Scribd Logo
Upload

Welcome to Scribd!

  • 163 views

    Allied Office Products Case Analysis

    Uploaded by

    MegaApple
    Allied Office Products launched a value-added service called "Total Forms Control" (TFC) to provide inventory management and reporting services to corporate clients. TFC was struggling with low profitability of only 6% ROI. An evaluation was conducted of TFC's activities, cost structure, and distribution charging methodology in order to identify gaps and improve profitability. The case discusses TFC's control systems for purchase, pricing, and inventory management and recommends shifting to a service-based pricing model to better reflect the different levels of services provided to each client.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Allied Office Products Case Analysis

    Uploaded by

    MegaApple
    163 views2 pages
    Allied Office Products launched a value-added service called "Total Forms Control" (TFC) to provide inventory management and reporting services to corporate clients. TFC was struggling with low profitability of only 6% ROI. An evaluation was conducted of TFC's activities, cost structure, and distribution charging methodology in order to identify gaps and improve profitability. The case discusses TFC's control systems for purchase, pricing, and inventory management and recommends shifting to a service-based pricing model to better reflect the different levels of services provided to each client.

    Original Description:

    HBR Management Control Systems

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Allied Office Products launched a value-added service called "Total Forms Control" (TFC) to provide inventory management and reporting services to corporate clients. TFC was struggling with low profitability of only 6% ROI. An evaluation was conducted of TFC's activities, cost structure, and distribution charging methodology in order to identify gaps and improve profitability. The case discusses TFC's control systems for purchase, pricing, and inventory management and recommends shifting to a service-based pricing model to better reflect the different levels of services provided to each client.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    163 views2 pages

    Allied Office Products Case Analysis

    Uploaded by

    MegaApple
    Allied Office Products launched a value-added service called "Total Forms Control" (TFC) to provide inventory management and reporting services to corporate clients. TFC was struggling with low profitability of only 6% ROI. An evaluation was conducted of TFC's activities, cost structure, and distribution charging methodology in order to identify gaps and improve profitability. The case discusses TFC's control systems for purchase, pricing, and inventory management and recommends shifting to a service-based pricing model to better reflect the different levels of services provided to each client.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Allied Office Products

    MCS Assignment -1
    Group A1
    Hemang Chauhan (P40015)
    Narendra S. P. (P40086)
    Veena Priya Lakshami V (P40106)

    Date – 13 November 2020


    Brief about the Case:
    In 1988, Allied Office Products, company specialized in making business forms and specialty
    paper products, launched “Total Forms Control” (TFC) programme for its corporate clients as
    a value added service. It stablished a separate company within their business forms division
    to handle TFC’s sales. Services provided by TFC included warehousing and distribution of
    forms (including inventory financing) as well as inventory control and forms usage reporting
    to its clients. As part of their services, Allied also offered “pick pack” and “desk top
    delivery”. They charge a fixed 32.2% of product cost to client for their warehousing and
    distribution services, irrespective of the services provided.

    Central Point of the Case:


    TFC’s declining profitability and very less ROI of 6%, set off the evaluation of the current
    activities and the distribution charges. Various activities contributing to the cost and the
    profits are analysed to understand the gaps. This includes the analysis of control systems and
    the tools used such as the revenue models and the pricing methods and rejigging the same to
    improve profitability.

    Control Systems Discussed in the Case:


    Purchase Control System is used for the purchase of paper from Allied by TFC and the tool
    used is transfer pricing at fair market Value. The standard product price is marked up with
    32.2% for the service costs and 20% for margins. TFC charges uniform margins across all its
    clients. Here, the uniform pricing system is the control system and the tool used is the mark-
    up pricing or cost-plus pricing. The management then decided to shift to Service Based
    Pricing which acts as a control system and the margins across different revenue slabs acts as
    the tool. The case mentions about the Inventory control systems and tools used can be better
    aisle management, leasing programs and charging the client for dormant inventory. The case
    also indicates the use of depreciation in the calculation of costs. Hence consistency principle
    acts control system and WDV or SLM acts as the tool.

    Learning from the case:


    Given Allied is a service providing firm, their contribution is not directly proportionally to
    product cost. Rather it is based on services provided against each account. Therefore they
    should charge based on service provided to each client as opposed to being based on product
    cost. The two accounts A and B had similar size, but had different level of service and so
    based on the above reasoning, both would be charge differently. Service Based Pricing like
    this will help Allied to differentiate the accounts that they should concentrate to improve
    profitability.

    You might also like