copier. Canon’s success with this system derives from the software that controls parts inventory and selection. In insurance brokerage, a number of insurance companies usually participate in underwriting a contract. The costs of documenting each company’s participation are high. Now a computer model can optimize (and often reduce) the number of insurers per contract, lowering the broker’s total cost. In garment production, equipment such as automated pattern drawers, fabric cutters, and systems for delivering cloth to the final sewing station have reduced the labor time for manufacturing by up to 50%. (See the insert, “Aim: A Competitive Edge,” for further examples.)
In addition to playing a direct role in cost, information technology often alters the cost drivers of activities in ways that can improve (or erode) a company’s relative cost position. For example, Louisiana Oil & Tire has taken all ten of its salespeople off the road and made them into telemarketers. As a result, sales expenses have fallen by 10% and sales volume has doubled. However, the move has made the national scale of operations the key determinant of the cost of selling, rather than regional scale.
copier. Canon’s success with this system derives from the software that controls parts inventory and selection. In insurance brokerage, a number of insurance companies usually participate in underwriting a contract. The costs of documenting each company’s participation are high. Now a computer model can optimize (and often reduce) the number of insurers per contract, lowering the broker’s total cost. In garment production, equipment such as automated pattern drawers, fabric cutters, and systems for delivering cloth to the final sewing station have reduced the labor time for manufacturing by up to 50%. (See the insert, “Aim: A Competitive Edge,” for further examples.)
In addition to playing a direct role in cost, information technology often alters the cost drivers of activities in ways that can improve (or erode) a company’s relative cost position. For example, Louisiana Oil & Tire has taken all ten of its salespeople off the road and made them into telemarketers. As a result, sales expenses have fallen by 10% and sales volume has doubled. However, the move has made the national scale of operations the key determinant of the cost of selling, rather than regional scale.
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