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Understanding Customer Profitability To Create Value

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Accounting and Information ... Value Chain Perspective of Business Functions Cost Management KANTHAL Cost Management Value Chain Perspective The End Buyer Pays ... – PowerPoint PPT presentation

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Title: Understanding Customer Profitability To Create Value


1
Understanding Customer Profitability To Create
Value
  • Bala V. Balachandran
  • J.L. Kellogg Distinguished Professor of
  • Accounting and Information Systems

2
The Current Business Environment
Manufacturing Excellence
  • New Products

Demanding Customers
Changing Workforce
Changing Technology
New Competitors
Global Competition
Decreasing Margins
3
Levers to Maximize Profit
4
Levers to Maximize Profit
5
Balas 4Ms
  • Measure Both Revenues Costs Correctly (ABC)
  • Monitor Movement of Both Revenues Costs
  • To Apply 50 Rule
  • For Benchmarking
  • Rule-I and Cashew nut Rule-II
  • continuous Improvement
  • Manage For Action Plan
  • Yield Management / Revenue Management
  • Thru-put Management
  • Activity-Based Management
  • Process Value Analysis So That We Can
  • Maximize Profitability

6
Strategic Process Management
7
Strategic Process Management
8
Strategic Process Management
  • Product Innovation/Excellence
  • Nike
  • Merck
  • Sony

Latest Products
  • Operational Excellence
  • FedEx
  • Wal-Mart
  • Costco

Operational Excellence
Personal Touch and Feel
9
Strategic Profitability Management
  • Constancy of Purpose

10
Revenue Management
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." R. G. Cross
  • Keenly Observe Buying Behavior of Customers
  • Objective of RM is to Sell
  • The Right Product to the Right Customer at the
    Right Time for the Right Price

11
  • C.M. The relentless pursuit to eliminate
    Non-value added activities and optimize
    resource utilization effectively
  • and efficiently."
  • 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.
  • 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.

12
Value Chain Perspective of Business Functions
13
Cost Management
  • KANTHAL

Bala
14
Cost Management
15
Value Chain Perspective
Supplier Value Chain
Supplier Channel Value Chain
Firm Value Chain
Buyer Channel Value Chain
Buyer Value Chain
  • The End Buyer Pays for Margins Throughout the
    System

16
Strategic Cost Management
  • Balanced Scorecard

17
Building Blocks of the e-Corporation
Supply Chain Management Applications
ERP Backbone
Intranet Applications
eProcurement Applications
Data Mining, Knowledge Mgmt. Apps.
Enterprise Applications Integration
Customer Relationship Management Applications
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