Focus groups (Bannon, 2001) also enable manufacturers to identify early in the process whether a product will be a hit among the consumer base or if it is expected to flop. The earlier the product is identified to flop, the better the savings for the company and potential for greater profits through the pipeline of alternative toys used in the focus group process.
Other measures pertinent to the cost control process include securing an earlier production schedule (Bannon, 2001) and utilizing a smaller number of molds or casts necessary to manufacture the facsimile toy product. "The difference is important, since molds can cost as much as $100,000 each. Says Mr. Bousquette. "For 30 years, the company has been talking about doing this," he says, referring to the change in production schedules, "and now we've done it in the past 18 months." (Bannon, 2001)
The aforementioned example is a prime use of process redesign. The lucid nature of the change in production scheduling is an understanding to the profitability cycle inherent in the design and manufacturing of the product. Understanding the yield in the profitability curve is essential to operating profitably when facing production cycle and logistic constraints.
Zero-based budgeting (Landers, 1989) is an alternative to incremental budgeting and is viewed as a method to review individualized overhead activities to assess for efficiency and relevance to business needs (Landers, 1989). The most clear manner to obtain results using zero-based budgeting is to determine the total contribution of the itemized budget activity as the contribution pertains to business...
The fundamental activities are identified and assessed for lean processes, which removes all unnecessary activity associated withthe activity. Nonfundamental activities "are separated and ranked against each other. Once the benefits are ranked, costs can be ranked and a cost-benefit matrix developed." (Landers, 1989)
The cost-benefit matrix (Landers, 1989) enables the costs to be ranked in order against each other for easy comparison. Such comparisons enable a clear and present context on which to analyze costs for removal and the decisions needed to remove costs without reducing revenue streams.
References
Bannon L. New Playbook: Taking Cues from GE, Mattel's CEO Wants Toy Maker to Grow Up - the Former Cheese Whiz Puts Financial Discipline Ahead of Marketing Flash - but is Barbie Unpredictable? Wall Street Journal. (Eastern Edition). New York, NY.: Nov 14, 2001. Pg a.1
HEYMAN, S. (1975). Expense control for retail companies. Retail Business Review, 44(2), 2. Retrieved fromhttp://search.proquest.com/docview/211124929?accountid=13044
Landers, B. (1989). Overhead cost management in retailing. International Journal of Retail & Distribution Management,17(3), 14. Retrieved from http://search.proquest.com/docview/210969127?accountid=13044
Trozzi, M. (1974). Managing the Cost Reduction Process. Retail Business Review 42.9 (Jun/Jul) 14. Retrieved fromhttp://search.proquest.com.rlib.pace.edu/abiglobal/docview/211124576/12DAF4D15AB6D9CC697/12?accountid=13044
