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Colorscope, Inc.

Harvard Business School Case
Case Software #XLS-812

197040

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100 900 750 650 600 400 425 450 475 500 Service-Bureau2 2 Service -Bureaus such as Kinko's and Alphagraphics typically do jobs that are cheaper. proof and output printer specified film for a hypothetical direct mail catalog page with one image Price/Page of work ($): 1991 1992 1993 1994 1995 Colorscope 1. assemble.Exhibit 1 Price trend of color separations to scan. . and involve fewer and/or smaller pages.

Prepress (2 weeks). binding. producing layouts.000 . in this example. studio and location shots. 2 rounds of proofs to the project manager. second class bulk rate post. Photography (2 weeks).Exhibit 4 Time/Cost Breakdown for the Catalog Producer Direct mail catalogers constituted over 90% of Colorscope's customers. $10. 200300 images.300.000 $50. costs would break down as follows: Design (3 weeks).000 $30. 1 million copies of a 52-page catalog.000 $1. cutting. writing copy. Printing (3 days). addressing for national distribution Distribution (23 weeks). gaining management approvals. To produce an average project run.000 $120.

pkg. direct mail. packaging mags. packaging. dir. packaging. agency packaging. mail. dir. 41 37 27 24 22 110 390 313 230 165 1 1 4 1 2 magazines. packaging. catalogs mags. agency mags. Sales Employees (M$US) Facilities Primary Business (sites) 200 130 109 104 1. direct mail. mail. pkg. newsp Intaglio Vivi-Color Enteron Group 60 56 450 400 13 packaging 4 mags. agency packaging. pkg. mail. agncy.Exhibit 5 Top American Pre-press Competitors (does not include printers that have integrated forward) Company WACE USA Applied Graphics Technologies Black Dot Group Schawk. books Kwik International Color Associates TSI Graphics Blanks Color Imaging Kreber Graphics. mail. mail. packaging magazines. Inc. books mags. books mags. mail.850 1. agncy. dir. dir. Inc. agncy. packaging. dir. mail. retail . dir.060 900 729 20 13 12 12 American Color 76 840 16 mags. dir. publishing.

600 9.400 8.00 $ 500.00 $ 750.75 $ 687.000 0 $315.00 $ 500.50 $ 625.00 $ 500.000 9.000 1.000 11.000 7.75 $ 750.600 23.000 10.000 2.00 $ 600.50 $ 500.50 $ 687.000 22.50 $ 612.50 $ 718.000 50.000 12.000.00 $ 1.Exhibit 8: Jobs completed in June 1996* Job # 61001 61002 61003 61101 61102 61201 61202 61203 61204 61301 61401 61402 61403 61404 61405 61501 61502 61601 61602 61603 61701 61702 61801 61901 61902 62001 Total Customer # Pages 10 16 10 16 10 32 11 16 11 16 12 16 12 32 12 32 12 32 13 128 14 16 14 16 14 16 14 16 14 16 15 16 15 16 16 32 16 4 16 4 17 16 17 16 18 4 19 4 19 16 20 1 545 *All figures are disguised Revenue $9.00 $ 350.00 $ 390.000 20.00 $ 625.50 $ 625.000 20.63 $ 487.35 23.200 $ 600.000 11.000 12.800 8.00 $ 687.50 $ 687.50 $ 687.000 4.00 $ 718.00 $ $ 578.000 9.800 11.00 $ 500.000 8.400 40 585 .000 23.000 11.00 $ 562.000 2.

