Strategos Lean Briefing
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30 January 2004 www.strategosinc.com Volume Adjusted CostingEluding The Death Spiral of OverheadOur previous Briefing explored Product Costing and the distortion inherent in traditional accounting. In "The Death Spiral of Overhead" we show how this warping of overhead cost can lead to an agonizing corporate death. Distortion leads to product proliferation and even more distortion in a slow, sinister cycle of deteriorating profitability; a cycle that plays out over decades. Then, Glen Navis, formerly of Deere & Co., describes "Volume Adjusted Costing" (VAC). In many situations where volume is a primary cost driver, it gives most of the accuracy of ABC with less complexity and far more transparency. It is simple, easy and fast to implement. VAC drives behaviors that, in turn, actualize strategy. Our next issue wraps up the series on accounting. Then, we go back to a more technical topic: Process and Value Stream Mapping. All the best, Quarterman Lee Please forward this Lean Briefing to colleagues or use it in your publication. We only ask that you do so in its entirety. |
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