KA’s model allows it to understand and control the cost components. For example, a plain white T-shirt with no collar or buttons has more than 20 different cost components. A hooded sweatshirt might have more than 100. Understanding the components and costs and how they affect the end product gives KA a strong competitive advantage as its price to produce is significantly lower.
20 cost components for a white tee shirt? Really? At first I thought that claim sounded crazy but doing a rough count on my fingers and toes, decided there are at least 20.
So the challenge today boys and girls, is to list as many factors or components that comprise the cost of a plain white tee shirt as you can. Good luck!
(p.s. this will also be helpful for an upcoming post on how to cost your products)