OPPapers.com Essay Index >> Business >> Succeeding With 80/20
We have many free term papers and essays on Succeeding With 80/20. We also have a wide variety of research papers and book reports available to you for free. You can browse our collection of term papers or use our search engine.
Submitted by srewers3 on March 24, 2007
Category: Business
Words: 1225 | Pages: 5
Views: 298
Popularity Rank: 46,487
Average Member Grade: N/A (Add a Comment / Grade this Paper)
Author: Lakshmi U. Takikonda; Dan O'Brien; Rao J. Takikonda
Title: Succeeding with 80/20
Source: Management Accounting (New York, NY) 80 no8 40-4 F 99
Summary
The authors of this article discuss how a manufacturing company (XYZ) succeeded in cutting costs and increasing customer satisfaction by focusing on process reengineering, total quality management, and using the 80/20 rule extensively to: flatten their organizational structure, modify its plants to fit just-in-time (JIT) production, and empower their employees.
Instead of using activity based costing (ABC), their approach to controlling costs focused on: elimination of waste (e.g. non-value added activities), reduction in cycle time, elimination of defects or disconnects in the process, employee involvement, continuous improvement, and by focusing on the 20% of their key business and products that account for 80% of their revenues. As a result, XYZ was able to improve quality, productivity, delivery of products, product design, communication among all levels of employees, and customer satisfaction. For XYZ, this translated into the doubling of operating income, the recognition of being a low cost provider, and being the supplier of choice for its products.
Issues the company faced & how they addressed them
Like many companies, XYZ had trouble managing their growth and overhead costs. Support areas of the company were growing and it became difficult for the company to determine which products were contributing to the growth. With large amounts of overhead costs in the support departments, a large portion of the costs associated with products were not direct costs. That made it difficult for the company to see the true profitability of products.
In an attempt to control costs, XYZ initially decided to implement the ABC methodology. After a lengthy and costly analysis, XYZ discovered that low-volume products were...
You must Login to view the entire paper.
If you are not a member yet, Sign Up for free!