Good ideas are a dime a dozen. Ask your coworkers about operational changes and other measures that can simplify their work lives and make your employer a bit more profitable, you'll probably get more ideas than you expected.
Some of those ideas might gain consensus as being a really good idea that ought to be pursued, perhaps implemented. But, that might require purchasing one thing or another, maybe many things. The stakes go up at that point because that money isn’t coming out of your pocket. Someone else will need to front the cash to make things happen, and is your place is like mine, there will someone standing between the idea implementation and the corporate till.
You’re going to need to convince someone in the hierarchy that the idea is a winner. A big part of gaining approval to spend corporate funds for a project or product that promises to save cash that, in the absence of the new initiative, normally would be spent, will probably need to be supported by some heavy-duty return-on-investment metrics.
The purchased items needed have a relatively fixed price – just ask your vendor. One problem with estimating the payback is related to internal costs, both before and after the project is in place. My point is that the overhead figures generally involve allocated indirect costs, whereas absorbing some of that overhead into direct costs would produce a more accurate payback estimate.
That’s one of the ideas behind activity-based costing. Some additional resources that can amplify the idea are found at:
• The ABCs of activity-based costing
• The vendor evaluation process
• Back to ABC
