Customer Profitability for the Automotive Component Industry <ul><li>Bala V. Balachandran </li></ul><ul><li>J.L. Kellogg D...
The Current Business Environment <ul><li>New Products </li></ul>Changing Workforce New Competitors Manufacturing / Service...
Levers to Maximize Profit
Levers to Maximize Profit
Bala’s 4Ms <ul><li>Measure Both Revenues & Costs Correctly (ABC) </li></ul><ul><li>Monitor Movement of Both Revenues & Cos...
Strategic Process Management
Strategic Process Management
Strategic Process Management <ul><li>Product Innovation/Excellence </li></ul><ul><li>Nike </li></ul><ul><li>Merck </li></u...
Strategic Profitability Management <ul><li>“ Constancy of Purpose” </li></ul>
Revenue Management <ul><li>Keenly Observe Buying Behavior of Customers </li></ul><ul><li>Objective of  RM  is to Sell </li...
<ul><li>C.M.: ”The relentless pursuit to eliminate Non-value added  activities and optimize resource utilization effective...
Value Chain Perspective of Business Functions
Cost Management <ul><li>KANTHAL </li></ul>Bala
Cost Management
Value Chain Perspective <ul><li>The End Buyer Pays for Margins Throughout the System </li></ul>Supplier  Value Chain Suppl...
Strategic Cost Management <ul><li>Balanced Scorecard </li></ul>
Building Blocks of the e-Corporation ERP Backbone Supply Chain Management Applications Data Mining, Knowledge Mgmt. Apps. ...
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Customer profitability to create value session - pmi conference

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Customer profitability to create value session - pmi conference

  1. 1. Customer Profitability for the Automotive Component Industry <ul><li>Bala V. Balachandran </li></ul><ul><li>J.L. Kellogg Distinguished Professor of Accounting and Information Mgmt., Northwestern University </li></ul><ul><li>Founder & Dean, Great Lakes Institute of Management </li></ul><ul><li>PMI conference - 30 th July 2011, Chennai </li></ul>
  2. 2. The Current Business Environment <ul><li>New Products </li></ul>Changing Workforce New Competitors Manufacturing / Service Excellence Demanding Customers Changing Technology Global Competition Decreasing Margins
  3. 3. Levers to Maximize Profit
  4. 4. Levers to Maximize Profit
  5. 5. Bala’s 4Ms <ul><li>Measure Both Revenues & Costs Correctly (ABC) </li></ul><ul><li>Monitor Movement of Both Revenues & Costs </li></ul><ul><ul><li>To Apply 50% Rule </li></ul></ul><ul><ul><li>For Benchmarking </li></ul></ul><ul><ul><li>Rule-I and Cashew nut Rule-II </li></ul></ul><ul><ul><li>& continuous Improvement </li></ul></ul><ul><li>Manage For Action Plan </li></ul><ul><ul><li>Yield Management / Revenue Management </li></ul></ul><ul><ul><li>Thru-put Management </li></ul></ul><ul><ul><li>Activity-Based Management </li></ul></ul><ul><ul><li>Process Value Analysis So That We Can: </li></ul></ul><ul><li>Maximize Profitability </li></ul>
  6. 6. Strategic Process Management
  7. 7. Strategic Process Management
  8. 8. Strategic Process Management <ul><li>Product Innovation/Excellence </li></ul><ul><li>Nike </li></ul><ul><li>Merck </li></ul><ul><li>Sony </li></ul><ul><li>Operational Excellence </li></ul><ul><li>FedEx </li></ul><ul><li>Wal-Mart </li></ul><ul><li>Costco </li></ul>Latest Products Operational Excellence Personal Touch and Feel Customer Intimacy Activity Based Management
  9. 9. Strategic Profitability Management <ul><li>“ Constancy of Purpose” </li></ul>
  10. 10. Revenue Management <ul><li>Keenly Observe Buying Behavior of Customers </li></ul><ul><li>Objective of RM is to Sell </li></ul><ul><li>The Right Product to the Right Customer at the Right Time for the Right Price </li></ul>“ Revenue management” is the art and science of predicting real-time consumer demand at the micromarket level and optimizing the price and availability of products.&quot; R. G. Cross
  11. 11. <ul><li>C.M.: ”The relentless pursuit to eliminate Non-value added activities and optimize resource utilization effectively </li></ul><ul><li>and efficiently.&quot; </li></ul><ul><li>RM - CM: Ensures that companies will sell the right product to the right customer at the right time for the right price with the right cost. </li></ul><ul><li>An integrated set of business processes and activities that bring together people, systems, knowledge and information with the goal of understand-ing the market, anticipating customer behavior, responding quickly to exploit opportunities effectively and efficiently with company's resources, products and services. </li></ul>
  12. 12. Value Chain Perspective of Business Functions
  13. 13. Cost Management <ul><li>KANTHAL </li></ul>Bala
  14. 14. Cost Management
  15. 15. Value Chain Perspective <ul><li>The End Buyer Pays for Margins Throughout the System </li></ul>Supplier Value Chain Supplier Channel Value Chain Firm Value Chain Buyer Channel Value Chain Buyer Value Chain
  16. 16. Strategic Cost Management <ul><li>Balanced Scorecard </li></ul>
  17. 17. Building Blocks of the e-Corporation ERP Backbone Supply Chain Management Applications Data Mining, Knowledge Mgmt. Apps. Enterprise Applications Integration Customer Relationship Management Applications Intranet Applications eProcurement Applications Direct Material Suppliers Customers, Resellers Employees MRO Suppliers

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