1. Activity-based Management: Recommended Actions Kaplan and Cooper, Cost and Effect, HBR Press, 1998 Product –Reprice products –Substitute products –Redesign products –Improve production processes –Change operating policies and strategy –Invest in flexible technology –Eliminate products Customer –Protecting existing highly profitable customers –Repricing expensive services, based on cost to serve –Discounting, if necessary, to gain business with low cost-to-serve customers –Negotiating win-win relationships that lower cost-to-serve with cooperative customers – conceding permanent loss customers to competitors –Attempting to capture high-profit customers from competitors

2. Banta Opportunities identified: Acorn Systems Non-negotiable minimum order size Reduce the inventory of unprofitable products Promoted sales of high profit products Negotiate with customers to either reduce or re- price the demand for high cost services Offer incentives to its salespersons to increase the net profits of their customers Renegotiate with vendors to recoup the cost of processing customer rebates.

3. Banta Foods: Opportunities Quantified Sales incentives paid on net profits +11% Recover vendor rebate processing costs +20% What-if profit analysis on new business +22% Establish minimum order size +22% Perform vendor reviews + 5% NOTE: Profit actually increased 70%

4. Klein: Acorn Systems Establish new order acceptance guidelines Provide customer incentives to consolidate many small orders into a few large ones to reduce handling and shipping costs Enact a new sales commission plans based on net profitability of customers Improve processes revealed to be high cost

5. Kimberly Clark Successes: SAS’s version of ABC Customer “A” –Found that increased cube utilization on floor loaded product outweighed cost of clamp equipment –Eliminated pallets as a result Customer “B” –Used K-C cost to serve data to benchmark Distribution Centers –Evaluating pallet costs and Direct Store Deliveries as ways to get all Distribution Centers to best in class levels Other customers –Improved order configuration –Ordering more product from producing sites –Reducing slip sheet and pallet usage –Improving invoice match rate and reducing deductions

6. Kimberly Clark Successes With Distribution Centers Changed stack heights of production stretch-wrapped units to improve safety, storage and handling Increased direct loading of production and cross docking of inbounds Distribution Centers can perform own cost analysis for capital projects Reduced CHEP and slip-sheet usage by comparing actual shipments to customer profiles Analyzed trends in premium labor spending and adjusted labor schedules Outsourced some yard jockey services Created bulk storage area at automated Distribution Center