allied office product

8/13/2019 Allied Office Product

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Allied Office Product

Allied Office Products

Introduction

Allied Office Products is a large corporation that builds its reputation on itsannual sales of $900 million in business forms and specialty in paperproducts. Its paper products vary from envelopes to greeting cards andwriting papers.

Allied has incorporated a new program called Total Forms Controls (TFC)for its clients enabling Allied to separate this business form division to

handle client accounts. TFC provides services of warehousing anddistribution, inventory control and forms usage reporting. Further more

Allied offers several other services such as pick-pack and desk topdelivery (Govindarajan &Anthony 2007, p.348) to enhance their businessoperations.

Allied clients vary from small to large and all use their distribution center.Allied has a total of 13 distribution centers thus giving them an increase inthe services.

1) Using the information in the text and in exhibit 5, calculate ABC basedservices costs for the TFC business

Storage $1550k

Requisition Handling $1801k

Basic warehouse stock selection $ 761 k Pick-up activity $ 734k

Data entry $ 612k

Desk top delivery $ 250k

Total $ 5708k

Activities Cost Drivers


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The cost of storage average can be driven by number cartons in inventory.The cost of requisition Handling is determined by number of requisitions.The cost of basic Warehouse Stock Selection comes from the number oflines ordered. The number of pick pack lines is the cost driver of pick

Pack and the cost of data Entry is result in the number of lines. In addition,desktop Delivery by the number of deliveries

Cost per activities can be found.

Storage $1550k/350,000=$4.43

Requisition Handling $1801k/310,000=$5.81

Basic warehouse stock selection $761k/775,000=$0.98

Pick-pack activity $ 734k/697,500=$1.05

Data entry $ 612k/775,000=$0.79

Desk top delivery $ 250k/ 8500=$29.41

2) Using your new costing system, calculate distribution services costs forcustomer A and customer B

Customer A Customer B

Average inventory 350 cartons@ $4.43=1550.5 700cartons@$4.43=3101

Requisitions 364@$5.81=2114.84 790@$5.81=4589.9

Number of lines 910@$0.98=891.8 2500@$0.98=2450

Pick-pack 910@$1.05= 955.5 2500@$1.05=2625

Annual freight cost $ 2,250 $ 7,500

Extra charging after 9 months nil [email protected]%*3=315

Desk top deliveries nil 26 per year@$29.41=764.66

Data entry 910@$0.79=718.9 2500@$0.79=1975

Total $8,483 $23321


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Here is an example how to calculate the cost using the ABC method forcustomer B, there are 700 cartons inventories, 790 requisitions and 2,500line all lines with pick-pack activity. Besides, customer needs 26 timesdesk top deliveries which cost $764.66 more. In addition, for customer B

there is $7,000s inventory stored over 9 months, the extra charging after 9months should be $315. It added up to $23,320.56 for customer B.

Costs for Customer A & B:

Customer A:

$1500+$2250=$3750

Customer B:

$50,000+$7500=$57,500

3) What inference do you draw about the profitability of these 2 customers?

Currently customer A & B both face the service charges of 32.2% of its totalproduct costs $ 50,000 that is $16,100.

Customer A: $16,1008483 = $7617

Customer B: $2332116,100 =$7221

As shown here, A was over charged $ 7,617 while B was under charged $7,221

From another viewpoint:

old method ABC method

customer A customer B customer A customer B

sales $79,320 $79,320 $79,320 $79,320

products cost $50,000 $50,000 $50,000 $50,000

services fees $16,100 $16,100 $8,483 $23,321

gross profit $13,220 $13,220 $20,837 $5,999


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% in gross profit 17.0% 17.0% 26.0% 7.7%

Compare the two cost analysis methods we could find that, the old methodis difficult to figure out which activity is the major one while the ABC costmethod can provide the clear information. Furthermore, its fair and wise tocharge clients according to the service used by them but the old method

just charge them at the same price despite the difference in serviceprovided.

