Process Costing: VDDW Corporate Performance Management Initiatives for Results



	Initiatives: Overview Pricing Supply Chain Routing Planning & Budgeting Return On Advertising NOP–driven Negotiating NOP–driven Commission & Incentives Sku Rationalization Customer Profitability Market Segmentation Partner and Product Benchmarking Improved Category Management Staffing efficiencies Process Costing

Process costing involves determining how much it costs to execute a given business process or activity, and what are the key variables which can make that process more or less efficient, and therefore more or less costly to execute.
Process costing is at the heart of ABC, and therefore the VDDW as well. Process Costing is used to directly support numerous business initiatives, including the following:
1. Pricing: So as to determine where there are discount or surcharge opportunities related to handling efficiencies, and what variables should trigger the application of those discounts or surcharges.
2. Negotiation: Closely related to Pricing. A readily available lookup of process costs and driver variables with delegated levels of negotiating authority can be a tremendous aid to those on the front-lines.
3. Planning & Budgeting: A key input for determining how much a change in forecasted volumes will change resource expenditures.
4. Customer Segmentation: Understanding how customers consume processes, and the associated financial impact, is a key input to market segmentation.
5. Supply Chain Routing: Process costs and driving variables are a key component in determining how to route products through the supply chain, and whether or not it makes sense to farm out pieces of the supply chain to 3rd parties.