Process Measurement - a way to better image, monitor and control Profit in a company.
Regarding the imaging of a company's operations economically, this is done in most companies using the chart of accounts and budget. We all know that it is not the way business is done, but it does provide some feedback in order to control company´s activities. The chart of accounts that are focused to show and control cost-and earnings has its main task to verify that all transactions are within the books. The target is therefore more toward auditors and government agencies than as a basis to check what is important for the company - the profitability of products, services, customers and resources. See picture below!
Our software ProfitFinder ® is focused on making a company's earnings transparent from order in to order out, and show where the profit creates in each process. Focus on profits also means that you get a more direct customer perspective. The system is based on a fix profitability process in a format of a profit chain. It is based on fixed and variable costs in production and market processes in which also other overheads are integrated. That way, all costs are distributed.To monitor the different processes from order in to order out, or the equivalent of a product- or customer group, the production value is calculated for the period analyzed. In this way, then profitability, or profit contributions, can be analyzed for each customer or customer group, product or product group and for resources. See picture!
By consistently express all processes with a fixed profit chain you also get effective decision support. The division between the classical economic terms variable and fixed cost you know that if a product is added the similar variable costs are added. If a product is similarly dropped out the related variable costs are dropped out. However, the fixed costs remains. Similar relationship occurs in the marketing area for a new customer or if a customer is lost.
Interesting is also that the measurement of processes monitors how fixed costs are "variable" in relation to how capacity is utilized. In a similar way, the variable costs are often "fixed" in the short term, for example, as long as a batch of raw materials is used the variable costs are fixed for that batch.
Process measurement supports the teams which does the job with performance information for better results meaning better profit. By showing the results within the process, staff at different departments can collaborate on the final result in a clearer way than when they only are budget-driven. See picture below!
Profit Finder is more than an analysis and decision support systems. With its built-in Agenda, Log Book and communications function it is a small software management system that supports focused profit-generating activities. The quantitative tools are integrated into the system so that it is possible to dialogue, goal setting and follow up activities on three levels. The direct active product-customer level, the governing level of resources where product groups / production resources are linked to customer groups/market recourses, and a third level, where all processes are brought together into a profit chain for the entire company. See picture below!
On the lowest level – customer connected with its products, an analyze looks like below!
What are the advantages of complete the chart of accounts and budget with monitoring and control a company´s business processes?
If using ProfitFinder you get the following: