Order Line Prof Presentation

© SAM Consulting Group AG 2005, All rights reserved

SAM Extraordinary results through attention to work and people

SAM Consulting Group AGG.Cinciripini

[email protected]

21/9/2008


3 Primary Principles - 1

• The universe is a constantly evolving system that operates according to very few Principles

• Same for human organizations such as the new global businesses

• 3 Primary Principles


3 Primary Principles - 2

• SELF ORGANIZATIONmeans that everything in the universe

has the power to sustain its own unique identity

• INTERDIPEDENCYit’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


3 Primary Principles – 3

• DIVERSITYNewness 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


MBM the 3 stems

• Knowledge (creation) is a cornerstone of what makes any organization successful

• organizations are interdependent with larger natural and social systems

• MBM = how work is organized must be guided by principles of living systems


a lesson by Anders Broems

• to survive and prosper in the long run requires a business to follow practices that adhere to those principles


SAM Offer

Produce to OrderDemand driven

Supply/Production/Distribution

Design to OrderModularisation and

Demand driven design

Assess to OrderOrder-line profitability

Analysis PractiseTheory

Continuous Improvement

&Flow principles

Modularisationprinciples

Technicalcommonality

Activity and cost analysis

Profitabilityforums

Modulartraining programmes

Leadership andtraining programmes

Level of awareness- “Litmus test”

Order-linecosting

Build to Order Services

… where customer and product meet.


Management model


ABC Activity Based CostingOrder Line Profitability Analysis Tool

• No net linear connection LINK organization’s profitability with costs and revenue

• Accounting info can measure and keep track of results BUT no insight into the particular inner relationship that determine those results

• Managers are more interested to a non-accounting system that can focus on the organic union between customer and company


ABC Activity Based CostingOrder Line Profitability Analysis Tool

• Managers will be able to “assess to order” with such non accounting financial information when they adopt a tool known as ORDERLINE PROFITABILITY ANALYSIS

• 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


Profit

(+)

(-)

100%

“Banana”-curve


Creating profittablity modells

Two basic approachs

Create analysis model based on a software package

Create software solution based on the analysis model


The Order-line, a unique costing object

Customer

Customer Segment

Geography

MarketProduct

Product Group

Raw materialor components

Related productsVolumes

Buying frequency

RebatesLead times

Sales channel

Suppliers


Resource analysis

Research and development SalesManufacturing

Volume

Structure

Newness


Navigate to higher profitability

PRODUCT


Material

Material

Transfer price

Revenue

Productionunit

HQ & Centralfunctions

Salescompany

Verticalview

Volume

Structure

Newness

Material

Material

Vertical results give transparency

Transfer price


Profit Mapping – 1

-0,8

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

-3,0 -2,0 -1,0 0,0 1,0 2,0 3,0

Overall Customer result(MUSD)

Combination result (MUSD)

+/++/-

-/- -/+

Product axis

Customer axis


Order line profitability Map - 2

• the customers in Q4 are all to be ‘dropped’ ?!– each point contains all detailed

non-accounting information, like: • revenue, gross margin• administration and sales costs• logistic costs



• e.g. the mapping is done for auditing of one customer:

• 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.

• the analysis is a valuable tool to plan – proactively – the relationship with customers





Structural indexes ( in case of modular production ) - the link between structural complexity and costing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Articles

% o

f p

rodu

ct v

aria

nts

tha

t ho

lds

the

artic

le

Unique to a few variants

Common to all variants

Technical commonality

TCC = 0,28

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Articles used

% o

f pr

oduc

t va

rian

ts p

ossi

ble

to

ma

ke

Sold product volume

Most frequently sold products

Least soldproducts

Articles in use

CCC = 0,12

Commercial commonality


Profitablity learning


Data flow

Analysismodel

(ana-tool)

Calculationmodel

(clc-tool)

Datacapture

(SQL or Access)

Accounting informationcost centres, accounts, cost, etc

Product, customer andorder-line information

Resultanalysis(SQL, Access or QlikView)

Standard reports

In-depth result analysis

Pricing

Comparison estimatedversus actual

Sales patterns

Quality gate

Quality gate


A Chemical Company : Operational outcome 2004

Waterfall 2004 figures

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

Sales Mtrl andProduction

Marketing andDistribution

R&D Administration Other expenses Profit

MC

HF


Order Line Prof Presentation

Economy & Finance

peoplesam consulting

rights reservedmbm

rights reservedprofit

rights reservedabc activity

rights reserveda lesson

results managers

human organizations

track of results