Activity Based Service Cost for the TFC business Activity | Total Activity Cost ('000) | Activity Driver | Usage | Actual Cost | Storage | $ 1,550 | Number of Cartons | 350,000 | $ 4.43 | Requisition Handling | $ 1,801 | Number of Requisition | 310,000 | $ 5.81 | Basic Warehouse stock selection | $ 761 | Number of Requisition × 2.5 lines | 775,000 | $ 0.98 | "Pick-pack" activity | $ 734 | (Number of Requisition × 2.5) 90% | 697,500 | $ 1.05 | Data Entry | $ 612 | Number of Requisition × 2.5 lines | 775,000 | $ …show more content…
Through the whole value chain, customer can source many distinct product categories just with one order, one delivery, one invoice and one remittance which are all conducted by one salesperson.
My recommendation for TFC would be to implement SBP system as it will improve profitability and it will also make it easier for the warehousing and the charge for individual freight. Also it will prevent the customer’s from constantly changing its forms causing the company to lose delivery cost. Also the company should centralize their data entry into a single location. The company should build a staffing model design to reduce headcount by consolidating warehouses and modify compensation plan to encourage sales behaviour focused on growing customer revenue and profitability.
Contingency theory sees to maximize the internal effectiveness of the organization which is the ability of the company to achieve organizational goals. Contingency leads to higher profitability which aims for higher returns. Institutional theory sees to maximise conformity to the model of the organization that is approved by the institutional environment leading the organization to be seen as legitimate and to receive external support such as grants and loans. In other words it aims to win the confidence of investors to increase the demand of shares consequently increasing share prices (Burton, Eriksen & Hakonsson, 2008). Stakeholder