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Demand Driven Performance by Chad Smith, Debra Smith

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CHAPTER 9
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A Case Study—The Boeing Dreamliner
Companies need to be looking at every decision from the standpoint of ROI opportunity for the whole system not just the cost component. Companies have chased the focus on labor reduction past the point of diminishing returns and into the realm of negative returns. One of the most damaging GAAP misuses has been the use of full absorption unit costing to drive outsourcing decisions. Bad outsourcing decisions were first driven by comparing unitized labor and overhead costs to the outsourced part purchase price. If neither labor nor the overhead cost assigned to the product cost will actually be reduced ...

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