9 October 20152Profitability Management

9 October 20153Profitability Management Revenue COGS Opex OR With ↑ Rev Opex OR With ↑ Rev

Core of Enterprise performance management. Represents the bottom line for every Company. It scans and assess how mature the company is. 9 October 20154Profitability Management

9 October 20155Profitability Management Assuring that each click is accounted for in the revenue Revenue Assurance Recognition of Revenue pertaining to a month in the same period. Timing Billing is complete only when money is collected. Collection The price of the product has to be decided in consideration with market, competition and end customer expectations. Product Pricing Discounts offered to the customer flow through a series of approval as per the Metrics. Discounts

9 October 20156Profitability Management Negotiating the purchase price with the supplier. Purchase Price Minimising the overheads cost of transportation freight, Insurance and other charges. Overheads Effectively planning taxes paid for the purchases. Eg Promo items provided free to customers purchased against CST than VAT. Effective Tax Planning Negotiating for the best payment terms with the suppliers. Payment Terms Obtaining volume discounts from the supplier on bulk purchases keeping in view the inventory management also. Volume Discounts

9 October 20157Profitability Management Fixed Variable

9 October 20158Profitability Management Restraining the expenses from growing further. Money saved by change in plans or policies that reduce the expenses associated with a business activity.

9 October 20159Profitability Management Various ways through which personnel expenses and staff cost can be controlled. →→ Personnel Expenses Business process automation (BPA), focuses on streamlining and automating the key processes that drive value for an organization and its customers. →→ Process Automation An internet enabled, web based application that act as a mechanism for business to manage those third parties that supply goods and services. →→ Vendor Management A corporate Level strategy that focuses on creating and maintaining relationship with customers. →→ Customer Relationship Management Some other day to day cost saving measures that will help reduce operating expenses and increase profits. →→ Others

9 October Profitability Management Use part-time support staff. They don't require benefits and usually have more flexible working hours. Use an outside payroll service. Use college interns or co-op students for research, setting up databases, etc Have one person attend a seminar, and then later "show and tell" the rest of your staff. Broaden staff responsibilities. ←

9 October Profitability Management Extension of existing IT systems. Purchase of a specialist BPA tool Purchase of a Business Process Management solution (BPM). ←

9 October Profitability Management Automate monitoring of controls Enable vendor managers to manage risk Track and address areas of non- compliance identified in the vendor assessment process. Measure vendor compliance to policies and procedures. ←

9 October Profitability Management ← Low Margin Customers- Basic Relationship management Key Customers Full partnerships Weeding out unprofitable customer Selective relationship

9 October Profitability Management Recycle and Reuse papers and ink cartridges of printers and photocopier Encourage use of s rather paper memos as mode of communication. Find alternatives for air flights.book ticket in advance with low tariff air carrier Don't overpay your income tax quarterlies. If you anticipate that your taxable income will drop this year, don't pay taxes based on last year's income. Fix one day in a week for employees to leave in time to save on electricity and transportation expenses.

9 October 2015Profitability Management15 A business must have sufficient cash to meet its obligations else it will be declared bankrupt. →→ Managing Cash Buying too much or too little inventory can lead to problems. →→ Managing Inventory

9 October Profitability Management Payment on due date Inventory Strategy in place Aggressive with past due Do not miss any COD opportunity Interest Income ←

9 October Profitability Management ROL, MOQ, Transit period Perpetual Stock Take Demo Policy Slow Moving and Non Moving Senior management review

9 October Profitability Management