30 $ 3.212.29 16 $ 295.312.93 34 $ 442.034.11 19 $ 73.15 $ 1.89 $ 2.Exhibit 9: Hours clocked at different workstations in June 1996* JOB# 61001 61002 61003 61101 61102 61201 61202 61203 61204 61301 61401 61402 61403 61404 61405 61501 61502 61601 61602 61603 61701 61702 61801 61901 61902 62001 Idle Time Capacity Job Customer # Preparatio n 10 4 10 3 10 7 11 4 11 4 12 4 12 7 12 6 12 6 13 15 14 5 14 4 14 4 14 4 14 4 15 4 15 4 16 7 16 2 16 2 17 4 17 4 18 1 19 2 19 5 20 1 117 43 160 Applied Scanning Cost $ 295.962.89 $ 144.68 $ 501.818.07 $ 2.99 $ 501.312.26 .818.30 $ 2.606.62 $ 9.29 22 $ 295.208.30 $ 2.606.59 $ 4.80 $ 72.68 $ 2.75 40 $ 295.624.37 $ 1.023.30 $ 2.491.034.30 $ 2.92 $ 501.85 $ 2.212.37 $ 4.609.335.26 $ 2.38 $ 61.11 $ 3.29 21 $ 295.81 $ 2.890.29 16 $ 295.93 30 ### 130 $ 369.45 $ 2.29 20 $ 295.52 $ 83.007.29 32 $ 221.76 640 $ 64.907.064.14 $ 2.68 $ 2.11 $ 2.191.95 $ 1.745.03 $ 18.64 5 $ 147.85 $ 867.47 24 $ 516.249.167.29 20 $ 516.007.64 5 $ 369.435.63 $ 794.29 20 $ 295.90 73.29 16 $ 516.75 26 $ 147.33 $ 2.409.29 19 $ 295.810.53 $ 13.30 $ 100. * All figures are disguised $ 100.82 1 ### 612 ### 28 $11.007.601.191.811 $ Applied Cost $ 3.68 $ 2.413.81 $ 2.015.92 $ 2.82 Hours clocked in different work stations include rework hours given in Exhibit 10.456.33 $ 2.06 $ 3.007.22 $ 4.92 $ 501.55 $ 722.29 20 $ 295.419.606.601.245.18 $ 92.03 $ 4.59 $ 794.242.44 $ 2.011.907.68 $ 2.049.15 $ 3.38 Assembly 42 38 75 30 28 32 58 64 58 250 32 32 34 36 36 39 40 60 10 11 39 41 11 12 42 2 1152 128 1280 Applied Cost $ 3.007.30 $ 4.75 32 $ 442.64 5 $ 295.312.11 $ 2.78 $ 2.108.38 $ 1.29 20 $ 73.405.82 5 $ 147.85 $ 5.11 14 $ 295.92 $ 1.15 $ 1.

