The Profitability Performance Management module of Stratum provides the ability to gain a comprehensive understanding of costs tied to all activities within your organization, including product manufacturing, product distribution, customer service, marketing and sales. Each activity can be linked to one or more products or customers, enabling you to determine true net profitability by specific product or even by customer. This information can be leveraged into strategic decisions that improve business performance and profitability, such as pricing strategy or resource allocation.
In addition, organizational analysis supports activity-based management. By identifying non value-add or high-cost activities and comparing budgeted costs to actual costs, managers have the information needed to begin process improvement programs and to establish performance metrics for benchmarking future programs.
Customer Profitability
Identify and rank your most and least profitable customers or groups of
customers, and the specific activities that are causing them to be the most or
least profitable. Analyze what customer-related activities consume the most revenue
and how they compare to cumulative averages. Gain a comprehensive view of profitability
by customer via a "profit and loss statement" that details all activities
associated with indirect costs. Evaluate the profitability of the products each
customer is purchasing so that more profitable products can be recommended for
purchase. Uncover low-profitability trends within certain customer segments or
geographies and the activities which are impacting profitability in those segments.
Product Profitability
Rank products to determine which ones are most and least profitable. View all
activities associated with a particular product to compare costs to cumulative
averages. Support category management efforts by evaluating the true net profitability
of each category and the products within each category to identify trends and
improve overall category profitability. Evaluate product activity costs over any
time period and compare to budget to detect any variances.
Operations Performance
Determine which operational activities consume the highest costs and implement
programs to improve those costs. Identify which department(s) impacts particular
activity costs the most and consider which activities can be minimized or improved.
Compare costs across facilities, plants, warehouses and departments to determine
which areas of your business are in line with expected costs and which are not.
Focus efforts on improving areas of the operation that are not meeting expectations.
Analyze variances in budgeted versus actual costs across multiple dimensions including
resource center, activity center and cost object center. Determine what specific
products or customer-related activities are contributing to those variances.
