Strategic P&PM solutions provide insight to address specific business needs. They are custom developed to support individual projects. However, they can also be used as the foundation for building the plugin solutions that are described in the section that follows.
Product and Customer Profitability
This solution supports activity-based costing to provide insights about product and customer profitability. It uses historic data to provide the following historic insight:
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- Business process and activity costing
- Product and product segment profitability
- Customer and customer segment profitability
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Cost Structure Optimization
Cost structure optimization builds on the product and customer profitability solution. What’s different about it is that it leverages prescriptive analytics models to provide forward looking views of:
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- Business process and activity costing
- Product segment profitability
- Customer segment profitability
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This forward looking model can be used as the basis to evaluate actions to improve profitability. These can include changes to things like supply chain design, material sourcing, product and customer mix.
Integrated Scenarios
This solution helps organizations make decisions about strategies they will pursue and related targets that will can be set. It builds on the cost structure optimization solution to simultaneously answer the following types of questions:
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- Do revenue, demand and pricing targets optimize profits and cash flow?
- Are our objectives and related targets realistic and adequately funded?
- How many people do we need? Do we have enough capacity?
- What will spending be? What activities and outcomes comprise spending?
- What productivity targets (eg. cost / outcome) underlie resource needs?
- Will productivity, service level and quality targets deliver desired results?
- Are we optimizing process, product and customer portfolio value?
- How much working capital (cash, inventory, A/P, A/R) will we need?
- Do our plans minimize tax and foreign currency exposure?
- What are the best cost reduction / profit improvement opportunities?
- Which investments maximize ROI? How much operating cash is free for investing?
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This solution is highly relevant to complex organizations that seek to expose risks that are obscured by organization complexity. These risks typically relate to unforeseen consequences caused by interconnected products, customers, segments and resources.
A classic example being evaluating the cash flow generated from a potential acquisition, the valuation of which depends heavily on synergies realized. In such cases, understanding how potential constraints affect cash can have a significant impact on valuation.