Although customer A cost few, it doesnt make a bigger profit. Customer Bbuy lots of things, he may take a discount from the supplier and make aprofit.

4) Should TFC implement the SBP pricing system?

TFC should definitely implement SBP pricing system to change outdistribution services which will help TFC become more profitable since nowthey have a much better understanding of the drivers of costs involved inthe distribution services. If TFC implement this system it will properlyallocates costs

And provide equality and fairness to all customers

Further more, many customers will face reduced prices which are

beneficial to the company.

The system provides Profit opportunity as it is spread over many firmsand allied is not as dependent on a small number of firms for positiveprofits which will give rise to

Profits margins increasing.

The TFC has 13 distribution centres, so applying the SBP system wouldresolve the fair to all customers has implemented their pricing based onthere distribution centre.

Q.5) What managerial advice do you have for Allied about the Total FormsControl (TFC) business? How does Exhibit 1 relate to this question?

Allied has several beneficial aspects in their operations in conducting theirbusiness such as having a greater proportion of distribution centers and


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services provided. However they lack in the way they service to theirclients. Therefore improvements must be made in order to operate fairly toall clients in their business. As a manager, it is his/her duty to oversee andadvice on any changes that must be made to enhance the business and

bring it to a positive view.

Managerial Advice:

Adjustment of the management area to level of service. The reason forthis is because although customer account A and B both make annualsales of $79,320 with cost of product being $50,000, the current systemcharged equal service fee. Although these accounts were same only in theproducts being sold, they were different in the level of service required by

Allied.

A review on the true and fair to the clients. That is all similar size clientsneed fair treatment.

Service and treatment must be equal to all clients; whether small or large

Fees must be charged for usage of distribution centre at level of servicesprovided to clients.

In exhibit 1, it portrays a value chain concept of TFC, Allied operates its

forms manufacturing and TFC activities as a separate profit centre. Thetransfer price of product to TFC was at arms length with the transfer priceset at fair market value. Allied manufactures business forms in 13 locations.

Although the TFC sales people had the option to outsource products ifnecessary, internal sourcing was more encouraged for customer orders.Clients who participated in the forms management program kept aninventory of forms at one of Allieds 10 distribution centers. The forms weredistributed to the client as required. Usage of distribution center by clientsincur extra charges to cover the cost of warehousing and distribution based

on a percentage of the cost of sales of the products for that month,regardless of the specific level of service provided to that clients.

Learnings of the case

From the case, we find out there are two main issues in the company- thecosting system and the pricing system. To improve the efficiency and to act


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effectively the company, as shown above, should introduce the activity-based cost system; it provides the company more clear information foreach customer and its more fair to charge clients according the servicesactually provided. It will help the company to avoid overcharge or

undercharge for the customers.

Additionally, the pricing system, TFC should implement SBP pricing systemto change out distribution services which will help TFC become moreprofitable since they have a much better understanding of the drivers ofcosts involved in the distribution services. By implementing these twosystems the ROI of Allied may be improved as the revenue is going up.The company only needs to change a little, but can run effectively andefficiently.


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Allied Office Products Case Write-Up

Allied Office Products Case Write-up

Allied office products have two different divisions, each of these weretreated as profit centers. One of them is the Form Manufacturing division,which basically involved with producing business forms and specialty paperproducts. The other one is Total Forms Control activity division, which is aprogram of business forms inventory management services.

The industry value chain is:

TreesPulpPaperForms manufacturing Forms salesTFC Customer

Purchasing Manager Customer receiving Forms end users

The TCF chain is:

Storage and inventory financing Requisitioning Stock selection and pick-pack Order entrybilling Desk top delivery Freight

In terms of the profitability performance, the Business Forms Division in1988 earned a 20 percent ROI, but returns have been dropping for severalyears. In 1992, Allied Office Products has annual sales of $900 million and

sales from TFC were only about $60 million. TFC profitability was sufferingin October 1992 and it was projected to earn an ROI of only 6 percent for1992.

