Managers Decide
Real-time Accounting Information
Helps Companies Thrive
When Jim Kilts took over as chairman and CEO of Gillette in early 2001,
the company was in deep trouble.
Its market share for most product lines was falling, sales were stagnant or declining, and the share value had dropped by 30 percent over the past three years.
Kilts knew that the first step in turning the company around was to instill financial discipline through more detailed management accounting.
Sale and income by product line were calculated and tracked.
This allowed Kilts to see that Gillette’s razor blades were very profitable, but Duracell batteries were no.
Previously, the company tallied up its sales results at the end of the quarter—too late to take quick action on problems.
Now, Kilts and his senior management team receive a morning report detailing the number of razors, batteries, and toothbrushes the company sold the day before.
We can see that Jim Kilts needed detailed financial information by product line.
The product line, and individual products within the product line, became important cost objects.