December 2018
Intermediate to advanced
178 pages
4h
English
Content preview from Strategic Cost Transformation
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In Chapter 7, we talked about the differences between input, or static capacity, and output or dynamic capacity. One of the key differences is that you buy input, not output capacity. When you hire a manager, you are buying her time, not her decisions. This gives you access to her decisions, but you are not paying her on a decision-by-decision basis. Of course, when you buy input capacity, you must pay for it, creating the tie between input capacity and cash. Given the notion that most companies are fundamentally capacity based, it should follow that most of what the company pays for is capacity. If that is true, then the largest influence of cash, specifically cashOUT, is capacity. That makes understanding ...
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