She showed two graphs.
Within three months, his cost per roasted pound fell to $9.90. Not as low as Aurora, but for the first time in two years, his profit margin turned green.
"That's the illusion," Elena said softly. "The same costs aren't driven by the same things." cost driver analysis
She replied: "Cost driver analysis is just asking, 'What is the work behind the expense?' Control the work, control the cost."
One Tuesday, Silas received an unusual invitation. "Coffee Summit: A Comparative Look," it read. Curious (and hoping for free espresso), he went. Elena was presenting. She showed two graphs
He pulled out a notebook.
He sent a short note to Elena: "You didn't teach me about costs. You taught me about leverage." "That's the illusion," Elena said softly
"For a roastery," she explained, "the cost driver isn't just 'gas.' It's the activity that causes gas usage. At Aurora, we asked: What drives our utility bill? "