Porters 5 forces:

* Supplies: Forms and other paper products are commodity products andthere are a lot of supplies in the market. Low power

* Customers: Since form products are commodity products and thereforecustomers are sensitive to the price change. The switching cost is low andthey have many options to choose from, such as Staples and Office Depot.While TCF division just started up, competition in this market is relativelylow and therefore there are not many options to choose from. Mediumpower.


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* Threat of new entrants: The barrier to enter is relatively low since notmuch investment is needed, while the competition makes the enteringrelatively difficult. However, there are certain renowned brands andtherefore making new companies difficult in obtaining market shares.

Medium power.

* Substitutes: There are lots of substitutes of paper products. As lots ofcompanies are going green and changing everything to paperless,electronic writing forms are becoming more and more popular. The TCFdivision is relatively unique, but customers may also look for Fedex andUPS for pick pack service and delivery. Medium power.

Rivalry: Medium to High. There is lots of competition within the formmanufacturing industry since the industry just matured and every single

company was seeking ways to generate sales growth. However, the goodthing is that TCF division is a relatively new service and the competition isnot intense. Therefore, the overall rivalry is medium to high.

SWOT analysis:

Strength | Weakness | Opportunities | Threats |

1. Two profit centers are correlated with each other. Form manufacturingwould transfer products and fulfill its demand for TFC division. | 1. Excessinventory. The company usually gets cartons that just sit on the shelfforever. It reduces the inventory turnover ratio and does not help optimizethe usage of the warehouse. | 1. The industry is pretty new and thereforethere is excess demand over supply. | 1. Inventory Obsolescence. Paperproducts may be outmoded quickly and the inventory sit on their shelveswill lose its value quickly. |

2. It could offer multiple services, including pick-pack and desk topdelivery. | 2. Cost of capital. Customer does not pay for inventory until

requisition submission and therefore the company lost investment profits onearning that revenue. | 2. More and more firms are tend to store theirinventory in other warehouses in order to reduce their inventory carryingcost, and therefore customers preference indicate the industrys potentialgrowth. | 2. The world environmental paper less trend has made paper


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products less and less attractive and thus decreasing the demand for paperproducts. |

3. TFC salespeople have the option of outsourcing product if necessary. |3. Service fees were not charged based on activity, and therefore reducingthe profitability. | 3. Technology advancement could help the company toimprove its inventory control system more effectively and more efficiently. ||

| 4. Employees in distribution department are not satisfied with the currentstrategies and data entry is redundant. | | |

Conclusion: It is a relatively attractive industry and Allied is doing good,except that it might achieve even more profits if could adjust its pricing and

costing program.

Strategic positioning to achieve this apparent success is based on:

* The cooperation between its two divisions: forms manufacturing divisionand TFC division.

* Focus on value added servicepick pack service and desk topdelivery.

* Sales force charges average of 20% of product & services and clientswere charged service fee based on the cost of sales of the product,regardless of the specific level of service.

Issue: Will the SBP quickly implemented and adopted, and will it effectivelyimprove the profit margin?

* Service based pricing. Activity-based pricing program. Chargingcustomers based on distribution services they request.

* Will the sales team perceive plan will decrease commissions?

Some of the sale force used to the old pricing system and are not willing tochange. Management should overcome the organizational problems. 1.Prepare account analysis for each account manager. 2. Train accountmanagers thoroughly on client benefits.


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* Will customers view this positively or negatively?

Make sure customers understand our value proposition, and they will viewthis positively.

* Will it effectively improve companys profit margin?

We can re-compute the profits Allied can get from customer A and B basedon activity-based costing and compare it with the prior pricing system tosee the difference.

