She continued. "Take labor costs. You pay your packers by the hour, Silas. We discovered our packing cost driver was —switching from one bag size to another. Each changeover cost us 22 minutes of idle time. We redesigned our line so that we pack all the 12-ounce bags, then all the 5-pound bags. Labor cost per unit dropped 18%."
Gas consumption vs. Batch size optimization. A smooth, efficient curve. "We analyzed our activity. We found that 60% of our gas was used in the warm-up and cool-down phases, not the roasting itself. So the true cost driver was setup time . We now batch all small test roasts into one day. We use a smaller sample roaster for trials. We schedule large production runs back-to-back to eliminate cool-downs."
"That's the illusion," Elena said softly. "The same costs aren't driven by the same things." cost driver analysis
He pulled out a notebook.
She showed two graphs.
Silas shifted in his seat. Giacomo did love using the big machine.
For years, Silas ran his business on intuition. "The cost of doing business is the cost of doing business," he'd say, shrugging as he paid his gas and green coffee bean bills. His profit margins were shrinking, but he blamed the usual suspects: rising rent and fickle customers. She continued
After the summit, Silas walked back to his creaky roastery. He watched Giacomo fire up the massive drum for a single 10-pound test batch. He saw two packers stop work for fifteen minutes to switch from kraft paper bags to valve bags.