Order Line Prof Presentation

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It's a short presentation on how SAM Consulting can support the profitability analysis

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Order Line Prof Presentation

  1. 1. SAM Extraordinary results through attention to work and people SAM Consulting Group AG G.Cinciripini [email_address] 21/9/2008
  2. 2. 3 Primary Principles - 1 <ul><li>The universe is a constantly evolving system that operates according to very few Principles </li></ul><ul><li>Same for human organizations such as the new global businesses </li></ul><ul><li>3 Primary Principles </li></ul>
  3. 3. 3 Primary Principles - 2 <ul><li>SELF ORGANIZATION </li></ul><ul><li>means that everything in the universe has the power to sustain its own unique identity </li></ul><ul><li>INTERDIPEDENCY </li></ul><ul><li>it’s possible for anyone entity in nature to use all the energy … but the nature limits on growth; everything in the universe interrelates with everything else </li></ul>
  4. 4. 3 Primary Principles – 3 <ul><li>DIVERSITY </li></ul><ul><li>Newness continually arises from the constant interactions of unique entities, it occurs because everything is related to everything else, and relationships among self organizing entities generate diversity </li></ul>
  5. 5. MBM the 3 stems <ul><li>Knowledge (creation) is a cornerstone of what makes any organization successful </li></ul><ul><li>organizations are interdependent with larger natural and social systems </li></ul><ul><li>MBM = how work is organized must be guided by principles of living systems </li></ul>
  6. 6. a lesson by Anders Broems <ul><li>to survive and prosper in the long run requires a business to follow practices that adhere to those principles </li></ul>
  7. 7. SAM Offer Produce to Order Demand driven Supply/Production/Distribution Design to Order Modularisation and Demand driven design Assess to Order Order-line profitability Analysis Practise Theory Continuous Improvement & Flow principles Modularisation principles Technical commonality Activity and cost analysis Profitability forums Modular training programmes Leadership and training programmes Level of awareness - “Litmus test” Order-line costing Build to Order Services … where customer and product meet .
  8. 8. Management model
  9. 9. ABC Activity Based Costing Order Line Profitability Analysis Tool <ul><li>No net linear connection LINK organization’s profitability with costs and revenue </li></ul><ul><li>Accounting info can measure and keep track of results BUT no insight into the particular inner relationship that determine those results </li></ul><ul><li>Managers are more interested to a non-accounting system that can focus on the organic union between customer and company </li></ul>
  10. 10. ABC Activity Based Costing Order Line Profitability Analysis Tool <ul><li>Managers will be able to “assess to order” with such non accounting financial information when they adopt a tool known as ORDERLINE PROFITABILITY ANALYSIS </li></ul><ul><li>Orderline profitability data visibly connects the earning of profit with the conditions that exist where the customer’s needs and company’s costs come together in a natural union </li></ul>
  11. 11. Profit (+) (-) 100% “ Banana”-curve
  12. 12. Creating profittablity modells Two basic approachs Create analysis model based on a software package Create software solution based on the analysis model
  13. 13. The Order-line, a unique costing object Customer Customer Segment Geography Market Product Product Group Raw material or components Related products Volumes Buying frequency Rebates Lead times Sales channel Suppliers
  14. 14. Resource analysis Research and development Sales Manufacturing
  15. 15. Navigate to higher profitability PRODUCT
  16. 16. Vertical results give transparency Material Material Transfer price Revenue Production unit HQ & Central functions Sales company Vertical view Material Material Transfer price Volume Structure Newness
  17. 17. Profit Mapping – 1 Q1 Q2 Q3 Q4
  18. 18. Order line profitability Map - 2 <ul><li>the customers in Q4 are all to be ‘dropped’ ?! </li></ul><ul><ul><li>each point contains all detailed non-accounting information, like: </li></ul></ul><ul><ul><ul><li>revenue, gross margin </li></ul></ul></ul><ul><ul><ul><li>administration and sales costs </li></ul></ul></ul><ul><ul><ul><li>logistic costs </li></ul></ul></ul>
  19. 19. Order line profitability Map - 3 <ul><li>e.g. the mapping is done for auditing of one customer: </li></ul><ul><li>the tool supports to view the conditions to increase the total profitability via the less profitable product handling, the terms of payments, the terms of delivery, etc. </li></ul><ul><li>the analysis is a valuable tool to plan – proactively – the relationship with customers </li></ul>
  20. 20. Order line profitability Map - 4
  21. 22. Structural indexes ( in case of modular production ) - the link between structural complexity and costing Technical commonality TCC = 0,28 CCC = 0,12 Commercial commonality
  22. 23. Profitablity learning
  23. 24. Data flow Analysis model (ana-tool) Calculation model (clc-tool) Data capture (SQL or Access) Accounting information cost centres, accounts, cost, etc Product, customer and order-line information Result analysis (SQL, Access or QlikView) Standard reports In-depth result analysis Pricing Comparison estimated versus actual Sales patterns Quality gate Quality gate
  24. 25. A Chemical Company : Operational outcome 2004
  25. 26. Contacts for Italy : Dr Giorgio Cinciripini [email_address] phone +39 335 593 2686

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