57 $ 2.751.252.400 $3.57 $ 4.71 $ 9.93 $ 1.18 $ 29.852.185.30 30 $ 2.29 $ 1.807.31 $ 4.32 $ 148.25 $ 1.54 $ 6.200 $14.26 $ 10.57 7 $ 604.99 $ 4.554.64 $53.900 $2.156.789.68 $ 1.97 $ 592.57 6 $ 517.972.611.20 160 ### $ 86.122.79 4 $ 345.79 4 $ 345.200 $5.483.229.371.54 $ 6.29 $ 592.64 $ 39.13 $ 5.76 $ 1.97 $ 592.185.76 $ 2.185.68 $17.500 $1.359.03 $ 5.083.54 $ 8.362.324.535.424.79 3 $ 258.79 5 $ 431.460 $21.09 $ 9.842.57 5 $ 431.68 $ 13.721.206.57 7 $ 604.79 4 $ 345.32 $ 592.184.537.100 $3.335.742.013.61 $ 148.839.129.185.69 $ 553.072.28 $ 5.837.24 $273.79 3 $ 258.511.724.983.606.000 $1.15 8 $ 690.185.45 $ 9.57 8 $ 690.93 $ 1.57 $ 592.28 $ 4.432.79 5 $ 431.589.000 $2.17 $ 9.17 $12.13 $ 8.32 $ 24.300 Cost + Material $16.61 $ 296.689.600 $4.32 240000 83300 323300 Total 93 81 146 58 56 62 110 118 110 457 59 70 65 71 68 72 79 110 19 21 70 74 20 21 75 6 2191 249 2440 Cost Material $ 8.800 $3.61 $ 1.86 $ 6.28 13 $ 1.57 9 $ 776.639.24 $190.38 $ 6.20 1 $ 86.38 $ 8.47 $ 7.100 $3.Output 8 8 16 4 4 4 8 8 8 32 4 8 4 4 4 4 8 8 1 2 4 4 2 1 4 1 163 37 200 Applied Quality Applied Cost Control Cost $ 1.29 $ 1.57 7 $ 604.20 1 $ 86.827.600 $2.000 $2.500 $3.07 147 $ 12.45 $12.83 $ 6.79 5 $ 431.451.862.185.77 $ 6.77 $ 5.19 $ 8.304.024.160 $8.159.100 $2.57 8 $ 690.99 $ 1.824.513.29 $ 5.79 4 $ 345.34 $ 148.100 $2.83 $ 8.185.73 ### .700 $2.800 $1.584.353.71 $ 5.30 $11.26 $13.39 1 $ 86.31 $ 1.289.521.500 $1.29 $ 592.25 $ 1.753.404.68 $ 2.69 $ 753.827.54 $12.32 $ 296.86 $ 9.65 $ 592.39 1 $ 86.28 $ 6.842.007.200 $200 $83.100 $4.09 $12.300 $3.500 $2.32 $ 592.185.19 $ 6.29 $ 592.47 $ 5.25 $ 592.824.90 $ 148.61 $ 592.03 $ 6.300 $600 $1.79 4 $ 345.28 $ 6.30 $ 7.332.554.79 6 $ 517.20 1 $ 86.

71) -17.00 $ 500.252.800.00 $ 9.554.00 $ 11.50 $ 687.10% $ (353.00 $ 2.00 ### $ 600.000.200.73 13.00 ### $ 390.00 Idle Time Profit Rent CM CM% $ (6.000.83) -0.17% -4132 $ (2.00) ### ### $ 600.25% $ 7.00 ### $ 500.600.000.00 $ 20.000.00 $ 4.00 $ 12.00 $ 11.24% $ (21.00 $ 750.000.840.56% $ 1.000.00 $ 500.31) -8.00 $ 23.86% $ 5.000.000.38% $ (206.400.00 $ 8.162.50 $ 687.17) -9.72 43.11% -2554 $ 975.451.50 $ 500.31 28.54) -18.19% $ 8.50% $ (1.000.832.00 $ 10.47% -1153 $ 5.278.000.74 44.00 $ 12.00 $ 50.00 $ 8.00 $ 20.00 $ $315.00 $ 2.083.00 $ 9.192.00 $ 350.00 $ 11.00 $ 7.800.13) -101.16% $ 4.000.55 37.000.72 23.01 12.75 $ 750.98% $ 2.000.96% $ 10.00 ### $ 1.000.404.53 8.50 ### $ 687.24) $ 41.03) -7.68) -10.427.210.00 $ 562.63 $ 487.00 $ 1.Selling Price $ 9.68) -23.39% $ (3.415.00% $ (1.14 12.000.94% $ (72.739.000.27% $ 4.23 42.00 $ 22.85% 417 $ 7.87% $ (753.000.62 19.000.24 36.957.00 $ 9.637.600.464.00 $ 687.33% $ (1.175.36 36.00 $ 625.000.75 $ 687.50 $ 625.00 $ 718.640.91% $ 1.00 $ 8.30) -71.89% $ 770.511.83% 647 $ (2.00 $ 500.275.00 $ 23.19) -122.00 $ ### .56% -1451 $ 3.50 $ 718.46 24.56% $ (1.486.000.00 $ 11.91 38.50 $ 612.50 $ 625.000.

