Conclusions drawn
Hewlett- Packard (HP) Colorado spring division is one of the largest sub branches of the HP Company which is well renowned for innovation and management globally. HP Colorado is mainly tasked with the production and support of high-mix low-volume product line which designs engineering supply of communication and computer companies. The Testing, measuring group gained some information on ABC and decided to give it a try with the hope that it will be useful in guiding the pricing on their different products. After implementing this decision the result acquired was varying- something they had not expected.
The ABC trial procedure was meant to assist HP understand their cost structure from a process perspective. The second aim was to ascertain their product's exact value. The differing results are an obvious indication of failure to meet one or both of the critical objectives. It is concluded that HP failed to ascertain their product's exact value because of a few blunders made by the company which include; lack of follow through, emphasis on consensus at the expense of focusing on the system there use of very many drivers and improper administration of the ABC system.
Requirement for a successful ABC implementation
For successful implementation of ABC there are several measures that are to be put in place. The company should set up clear goals before hand. The goals should be specific and not a resultant factor of benchmarking and comparing with others. This goal will serve as a guide for the evaluation of the system.
Tracking procedures should be simple and easy to follow through. This is because successful implementation of ABC demands consistency and persistency. Any slight changes say on the drivers will interfere with the functioning of the system and result to ambiguous or differing results.
Since the ABC system is concerned with pricing it follows that the partners (both internal and external) should be willing to collaborate. The partners/ customers should at least understand most basic drivers use in implementing the ABC
