Do you know your best customers and most profitable products?
The results come as promised
Helped to drive nearly one million in profit improvement
CEO, Erweko 2014-2018
Leadership became easier
Executive VP, OP Oulu
The results come as promised
What we do
We provide Cost and Profitability Insights for driving informed business decisions and operational transparency, especially over three key areas:
Customer profitability provides insight into the costs and profitability of serving customers throughout the company’s supply chain. This allows the best customers to be identified and prioritized, and the root causes of loss-making customers to be revealed to drive needed changes.
Product profitability distinguishes between the best and weakest performing products and product mixes. This allows for pricing adjustments and product portfolio rationalizations to focus sales activities and align operations.
Customer and product profitability are interconnected through orders. Different order profiles or sales channels can make the same product profitable or unprofitable. Via granular insight start identifying winning business models and sales channel strategies.
Why we do it
Our mission is to bring transparency and clarity to profitability management. We strive to create decision-making superstars.
Net Profitability Revealed
- 1. Identify the most profitable products, customers and sales channels -> learn and implement best practices
- 2. Analyze the weak performers and root cause -> drive changes
- 3. Lead with complete understanding and transparency –> allocate resources where they genuinely produce best
Who we serve
CLINICAL LABORATORIES. HOSPITALS. Healthcare is a labor-intensive industry. Care delivery paths typically require the input of several different processes, where lead-times and needed resources vary by product, procedure, shift or method. Time-driven activity-based costing is an excellent tool for enlightening such a complex environment.
FMCG. WHOLESALE. E-COMMERCE. These are characterized by large transaction volumes, broad product ranges, several sales channels and a wide customer base. Margins are small, which makes order-level transparency of costs and profitability important. Cost-to-Serve profitability data is valuable for determining product offering, delivery logistics, terms of sale and service levels, as well as managing operational resources.
Services and Manufacturing
BANKING. MADE-TO-ORDER PRODUCTION. Industries with a high share of indirect costs and complexity due to a wide range of products, customer base and transaction volumes. Good transparency on costs and profitability and their root causes supports strategic business decisions; what to do yourself and what to outsource, how to focus operations and sales force, cross-selling opportunities, pricing, etc.
How we do it
As a result of the initial survey, the customer has information about the suitability of the calculation solution and possible data deficiencies. If the conditions for profitability modeling are met, the costs of implementation and managed service are determined. The desired business benefits are identified and their accessibility is validated at this stage. The Assessment includes the following steps.
- Defining the objectives of the Assessment together with the customer
- Review of current calculations and background information
- Review of organizational functions and focus areas
- Review of data availability
- Deployment plan
Business benefits of the solution can be verified by performing pilot modeling of the selected business entity. The scope of the pilot is determined according to the objectives set on a case-by-case basis and usually includes the following steps.
- Define scope and business entity to be modelled
- Define data requirements
- Extract operational data and financial data
- Model business logic with industry best practices
- Calculate and validate the model
- Report the results to identify value
3. Managed Service
The introduction of a cost and profitability model requires modeling a real business and its nuances into a virtual reality. The cost model creates a realistic organizational structure and identifies the cost flow from the general ledger cost centers to operational and support functions and further to the business processes.
The modeling determines how the various internal functions work with each other and allocates the costs of the support functions to the operational resources. The costs are further allocated to the various activites performed by the operational functions. Process modeling is used to identify how work is being performed to business transactions (orders, customers, products, sales channels). All of this is modeled into a calculation engine that maintains the business logic intact.
- Interviews and process modeling
- Data extraction and cost model construction
- Creating an ETL-process
- Model calculation
- Validation and reporting
- Reporting environment 24/7/365
- Model calculation, validation and reporting updates at agreed cycles
- Data runs & ETL during updates
- Keeping model and reporting fresh and up to date
- Continuous maintenance of the environment