Publications
Publications
- August 2005 (Revised April 2006)
- HBS Case Collection
Kemps LLC: Introducing Time-Driven ABC
By: Robert S. Kaplan
Abstract
Kemps is making a strategy shift: from being focused on fulfilling customer requests to becoming the best cost dairy producer in the industry. Its existing manufacturing cost system, however, fails to capture the costs associated with handling special flavors, small production orders, and complex delivery and order processing options. The company introduces a new system--time-driven, activity-based costing--that captures the full complexity of its operations and gives managers new insights into the profitability of orders, products, and customers. The time equations feature simply and accurately represents the cost impact of all possible options from a particular production order. Managers use the information to enhance process efficiencies, negotiate new terms with customers, and attempt to win new business. The company now faces some crucial decisions about how to forge new relationships with key customers.
Keywords
Activity Based Costing and Management; Customer Relationship Management; Cost Accounting; Managerial Roles; Cost Management; Earnings Management; Business Strategy; Time Management; Growth and Development Strategy; Management Teams; Decisions; Food and Beverage Industry
Citation
Kaplan, Robert S. "Kemps LLC: Introducing Time-Driven ABC." Harvard Business School Case 106-001, August 2005. (Revised April 2006.)
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