1. 8 Principles of Quantum Profit Management
presented by WayPoint Analytics Merrifield Consulting

2. QPM Principle #1 You’re Making More Money than You Know
all companies have internal profits
magnitude of the internal profits can be significant
internal profits are being diverted away from the bottom line
correcting this is completely in your control
act to identify and retain more of the company’s internal profits

3. QPM Principle #2 Measure & Evaluate at the Quantum Level
simpler to measure
more direct control
consumes less time / resources
reduces risk of errors
target for high-leverage results
analyze and manage the business at the granular level

4. QPM Principle #3 Measure & Manage on Net Profit
Net profit rarely correlates to GP/GM%
GP/GM% doesn’t account for CTS variances
GP incentives drive dysfunction:
GP% mirage
work against your true objectives
pits management vs sales force
GP/GM% evaluation drives poor decision-making
use Net Profit for decision-making

5. QPM Principle #4 Manage the deltas
profit improvement is the main purpose of executive management
focus on profit improvement management can differentiate a company from competitors
profit deltas in customers, territories, product lines and vendors can all contribute
drive profit improvement at the quantum level

6. QPM Principle #5 Financial Averages Mask Reality
every segment is made up of components
component performance can vary wildly
analyze and investigate homogeneous segments
homogeneous segments lend themselves to uniform, profitable service models
dig deep enough to find segments with homogeneous performance

7. QPM Principle #6 Understand and Manage Service Models
make money on everything you do
every segment needs its own profitable service model
service models must fit within the GP/Margin envelope of the segment
profitable segment service models eliminate cross-subsidies, and divert profits back to the company
develop profitable service models for every segment

8. QPM Principle #7 Identify and Manage Cross-Subsidies
in every business, profitable segments generate profits consumed by losing segments
some cross-subsidies are intentional and strategic
segments can have their own cross-subsidies
cross-subsidies consume the bulk of every business’ profits
identify and manage cross-subsidies strategically

9. QPM Principle #8 Align Goals & Incentives with Net Profit
make sure everyone has the same goals as the company and senior management
make sure incentive aren’t driving dysfunctional or counter-productive behavior
ensure all incentives are based on Net Profit or CTS improvments

10. 8 Principles of QPM You're making more money than you know.
Measure and evaluate at the quantum level.
Manage on net profit.
Manage the deltas.
Financial averages mask what's really going on.
Understand and manage service models.
Identify and stop non-strategic cross-subsidies.
Synchronize goals & incentives.