When you set an objective of becoming data-based smart, keep it simple by picking the right horses to ride --these four categories of hard information related to the operation of the company and its competitors. Dont' lose focus, concentrate your efforts; keep it simple.You may want more later, but start here:
The first, actual cost information by product, must be accurate. The term actual is used here to emphasize that the data must be real; many if not most cost systems are not. Before relying on the information generated by your system, check it out in detail. Strip away all the history of overhead allocations; who knows the agenda of the person making those decisions. If you take your cost accounting accuracy for granted, your decisions might turn out to be as effective as sprinkling fairy dust on your quarterly reports. Armed with accurate cost information you can attack clear targets, like low margin sku’s and slow moving sku’s; almost always many of these hang around in the product line and suck up working capital and administrative costs.