We Need Better Tools --Dickeson

If our people increase production efficiency, it's morale-destructive to lay off the very individuals whose efforts made the gain possible. So we accept the increased capacity, driving down our pricing and under-utilizing the capacity we develop. What to do?

Suppose we use Contribution Analysis, but this time around we treat only the job materials—the paper, ink and outside job purchases—as variable costs. All the rest of our costs are OE—Operating Expense. Let's call it "Printrol II" for a working title and incorporate the teaching of Drucker, Deming, Goldratt, Ohno, Margolis and others. Let's develop an operating business model that's more consistent with our General Ledger accounting and reporting systems.