84 $ 301.54 $ 100.78 289.156.04 $ $ $ $ 289.Exhibit 10: Rework hours* Rework due to change in specifications by customer JOB# Job Preparation 61001 61002 61301 61502 61801 61901 Total 0 0 2 1 0 1 4 Scanning $ $ $ $ $ $ 147.82 3 9 10 3 25 Assembly $ 301.15 $ 903.07 $ 501.59 578.606.92 $ 401.011.82 73.003.38 $ 100.64 73.38 10 6 10 8 3 4 41 $ $ $ $ $ $ 722.46 $ 1.82 73.78 Quality Control initiated rework of house errors JOB# Job Preparation 61301 61402 61403 61603 Total 1 0 0 1 2 * All figures are disguised Scanning $ $ $ $ 73.15 $ 803.82 16 8 5 4 1 1 35 Assembly $ 1.15 1.04 1.59 433.07 216.56 722.63 216.15 4 16 14 3 37 .

529 $3.702 14 $1.20 $ - $ 172.39 $296.20 1 2 1 0 4 Cost + Total Material $5.64 $ 258.065 .794 32 $3.20 $148.79 $296.64 $ $ $ - Quality Control Output 1 2 2 1 6 2 3 2 0 0 0 7 $148.32 $ - 10 29 27 8 74 $1.64 $ 86.841 21 $2.20 $296.by customer Quality Control Output 4 4 2 1 1 0 12 $592.188 21 $2.79 $592.899 $3.240 $10.32 $ 172.39 $148.39 $148.97 $ 172.463 6 $17.465 5 $1.454 99 Total $ 86.398 $1.

0 500.000.0 5.0 4.0 14.811.174.491.14 $ 83.639.811.000.20 $ 86.0 10.0 2.000.639.000.0 1.483.5 11.000.38 $ 72.33 $ 2.000.48 $ 64.9 1.90 $ 92.0 2.245.245.0 10.000.Exhibit 11: Selected Financial Information for June 1996 * Description Job Preparation Wages Depreciation Rent Others Total Overhead Floor Space in sq.637.3 2.5 500.311.14 $ 61.48 .000.88% $ 8.0 1.811.242.249.0 11.435.76 $ 9.000.000.000.5 13.000.311.491.8 92.689.122. Scanning 8.491.245.63% 90.80 $ 29.8 4.00% 81.0 64.18 $ 5.810.0 Assembly 32.62 $ 24.07 $ 12.0 Output Quality Control 10.29 Underapplied by $ 3.0 500.34 1.000.000.3 29.000.0 25.0 1.13% 95.9 64.0 8.000.28 $ $ 11.18 $ 13.0 * All figures are disguised Labor Hours Idle Actual OH Applied 160 640 1280 200 160 43 28 128 37 13 117 612 1152 163 147 $ 73.50% 91.156.32 73.639. ft.26 $ 148.811.5 1.000.82 $ 100.0 1.

000.0 15.Idle Total 125.0 30.0 225.000.0 50.213114754 15000 .0 6.000.500 2440 $ $ 212.0 13.000.000.0 20.21 92.000.000.00 92.000.

000 $1.900 $2.800 3. $5.100 2000 2200 3.500 1.400 3.000 1.200 13.100 $3.500 4.300 600 1.500 1.900 2.200 200 $75.600 $2.600 $4.800 $1.100 1.500 $8.200 $200 $83.100 3.000 $1.100 $3.500 $1.500 $3.400 $3.700 $2.200 $5.000 1.500 3.000 1.000 Customer initiated rework Correction of house error $2.700 1.000 $2.600 3.800 $3.000 1.000 $2.500 500 1.100 $4.000 $8.200 $14.500 $2.300 $3.300 .300 $3.300 $600 $1.000 1.Exhibit 12: Materials expense in June 1996* Job# Total Materials expense3 61001 61002 61003 61101 61102 61201 61202 61203 61204 61301 61401 61402 61403 61404 61405 61501 61502 61601 61602 61603 61701 61702 61801 61901 61902 62001 Total *All figures are disguised 3 Includes materials for rework.300 3.400 3.100 $2.000 2100 2.500 1.800 1.100 $2.500 $1.700 2.600 1.