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Cost reduction & Profit maximisation – A financial success

What organisation does not have a concern for its finances? Whether you are a commercial organisation and concerned with the bottom line or a not for profit organisation more concerned about delivering value you cannot escape financial objectives.

 

For organisations the fundamental equation is about turning inputs into outputs as efficiently as possible. Therefore it cannot be sufficient to concentrate solely on what the cost of inputs are.

Activity Based Management

Our approach to driving down cost or increasing net revenue does not sacrifice efficiency. We use Activity Based methodologies looking at what and how things get done in an organisation. This is extremely useful, providing insight and showing how efficient you are at meeting your goals. Activity is analysed between that which supports “core” activities (what you are really all about), “support” activities (those that support core) and “diversionary” activities (waste). Diversionary activity can amount to as much as 40% of all activities and so represents a huge opportunity for improvement.

 

  
 

For organisations that are interested in profit maximisation adding a cost dimension to the Activity Based approach gives you Activity Based Costing (ABC) and this can be used to analyse customer and product profitability. The result may well surprise you. A typical analysis might reveal something like this:

 

Up to 40% of your customers or products may be detracting from profit. Our approach provides insight as to what the situation is and the next step is to then provide strategies for negating this impact.

The insight is powerful and the impact can be significant