Key Account Management
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customers insisted on daily, just-in-time, store-by-store delivery, result- ing in major stock-holding and delivery problems. They also insisted that the salesforce called daily to carry out merchandizing. Finally, they took about 145 days’ credit. The other retailer, taking a similar amount of products, asked for stocks to be delivered centrally to their warehouse for them to carry out their own deliveries. They did not insist on mer- chandizing and paid their accounts in 45 days. Yet, the accounting sys- tem calculated that both customers were equally profitable, as it allocated overhead costs on the basis of volume bought.
We have enjoyed activity-based costing (ABC) for over 20 years, yet most companies still have not learned the lesson that it is the cost of dealing with the customer after the ‘product has left the factory’ that causes either profit or loss. Even today, most companies still do prod- uct profitability and marmalade their fixed costs to customers based on turnover, thus penalizing customers who are inexpensive to service and rewarding customers who are expensive to service.
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