Western States Stationary

Topics: Profit Pages: 2 (675 words) Published: February 4, 2014

1. Total Forms Control (TFC) fit well into Western’s strategy when it was initially implemented. It allowed Western to offer these “value-added” services to their customers that most of their competitors did not. Total Forms Control should have increased Western’s margins and helped them to increase the loyalty and number of customers. TFC was not performing up to expectations. It had become an increasingly time consuming process and profits from TFC had been consistently declining over the past several years, projected to drop a total of 14% in only two years. 2. The current accounting system charged all customers participating in the TFC program the same standard rates regardless of the level or frequency of services provided. There was no differentiation of charges from clients who had delivery three times a week or one time per week. Western’s current accounting system does not provide adequate information for the management of the TFC program. Western needed to implement an accounting system which tracked the services provided to their customers based on the level and frequency of services. This will help Western to determine which customers and services are most profitable. 3. Assessing TFC’s current accounting system, John Malone determined that the system was inadequate because customers which appeared to be similar actually required very different needs in terms of time, storage and delivery. To develop a new accounting system, the managers began to gather information from warehouse managers to understand what happens at the distribution centers and broke it down into five primary value-added activities: storage, requisition handling, basic warehouse stock selection, “pick-pack” activity and desk top delivery. The managers gathered additional information, allowing them to assign costs to those activities. From there, the managers determined the expenses associated with financing, labor and shipping. Once the information was used to...
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