* ABC-based services costs for TFC business:

Storage $1,550,000/350,000=$4.43/carton

Requisition handling $1,801,000/310,000=$5.81/requisition

Basic warehouse stock selection $761,000/775,000=$0.98/line

Pick-pack activity 734,000/697,500=$1.05/pick-pack

Data entry $612,000/775,000=$0.79/line

Desk top delivery $30/delivery

Total 5,708 42.47

* Compare distribution cost for customer A and B:

| Customer A | Customer B |

Sales income | $79,320 | $79,320 |

Storage Cost (Carton) | 350*$4.43=$1,550.5 | 700*$4.43=$3,101 |

Requisition handling | 364*$5.81=$2,114.8 | 790*$5.81=$4,589.9 |

Warehouse stock selection (Line) | 910*$0.98=$891.8 |2,500*$0.98=$2,450 |

Pick-pack | 910*$1.05=$955.5 | 2,500*$1.05=$2,625 |

Date entry (Line) | 910*$0.79=$718.9 | 2,500*0.79=$1,975 |


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Desk top delivery | 0 | 26*$30=$780 |

Freight | $2,250 | $7,500 |

Opportunity cost of capital for inventory balance | $1,950 | $6,500 |

Total cost of distribution | $10,431.50 | $29,521 |

Cost of product | $50,000 | $50,000 |

Profit | $18,888.50 | -$201 |

If Allied adopted ABC, managers could clearly see profits from customerswith the same sales income, could varied dramatically based on theirrequest services, and therefore should be charged different amount of

service fees.

Conclusion/Recommendations:

* Implement activity-based pricing program based on their proposal.

* Management tone and philosophy. Focus on overcoming organizationalproblems, reducing non-value added activities, and cost reduction.

* Optimize inventory levels and warehouse space. Implement Just-in-time

inventory control system and lease programs, change warehouse structure,and charge fees for anything that has been there over nine months.

* Concentrate on individual account management. Based on the accountingdata, which shows the top 20 profitable accounts, management shouldfocus on accounts that produce the most profit.


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Copy Allied Office Products

Allied Office Products

yesterday, I went to Monash Clayton for a seminar, Cover Letter Seminar,just for 1 hour, but I think it was useful. after this semester, i need to go fora work...there will be some similar seminars held on Monash Clayton in thenext few weeks. i will go to there.

after the seminar, i went home, but I totally lost in the Monash Clayton,becasue it is so huge...I study in Monash Caulfield, just few buildings inthere. But Monash Clayton...I think 70 buildings in there...it took me 20minutes to find the bus loop...

next, I put on some old assignment, Advanced Managment Accouting.there were a lot of case study when I learned that unit, but now, the teacherwas changed, so the assignment was changed...

anyway, the requirements:

1. Conduct a SWOT analysis

2. Using the information in the text and in Exhibit 5, calculate ABC basedservice costs for the TFC business.

3. Using your new costing system, calculate distribution services costs forCustomer A and Customer B.

4. What inferences do you draw about the profitability of these twocustomers?

(hint: you can compare the old method to the abc method using customerprofitability analysis in a table format; you can show this by:

Sales

less Product Costs

less Service Fees

= Gross Profit


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You can also show Gross Profit as a %

5. Should TFC implement the SBP pricing system? Give reasons.

6. What managerial advice do you have for Allied about the Total For

Control (TFC) business? How does Exhibit 1 relate to this question?

7. Can lean manufacturing practices be implemented in a company suchas Allied? Explain.

8. Google Allied Office Products. Are they still in business? What otherinformation have you discovered on Allied?

SOME ANSWERS SAMPLES:

Allied Office Products Case 8.1

1) Conduct a SWOT analysis

Under the Strengths: it was found that

They used Value added services to differentiate itself from othercompanies. Especially they have 2 different divisions, warehousing anddistribution. In the warehousing they use sophisticated computer systemsnetwork to monitor a clients activity history, so that means they can

eliminate the time laps, running shortage of inventory. Under thedistribution the staffs makes sure that they deliver the right products to rightpeople by checking full cartons. This will increase the customersatisfaction.

