Illustration 6 – Targeting costs
A major bank and provider of credit cards wished to reduce the time taken to process credit card application forms and issue a credit card. The staff responsible for processing applications and issuing new cards were asked suggest how the period (of 14 days) could be reduced.
The staff were unable to identify any significant time savings. The senior executive responsible for the area decided to pursue a version of target costing and instructed his staff that new cards were to be issued within 24 hours of an application being received and it was their responsibility to identify how this could be achieved.
The imposition of this target forced a new approach to the problem and radical new ways of processing and approving applications were identified and implemented with the result that the 24-hour target was met.
