Allied Office Products Essay

It seems that customers such as A are more valueable for allied at the moment, using Service-Based-Costing. According to the service-based costing, Customer A achieved a 23.81% profit margin, while customer B achieved a profit margin of -.38%. Using the old system, where overhead was not charged to the customer both customers achieved a 16.67% margin. However, it is authorized to note that if Allied could price their products better, Customer B may be more profitable in the long run, due to their wide use of Allieds offerings and products.Yes, because it more effectively allocates overhead to each customer and shows the true profitability of each customer. Additionally, this kind of system could provide Allied the leverage and initiative of charging more for their products and being more profitable in the long-run. Service-based-pricing, in Allieds case may not be too expensive to go for as evidenced by the relative ease that it took myself to allocate costs to each customer. Bu ilding SBP pricing into Allieds invoicing system could prove to be profitable in the long-run and can establish the true profitability of their operations.The TFC business seems to be an important part of the industry chain. However, Allieds puzzle is that its customers seem to take advantage of them, and they seem to be at the back-end of the clients concerns. Evidence to this is the amount of old inventory that sits in Allieds warehouses that companies do not utilize. If Allieds business offering was a more comprehensive document management system or they became at the header of the clients concerns, they could potentially push through some pricing increases and gain some pricing power that way.Additionally, extra services like background knowledge delivery end up costing their clients more than their apparent usefulness, especially given company Bs usage of only 26 of these per anum. Additionally, a more effective inventory control system, ie anSAP solution to their accounting and distribution services, could make Allied more cost effective and go by the need for certain data-entry tasks. An online tool or RFID chip usage could greatly boost their business potential.