Tdab Case

Decent Essays

Management was able to realize that one of the main contributors of waste, undetected under the traditional system, was the loss in capacity and material due to the high number of changeovers. For that reason, Kemps used the information gathered under the TDABC system to reduce the number of changeovers required to meet customer’s orders.
First, Bob Williams, Kemps’ vice president of operations, encouraged the salespeople to influence the ordering behavior of their customers. In the past, customers placed orders any time they needed without considering the impact of those decisions on the costs for Kemps. In the contrary, the customers were encouraged to place weekly orders. This allowed Kemps to meet the customer’s demands with four production runs per month. The consolidation released 2 hours of production capacity per month and eliminated all the material losses caused by …show more content…

Kemps was a prime candidate for this kind of costing system not only because of the business strategy followed prior to the introduction of the TDABC system, but also because of the great variety of customized customers and SKUs. Kemps successfully implemented the system by forming cross functional teams that included members of the different operation groups of the company. The initial results revealed that in order to reduce the production costs they needed to work with the customers to change some of the previous behaviors that increased the production costs. These changes included ordering behavior as well as reducing the demand for customized products. The data obtained also revealed that prior decisions could also affect the full implementation of the system. In this case, prior commitments did not allow the company to take the necessary steps to completely reduce the costs as suggested by data obtained from the

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