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CostPerform Business Models Are Used In Some of the World's Top Companies to Manage Performance, Monitor Complex Supply Chains, Improve Operations, and Determine Strategy |
| Commercial industry organizations have long been on the forefront of innovation due to the quickly changing market landscape and the constant pressures to improve performance and maximize revenue and profitability. These abilities often depend on obtaining maximum business intelligence and enterprise performance information. CostPerform has been implemented in organizations across industry sectors including manufacturing, telecommunications, banking and insurance. |
| A current manufacturing client, one of the most prestigious automobile manufacturers in the world, uses the systems to manage the supply chain responsible for the automobile interior components. The client needed a tool that integrated multiple and disparate data systems to obtain a full view of the supply chain and the variables that impacted cost, quality, and timeliness. A particular challenge of the supply chain was the constant changes in material and transportation costs, which when combined with pricing strategies determined for the automobile class and unit made it difficult to project profit margins. |
Using the CostPerform™ methodology and software, the consulting team supported the automobile manufacturer in modeling all of their resources, processes, and various supply chain vendors, and the resulting automobile unit interior components. The shared service costs and supply chain vendors had been particularly difficult for management to integrate with existing cost data and determine a meaningful method to continuously manage, monitor, and project auto interior costs and its impact on overall unit profit margin. The CostPerform™ project cut through the hundreds of thousands of line items in the general ledger and supply chain systems and reorganized the cost data to reflect an accurate and repeatable method to manage the auto interior supply chain and product component. |
The automobile manufacturer was able to gain invaluable supply chain management information including: |
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Accurate total and unit cost for the auto interior components by supply chain vendor (information that could not be obtained from its ERP systems); |
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Determine impact of cost increases of certain supply chain components on the resulting interior total and unit costs, as well as on the resulting automobile unit by type or class; and, |
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A model for planning labor capacity and profitability. |
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Continuously maintain visibility of the impact of changing supply chain costs and shifts in order to stay ahead of profit margin expectations; and, |
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The resulting multi-year model is used to plan the usage of labor (FTEs needed in each department). This yearly calculation exercise used to be very labor intensive and took several months; with the model they achieved the same results in a matter of hours. The model is also used for (internal) profitability analysis of products (components going into the complete assembly of any car). Because the fully allocated cost of products were never calculated except in the planning stage, the results of this analysis were very surprising and caused some major re-defining of internal rates and a renewed interest in monitoring actual cost as opposed to budgeted unit cost for management decisions. |
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This automobile CostPerform™ client has used CostPerform for over 8 years to manage their auto interior supply chain process. |
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The CostPerform™ business model and approach presents an effective framework for linking the myriad of supply and material systems that reside in manufacturing organizations with financial and output data in order to get the full view of the supply chain. |
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Supply Chain Benefits of CostPerform |
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Industries with Complex Supply Chains Gain Valuable Insight from CostPerform Models |
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Total and unit costs and averages of the supply chain material and services? |
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Accurate product and customer profitability information. |
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A method and tool to plan and project by altering variables in the model to test its impact on resource usage, profitability margins, as well as resulting product total and unit costs. |
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A platform to select, test, and measure performance improvement projects. |
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CostPerform™ is a powerful software system and methodology that creates the context for performance management and improvement. |
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CostPerform clarifies the challenges at all levels of leadership and create a way to focus the management team on alignment to create solutions that address operational and strategic management issues. As the illustration bellows shows it links the various systems within a process context to bring visibility to the entire supply chain: |
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Cost Perform Software and Methodology Advantages |
Web-Based Reporting and Graphics |
Interactive web-based drill down reports make process and activity-based costing and management (ABC/M) reporting useful for analysts and managers; Reports are standard and custom designed through a wizard for ease and repeatability. Graphical and tabular views of data and information are easy and automated. |
Build Models That Fit A Particular Business Fast |
The flexible architecture of the software allows for a more realistic replication of business processes and uniqueness. Furthermore, flexible architecture allows models to report overhead, interdepartmental services and direct activity components of each process, product or service cost separately and simultaneously. |
Actual and Unit Costs Visibility at Each State of Product/Service (Output) Flow |
Total and unit costs are visible throughout the various product/service stages. Additionally, consumption rates (pull) or fixed costs (push) drivers may be used through a single interface. This enables users to know what processes vary by service levels, what processes vary by process levels, and what processes remain fixed. |
Dashboard To Monitor Key Metrics and Project/Forecast Impacts on Resources, Processes, and Outputs |
Historical and planning models are built quickly. Planning models enable projection and forecasting capabilities. For instance, by varying product/service output quantity (volume) and productivity assumptions, analyses of the impact on budget and capacity can be analyzed. The dashboard feature allows for selected attributes to display in a dashboard and users can change the attributes to analyze impacts on resource capacity, process and output unit and total costs – a simple "what-if" scenario capability for planning and business intelligence. |
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| Software Snapshot 1: Navigation Screen Shows Flow of Costs, Volumes, and or Consumption |
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Software Snapshot 2: Decision Support Dashboard |
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