It sounds easy to increase sales and reduce costs, but if it was straightforward, we would all be printing money. You need to identify your least profitable products and customers. You need to understand why that is the case, and then you need to take action. Profit Optimization enables you to answer such questions as:
- How should you price your products to make best use of your manufacturing capacity, raw materials, storage, and distribution capabilities?
- Who are your best customers? Which customers should you cherish to increase both revenues and profits?
- Which channels are the most effective? Where should you focus your efforts?
- What is the least expensive way of stimulating demand when sales are lagging (e.g. below plan or when a competitor has reduced its price) or specific sales objectives must be met (e.g. end of quarter) or the pipeline cleared (e.g. for a new product introduction)?
- How should our capacity, supply chain and supporting infrastructure be adjusted for specific strategic objectives such as market share targets, competitor positioning, market expectations, and other goals?
- How do you take unnecessary cost out of your organisation?
In short this is all about understanding your market, using activity based costing to reveal the true economics of products and customers, using zero based budgeting to prioritise your activities, and having metrics in place to measure progress as you implement change.
In this 5-day course we will give you tools and techniques to:
- Determine the true profitability of each of your customers
- Segment customers and markets
- Understand the true costs of your products and services
- Make better pricing decisions
- Eliminate costly and non-value adding activities
- Effectively challenge your operating costs
- Generate effective budgets that will allow you to manage and control cost
During the workshops, you will:
- Use the cause-and-effect “lens” of activity-based costing to design a cost model that accurately reflects the fundamental economics that underlie your organisation
- Accumulate a “toolbox” of costing concepts, tools and techniques that will help to incorporate seemingly complex issues into your costing model with a minimum of difficulty
- Incorporate your cost model’s design into an Excel-based predictive cost model that can be used to perform incremental cost analyses, measure the cost of key processes and develop rates that can be used to assign costs to individual jobs, products, services, customers, etc.
- Create Excel-based templates that will use your model’s costing rates to accurately assign costs to your company’s jobs, products, services, customers, markets, etc.
- Practice using your model to support a variety of management decisions
- Run workshops with your business to develop costing models, better budgets and rolling forecasts
- Learn techniques for gathering your company’s detailed information for populating your models and templates after your return home
Please note that this course is one in a series of management accounting titles. See all related courses below: