EXHIBIT 'l The Value Chain Concept-TFC
The Industry Chain
Clients who participated in the forms management program kept a-n tory of forms at one of Allied's 10 distribution centers. The forms were
uted to the client as needed. The client was charged a service fee to cost ofwarehousing and distribution based on a percentage ofthe cost d
of the product for that month, regardless of the specifrc level of service to that client.
If a TFC client made use of anv of the distribution services, they posed to be charged a price for the forms which was high enough to allow additional 32.2 percent of product cost to cover warehousing and di expenses, the cost ofcapital tied up in inventory and freight expense. Thi centage was determined based on actual 1990 financial data so that on gregate basis, in total, all expenses were covered (see Exhibit 2). The sales then marked up the cost ofproduct and services by 20 percent, on av shown in Exhibits 3 and 4, prices for individual accounts could vary standard formula.
Understanding C