They had a diverse product line providing 13 manufacturing locations +10distribution centres better access and closer delivery points by using thesemonitory systems.

Weaknesses found in the case study were that

Because of Too much old data being used and most of the data was from1990-1992. It is not accurate making decisions based on this information.

And Due to the Different years data given, it is quite difficult to makecomparisons.


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The system provides Profit opportunity as it is spread over many firmsand allied is not as dependent on a small number of firms for positiveprofits which will give rise to

Profits margins increasing.

The TFC has 13 distribution centres, so applying the SBP system wouldresolve the fair to all customers has implemented their pricing based onthere distribution centre.

Another Version

Background:

Allied Office Products was a corporation with annual sales of $900 millionin business forms and specialty paper products, such as writing paper,envelopes, note cards, and greeting cards. In 1988 the company hadexpanded into business forms inventory management services.

1SWOT analysis.

Strengths:

1) Well network---the sophisticated computer systems network to monitor a

clients forms inventory, forms usage, and ordering activities.2) Wide services, such as value-added, pick pack and desk topdelivery

3) Good strategy: the right product at the right place at the right time.

4) A wide variety of products and a wide market (market share)

5) Distribution sales---understand the customer profitability.

Weaknesses:

1) Lack of competitive strategy.

2) Inventory turnover.

3) The channels of outsourcing and distribution.


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4) Financial problems.

5) Accounts were similar only in the value of the product being sold but aredifferent on the level of service they required from Allied.

Opportunities:

1) New market & new production.

2) New demands of customers.

3) Global information.

4) Competitors vulnerabilities.

Threats:

1) New competitors.

2) Policy changed in the industry.

3) Pricing fights.

4) Substitute production.

2. ABC based services cost:

The ABC based services costs for the TFC business is $5708.

Total storage expense 1550

Total requisition handing expense 1801

Total warehouse activity 1745

Data processing expense 612

Total $5708

3. Costs for Customer A & B:

Customer A:

$1500+$2250=$3750


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Customer B:

$50,000+$7500=$57,500

4. The profitability of two customers:

Although customer A cost few, it doesnt make a bigger profit. Customer Bbuy lots of things, he may take a discount from the supplier and make aprofit.

Sales 79320

Less Product Costs 49620

Less Service Fees 15541

Total: 14159

5. TFC implements the SBP pricing system:

I believe that TFC will use the SBP pricing system. In face, TFCmanagement will rework the information in the data base as if the accountshad been charged service fees based on actual usage, leaving net salesand product cost the same as before. They ranked the accounts accordingto profit contribution.

6. Allied operated its forms manufacturing and TFC activities as separateprofit centers. The transfer of product to TFC was at arms length with thetransfer price set at fair market value. Allied manufactured business formsin 13 locations. Although the company encouraged internal souring forcustomer orders, TFC salespeople had the option of outsourcing product ifnecessary.

7. The implement of lean manufacturing practices for Allied:

Yes, Allied can lean manufacturing. In exhibit 6, TFC maintained 1100separate accounts; a large portion of the business came from very fewaccounts. The top 40 accounts represented 48 percent of the companysnet sales. Therefore, Allied should reduce the number of the account toreduce the cost and to improve the profit.


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8. Other information discovered on Allied:

Allied Office Products are still in business. To build a dynamic site fromwhich corporate customers can log in, and within a secure and customizedexperience, view product catalog, place orders, and check order status andhistory.

and I just find that, I do the presenation on that week, so I should prepare areport of that case, the report is shown as follow:

Abstract

This report identifies different issues in the Allied Office products casestudy. Such as SWOT analysis, Activity Based Costing (calculations from

the figures given and the explanations), Serviced Based pricing system,Managerial advice about the TFC business, implementation of Leanmanufacturing and at last the other informations about Allied Officeproducts Case study.

