,supportingkeybusinessdecisionsismorevaluablethanmerelyprovidinginformation)Task9:Documentpreliminaryideasandopportunitiestoreduceoverheadcosts;thisstepwillberepeatedthroughouttheprojectviamultipleinterviews/reviewmeetingswithalllevelsofmanagementTheprojectconsistedofninekeystepsthatdefinedtheendproductsofsub-functions,assignedcostsandvaluetoendproducts,andlogicallyeliminatedorsimplifiedactivities/endproductsbasedonacost/valuecomparison.KeyTasksinanExampleAVAEffortEXAMPLEApplyingActivity-BasedCostingActivity-ValueAnalysis(AVA)Inthisexample,twelvehighercostandlowervalueendproductsbecamethefocusareasforthecostreductioneffort.C PresentationsSupport(StrategicPlanning)D PresentationsSupport(BPA)E Presentations(Outlook/InterimFcstg)F Corporate&BURequests(BPA)J OperationsSummary(Outlook/InterimFcstg)I BU/Divisions/Plants(Outlook/InterimFcstg)U Varianceexplanations(Outlook/InterimFcstg)Y ICSCostFollow(CostAnalysis)Z WorkinProgressInventory(CostAnalysis)CC Division/BusinessSegment/Prod.Line(BPA)DD Mo/Qtr/YrForecast&Objectives(Outlook/InterimFcstg)EE ManagementReports&VarianceAnalysis(Budgeting) Average70.8Average140$Cost(000s)ValueRating(Baseduponprimaryusages)Valuevs.CostMatrixPGKKKBALTHXORJJGGLLVNNBBDNMSAACJQWHHMMIIFFFOOEZIUCCDDYEE01020304050607080901000100200300400TotalofallEndProductsFocusSubtotal%$5,741.90 $3,044.453EXAMPLEApplyingActivity-BasedCostingActivity-ValueAnalysis(AVA)Tobesuccessful,anAVAprojectmustcommunicateefficiently,analyzeobjectively,andmoverapidlytoimplement.RequirementsandKeyLearningsRequirementsforSuccessKeyLearningsDisplaytopmanagement’stotalcommitmentandvisibleinvolvementintheoverheadreductionprogramEstablishastretchtarget(withsupportingrationale)forcostreductiontoensurecompleteanalysisandinnovativethinkingUseabottom-upapproachtogivelinemanagerstheresponsibilityforgeneratingideasandprovidingknowledgefromthetrenchesCommunicateprogram’sprogressandconclusionstoparticipantsandtheoverallorganizationBalancetheneedforaccuracywithdataavailabilitytogetan“actionable”levelofdetailinend-productcostestimatesConductsimultaneouscost-savingseffortsacrossmultiplesites/functionstoavoidlettingthe“victim”mentalityslowprogressEncourageinvolvementandremoveblockersthroughstraight-forwarddiscussions/face-to-facemeetingswithkeyexecutives(asrequired)Assessthevalueofeachendproductusingquantitativeusagesurveyofcustomers/usersAggressivelyminimizethetimetoimplementationtoavoiddisruptionscausedbylingeringuncertaintyandinsecurityApplyingActivity-BasedCostingActivity-ValueAnalysis(AVA)IntroductionCost-to-ServeAnalysis(CTS)Activity-ValueAnalysis(AVA)OperationalandITManagement-ChemicalManufacturerExampleThenewbusinessstrategyrequiredabusinesssolutionthatcouldsupport:calculatingtrue““economicprofit”ofbusinesses,productlinesacrossgeographiesreductionintotalcosttoservereductionininventorylevelsinsightintocustomersatisfactionandretentionwithregardtocontributionThenewsystemneededtoreplacethetraditionalprofit-and-lossstatementswithinformationaboutthetotalshareholderreturnonproductsandservicesActivity““costs”hadtobebasedonstandardsdevelopedbyChemco’sfinancialorganizationwithsupportfromeachareaofthebusinessThesystemhadtobeabletoreportcontributiononavarietycombinationsofproduct,customerandgeographyIn1990Chemcoformulatedaglobalrestructuringstrategydesignedtoshedlowmarginproductlinesandglobalizebusinessunits.BusinessManagement-SolutionRequirementsApplyingActivity-BasedCostingOperationalandITManagement-ChemicalManufacturerExampleChemcocreatedthecapabilitybyimplementingacombinationofpackage(SAP)andcustom(reporting)systemsandintegratingthemwithalargebusinessprocessandhumanchangeinitiative.BusinessManagement-SolutionOverviewContributionMargin/EconomicProfitPriceVolumeCurrencySalesSummaryBusinessBalanceSheet/FundsFlowInventoryOrdersReplacementAssetBaseMaint-enanceBetterments&AdditionsFreight&LogisticsSalesDetailDaysSalesOutstanding/PayHabitsOrderDetailExpenseSumm.ABCReportingFixedAssetsExpenseDetail-ReportingViews--ReportingDatabase--SourceSystems-SAPMarket-SellApps(Siebel)GlobalCodesStructureGlobalMaintenanceSystemotherApplyingActivity-BasedCostingOperationalandITManagement-ChemicalManufacturerExampleProvidingABCdatatothebusinesshadimmediateandsubstantialimpact.BusinessManagement-ValueCreatedOneDivisionidentified$2MMannualcostsavingsbyanalyzingthe““truecost””toproduceproductsbetweensimilarplants.Inthepast,thiswasdifficulttodobecausetherewasnosinglesourceforallplantexpenseinformation.AnotherDivisionusedABCreportingtomeasureitsgoalofreducingconversioncostsby50%from1992costsvs1998costs.Todate,theyhavereducedconversioncostsby30%.Chemcohasacentralpoolofplantmaintenancepeoplewithcraftsmenfromdifferentgroupsincludingpipefitters,boilermakers,electricians,etc.UsingABC,Chemcocreatedreportstomonitorhowmanyhourseachcraftgroupwasspendingwithinitsownareaandtheamountofovertime,andtocalculatethetotalcostofthemaintenanceoperations.Reducedwaittoseequarter-endfinancialresultsfrom16daysto12-14hours.Improvedthetimeittakestoperformthelegalbookclosingby8daysandthebusinesscloseby16daysApplyingActivity-BasedCostingOperationalandITManagement-ChemicalManufacturerExampleWhenChemcochosetoplaceitsITorganizationintoanalliancewithAndersenConsulting,anABCapproachwasidentifiedastherightwaytomanageandreportactivities,giventhenatureofthechallenge.ITManagement-BusinessProblemChemcofocusedonearninganeconomicprofitthroughoutthebusinesscycle(7-8year)andhasfocusedonreducingfixedcoststhroughouttheirorganization.ThespecificissuesbeingfacedbytheITorganizationincludedthefollowing:significantincreaseinthesize,complexityandnumberofsystemdevelopmentprojects,ITinvestmentplansfarexceededresourcesavailableinternally,skillsurveysindicatedlargeskillgapsasthecompanyfocusedonmigratingtoclient/servertechnology,usercommunityrequiredquickertimetomarketandlowerunitcostsforITapplications.InAprilof1997theChemco-AndersenConsulting““Alliance”wasformedwithperformanceobjectivesincluding:improvevaluedeliverytothebusiness30%improvementindevelopmentandmaintenanceproductivity40%improvementindevelopmentlead-timeimproveclientITskillrankingtotopquartileofindustryimplementstandardprocessmethodologyApplyingActivity-BasedCostingOperationalandITManagement-ChemicalManufacturerExampleSupplyPlanAlliancecostsarecapturedandreportedinaframeworkthatsupports