Activity Based Profit ™ - the ABP ™ - couching method.
During the development process of the analyze tool ProfitFinder it materialized a method that places activities directly related to profits. We named it Activity Based Profit ™ or ABP™. It is the contrast to ABC-costing (Activity Based Cost) where activities relate to costs and it is perfect as a base for management couching to increase profit.
With ABP ™, management has a new tool to manage activities directly after their profit contribution regardless of where activities are carried out. Identification of profit drivers is quickly and easily done by Profit Finder’s unique GPS-format creating the unique profit-chains.
With this operational information and the corresponding rational actions will light up hidden profit. Activity Based Profit - couching. This profit-related analysis does ProfitFinder. Then the couching can follow the process and set the couching manager and the team it its process. Profit Finder constantly analyze, in real time if desired, this process for all products, services, customers and resources. The specific team can then meassure its contribution and decissions can be taken related to concreate results.When ProfitFinder describe the value from production to user sequentially in a flow, the analysis is particularly useful when marketing costs tend to be a growing part of the total cost to produce, distribute and sell a product.
. ProfitFinder support a profit network where management automatically can focus on earnings and profits.Activity Based Profit a tool for management An optimal use of a company's earning opportunities requires setting a balance between what the company offers from the product / service - cost point on one hand and with customer value / customer profitability - revenue perspective on the other side.
In the daily activity is therefore it requires that management takes on balancing the activities in relation to profit targets. The network of policy makers have in this way the same information from each profit chain checked and will be subject to actions based on a current basis. The analyze is done on three levels.
Level one (L1) is the profit chains on product and customer level. Here is connected customers together with the products they buy. The analysis can also be made from the other direction so that a product is connected to its customers. At L1, you get the profit contribution from product by product and customer profitability as net margin. Also obtained is information on current fixed costs and their profit contribution.
In the case of fixed cost listed on the dynamic of the period analyzed and the calculation is made in relation to how the production and marketing resource is utilized by products and customers. The practical implications of the analysis on L1 is that it is possible to study in detail what the different products and product combinations provide for product profit, and what then becomes the result of a specific customer when real variable and fixed costs been removed as customer profitability. Automatic identification of price differences The production part of the analysis is the value calculated by the average prices per product. On the marketing ProfiFinder corrects this so that each customer receives the exact price paid for the calculation of customer profitability. In this way appear any price differences for each customer. The difference is calculated as the total difference whether the customer purchased one or several products / services. All fixed costs operationalized As a profit relation consists of production- and a market recourses all the fixed costs of these parts are allocated. All costs will thus be operational. The allocation is first done on production and market recourses, and finally on product and customer. Level 2 (L2) Level L2 consists of the production / market recourse level which means that products manufactured in the same production (resource) in such a unit is a production resource. Generally, all information is available on the L1 can be obtained on the L2. L2 is the sum of L1-profit relationships. But most used in daily work is the feature that each resource is analyzed continuously. A systematic comparison of what various resources output of profit is automatically done in ProfitFinder. L1 and L2 Both the L1 and L2 contain detailed quantitative and qualitative information on products, customers and their production and market resources. On the L2 provides information on capacity utilization of the detailed production resources. Similarly, there status on L1 and L2 in terms of value of production surplus and production turnover and also in number of physical units added and left the warehouse during the period analyzed. Management level (L3) L3 is the management level and where the analysis are summed up so that the overall balance between total production profit and total market expenditure show the total profit or loss. From L3 is all control information such strategies and plans given out and controlled. ProfitFinder uses functions for Scorecards, Benchmarks and Agenda are the tools by which management develops and distributes control information between them and within the company. The earnings ratio for the entire company that appears on this level is special in the sense that it can also show the underlying production and marketing groups (resources). The display is, however, in such a way that the groups are not linked to profit relationships, but only shows the contribution they bring to their production and marketing group in the profit ratio for the entire company. From the top you are connect to the corresponding profit relationships at a lower level so you can one-click easy "drill" down for both groups (resource) level down to the base level where products are linked to their respective customers. The GPS-format gives you all possibilities to follow all profit chains on same level or combining different levels. The levels reflect business processes The levels L1, L2 and L3 are the network of decision makers who are able to influence earnings of production and profitability. On the L1 Profit Finder’s users are product and sales managers. L2 has manufacturing and marketing managers as users. On the L3, it is top management that uses ProfitFinder. Other support services in the network interact with their expertise and their costs are integrated into the respective profit chain and can thus also be assessed from a profit-contribution perspective. This network functionality connects real-time management of all decision makers and allows each one to directly analyze and influence its responsibilities of profit production in relation to management's profit targets. Profit finder and ABP are excellent for small businesses ProfitFinder works well in smaller companies where the management team may consist of only the CEO or the economy, production and sales managers or the senior executives as a smaller company. For regardless of company size, there is always the need to have full control on what the company makes money on and then needed analytical power from ProfitFinder in order to continuously achieve detailed profit information on the company's profit situation. ProfitFinder as a Bonus system In order to stimulate profit creation ProfitFinder is used as a base for a Bonus system. A bonus may be linked to production profit contribution and operating margin. But even the supporting staff outside no direct accountability for results could be within the base for such a Bonus system. Basically is it a company´s total results which in this way can be located down on specific parts and be used for a very fare base for team bonus in relation to the specific profit contribution each part delivers. ProfitFinder is designed to be an automatic system in terms of both input and when it comes to working with. The automatic input program makes it possible to suit every business. But most important is that ProfitFinder is automatic so that the information remains new. Via the Internet, the information is always available. Upp