Introduction

Allied Office Products is a large corporation that builds its reputation on itsannual sales of $900 million in business forms and specialty in paperproducts. Its paper products vary from envelopes to greeting cards and

writing papers.

Allied has incorporated a new program called Total Forms Controls (TFC)for its clients enabling Allied to separate this business form division tohandle client accounts. TFC provides services of warehousing anddistribution, inventory control and forms usage reporting. Further more

Allied offers several other services such as pick-pack and desk topdelivery (Govindarajan &Anthony 2007, p.348) to enhance their businessoperations.

Allied clients vary from small to large and all use their distribution center.Allied has a total of 13 distribution centers thus giving them an increase inthe services.

SWOT Analysis


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1) Conduct a SWOT analysis

Strengths:

Value added services to distinguish itself

various merchandise line

13 manufacturing locations and 10 distribution centres better access andcloser delivery points.

New computer system upcoming on line to follow individual freightcharges.

Weakness:

Too much old data; most of the data from 1990-1992.

Different years statistics given, quite complicated to evaluate.

Presently customers are charged a service fee is based on the cost ofsales for that month regardless of level of service provided.

ROI has been falling for a number of years.

Pick-pack and desk top delivery are both time consuming.

Opportunities:

pick-pack and desktop delivery

be able to generate flexible lease programs

Latest computer system where based on historical figures, allied can buildengagements with client to have a set of Deliveries per year based on

usage. As an alternative of charging extra for some items, allied can offer adiscount for those who purchase cartons.

Threats:

Strong industry competition all looking to make sales growth.


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incorrect cost systems follow-on in uncompetitive pricing

If apply new SBP, a number of accounts would be charged more, maywarn to leave.

(http://www.mgmt.utoronto.ca/~mccrackn/323/Allied%20Office%20Products.PDF)

Practical calculation of ABC

2. using the information in the text and in Exhibit 5, calculate ABC basedservice costs for the TFC business.

Storage $1550k

Requisition Handling $1801k

Basic warehouse stock selection $ 761 k Pick-up activity $ 734k

Data entry $ 612k

Desk top delivery $ 250k

Total $ 5708k

Activities Cost Drivers

The cost of storage average can be driven by number cartons in inventory.The cost of requisition Handling is determined by number of requisitions.The cost of basic Warehouse Stock Selection comes from the number oflines ordered. The number of pick pack lines is the cost driver of pickPack and the cost of data Entry is result in the number of lines. In addition,desktop Delivery by the number of deliveries

Cost per activities can be found.

Storage $1550k/350,000=$4.43

Requisition Handling $1801k/310,000=$5.81

Basic warehouse stock selection $761k/775,000=$0.98


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Pick-pack activity $ 734k/697,500=$1.05

Data entry $ 612k/775,000=$0.79

Desk top delivery $ 250k/ 8500=$29.41

Calculation of distribution services costs

3. Using your new costing system, calculate distribution services costs forCustomer A and Customer B.

Customer A Customer B

Average inventory 350 cartons@ $4.43=1550.5 700cartons@$4.43=3101

Requisitions 364@$5.81=2114.84 790@$5.81=4589.9

Number of lines 910@$0.98=891.8 2500@$0.98=2450

Pick-pack 910@$1.05= 955.5 2500@$1.05=2625

Annual freight cost $ 2,250 $ 7,500

Extra charging after 9 months nil [email protected]%*3=315

Desk top deliveries nil 26 per year@$29.41=764.66

Data entry 910@$0.79=718.9 2500@$0.79=1975

Total $8,483 $23321

Here is an example how to calculate the cost using the ABC method forcustomer B, there are 700 cartons inventories, 790 requisitions and 2,500line all lines with pick-pack activity. Besides, customer needs 26 timesdesk top deliveries which cost $764.66 more. In addition, for customer B

there is $7,000s inventory stored over 9 months, the extra charging after 9months should be $315. It added up to $23,320.56 for customer B.

Results/findings

4. What inferences do you draw about the profitability of these twocustomers?


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Currently customer A & B both face the service charges of 32.2% of its totalproduct costs $ 50,000 that is $16,100.

Customer A: $16,1008483 = $7617

Customer B: $2332116,100 =$7221

As shown here, A was over charged $ 7,617 while B was under charged $7,221

From another viewpoint:

old method ABC method

customer A customer B customer A customer B

sales $79,320 $79,320 $79,320 $79,320

products cost $50,000 $50,000 $50,000 $50,000

services fees $16,100 $16,100 $8,483 $23,321

gross profit $13,220 $13,220 $20,837 $5,999

% in gross profit 17.0% 17.0% 26.0% 7.7%

Compare the two cost analysis methods we could find that, the old methodis difficult to figure out which activity is the major one while the ABC costmethod can provide the clear information. Furthermore, its fair and wise tocharge clients according to the service used by them but the old method

just charge them at the same price despite the difference in serviceprovided.

Recommendation of implementation of SBP

5) Should TFC implement the SBP system? Give reasons

TFC should implement SBP pricing system to change out distributionservices to help TFC become more profitable.

Properly allocates costs


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Fees must be charged for usage of distribution centre at level of servicesprovided to clients.

How does Exhibit 1 relate to this question?

In exhibit 1, it portrays a value chain concept of TFC, Allied operates itsforms manufacturing and TFC activities as a separate profit centre. Thetransfer price of product to TFC was at arms length with the transfer priceset at fair market value. Allied manufactures business forms in 13 locations.

Although the TFC sales people had the option to outsource products ifnecessary, internal sourcing was more encouraged for customer orders.Clients who participated in the forms management program kept aninventory of forms at one of Allieds 10 distribution centers. The forms weredistributed to the client as required. Usage of distribution center by clients

incur extra charges to cover the cost of warehousing and distribution basedon a percentage of the cost of sales of the products for that month,regardless of the specific level of service provided to that clients.

Lean manufacturing

Q7. Can lean manufacturing practices be implemented in a company suchas Allied? Explain.

Lean manufacturing practices can be implemented into Allied business,because it would benefit Allied with a lot of cost and time saving. Alliedspends vast amount of money on proceeds, mostly labour. It also enablesidentifying and eliminating non value added activities.

Lean manufacturing is an organisations value chain, it is collection of keyactivities perform to design, produce, market, deliver and support itsproducts and services. It provides the opportunity to better understand thebehaviour of differentiation.

The external or industry value chain incorporates the value-creatingactivities which span the industry from the initial raw material to the endconsumer.

Q8. Google Allied Office Products. Are they still in business? What otherinformation have you discovered on Allied?


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Allied Office Products is still in business. Allied provides information on:

Office supplies

Stationary

Cleaning supplies

Office furniture

Computer equipment

Printing & Office design

Recommendation

From the case, we find out there are two main issues in the company- thecosting system and the pricing system. To improve the efficiency and to acteffectively the company, as shown above, should introduce the activity-based cost system; it provides the company more clear information foreach customer and its more fair to charge clients according the servicesactually provided. It will help the company to avoid overcharge orundercharge for the customers.

Additionally, the pricing system, TFC should implement SBP pricing system

to change out distribution services which will help TFC become moreprofitable since they have a much better understanding of the drivers ofcosts involved in the distribution services. By implementing these twosystems the ROI of Allied may be improved as the revenue is going up.The company only needs to change a little, but can run effectively andefficiently.

Bibliography

Allied Office Products Case, Viewed 4th April 2008,

http://www.mgmt.utoronto.ca/~mccrackn/323/Allied%20Office%20Products.PDF

Anthony & Newton R, 2007, Management Control Systems, 12th edition,McGraw-Hill, Boston


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allied office product

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