Colorscope Inc.

Group-8

1
 Table of Contents
01 02
INTRODUCTION CASE

03 04
OPERATION PRICING STRATEGY

05 06
ACCOUNTING & CONCLUSION
CONTROL SYSTEM
2
 Introduction
● Andrew Cha, a native of China who was a genius in artistic work - founded the company Colorscope, Inc in 1976 in
the United States.
● Colorscope, Inc - provided special-effects photography laboratory services catering to the needs of local
advertising agencies.
● Invested in advanced and expensive computer systems to provide better and more complicated print special
effects.
● Efficient in the business and other companies also adopted this on their own.
● Diverse range of products like: Greetings cards , Catalogs, Financial reports
● Competitors: Largest Printer:
❏ R.R. Donnelley & Sons
❏ Standalone firms
❏ National pre-press houses
● Colorscope, Inc had:
❏ Structured process,
❏ Diligent quality Control department
❏ Loyal Customer base
❏ Bit costly
3
 Operational Process

Receiving Orders
Orders related to
magazines and some
other art and graphics
work
Specifications and
design Template pictures
requirements Preparation digitized and Assembly
recorded on phone scanned Division
call Creation of templates
by physically cutting
and pasting text, Tint and shade of
All necessary
graphics and scanned photos were
requirements from
photographs. Special changed according to
clients were recorded customer demands
via phone call
effects were also added Quality Control
if required Department

The flow of process

The flow for reworking

4
 Improvement in Operations
Main avoidable cost drivers in operations due to high reworking
costs -
● Assembly
● Scanning
● Output

Additional quality control -

Total Idle time is 249 hours - Reducing rework hours at the above tasks
● Implementing Manpower reduction to reduce Idle time
● Introducing new portfolios in the segments

Quality control check can be done in Scanning phase

itself .
Idle capacity of 6500 sq.ft. floor space leads to idle total costs
of $13000
● Moving to a smaller space can decrease rent costs
● Allocating the idle costs to other tasks to increase
profitability 5
 Pricing Strategy
The loss-making tasks have been
reworked either due to changes in
customer specifications or in-house
Policy of additional charges on rework
errors.
requested by customer - the customer
should be told in advance that later
changes in work will require additional cost
to be paid.

Colorscope should analyze the cost of work

done at each process of the given task.

Capacity responsible for incurring the cost (cost

driver) should be used to allocate the cost
between each process and floor space should
be used to allocate rent for each department.
6
Rework Cost for various jobs

7
 Accounting System
Company should start following
activity based costing. So that each This process will help identifying the cost
process is evaluated against its drivers in each department so that it will
performance and cost consumed. provide value additions in each steps of
the production.

8
 Control System
Lack of
documentation
The work flow at the Colorscope is well
standardized but not properly
documented. So proper documentation
and communication at all levels of
production processes should present .
Resulting in no violation in SOP.
Quality Control
Check
As the staff are cross-trained so without
additional training every stage the task
should go through a quality control
process before sending to next level.
This will minimise the rework chances.
Customer
specifications
Customer specifications should also be
sent to each production process so that
it is matched with the work completed at
each step which will minimise the
chances of rework.
Internal control
system
supervisory controls introduced at all
stages of processes in order to assess the
performance of each individual and
processes involved in the completion of a
task.
9
 Conclusion

● Based on above analysis, operations of Colorscope should be documented and

well communicated regarding all the processes.

● Customer specifications should also be communicated to staff at all stages in

writing so that reworking of tasks can be avoided.

● New technology should be brought in to enhance the quality of output and to

minimize work hours.

10
THANK YOU!

11