By Yudhishthir Shrikant Joshi
In the last part, we discussed about the different unique requirements of warehousing for specialized industries like Aerospace. This industry also faces some unique challenges which stand apart from Auto or Retail industry in terma of its business lifecycle.
By Yudhishthir Shrikant Joshi
The Warehouse Management solutions are traditionally used for granular level tracking of inventory and assisting inbound and outbound processes. EWM was rolled out to improve this solution for higher inventory turnover, multi geographical landscape of the system and complex warehouse processes. But our recent experience with EWM project, gave us an insight on how useful is EWM in assisting the Production process. First, let us understand why warehousing is important from the manufacturer's perspective.
I am back with the next blog on profitability analysis and activity based costing (ABC). For the benefit of new readers, I blog on profitability analysis and ABC and you can click here to view the previous blogs on related topics.
First of all, my sincere thanks for your comments on my previous blog - How can IT help in implementing Activity Based Costing? It's really good to get the views from practitioners. One common view in these comments is that the output of ABC system should be relevant and must assist in future decisions. I completely agree to this. It makes all the more important for the business to perform due diligence in identifying the right purpose and the right software for their ABC system. The other view is ABC hasn't translated from concept to practice for large number of companies. I believe this will change over time as the ABC software evolves further to deliver more value in terms of relevant and insightful information it provides at a lesser TCO.
The recent global recession has forced many manufacturing companies to look into extreme cost cutting measures and liquidate their inventories. With the world now in a stage of economic recovery, consumers are opening their wallets again and are demanding more goods, leading to an increase in production output for manufacturing organizations. But rather than simply ramping up productivity, workforce and inventory levels to pre global recession levels, many manufacturers are first carefully investigating now how they can accommodate the increasing demand with their existing organization and production assets. After an era and years of industry wider restructuring, with increased globalization, mergers and acquisitions, many global organizations however now come to the rude awakening that their existing tools, structures, processes and data don't provide them the insights they are looking for to make sound strategic and operational decisions.
A lot has already been spoken about IFRS. For one reason being that, currently, there are 117 countries that have either adopted or committed to adopt IFRS. But, last month the US SEC announced that companies could start using IFRS no sooner than 2015 - a year after from the earlier timeline of 2014. However, according to a recent survey conducted by KPMG, 49% US executives said they would like the option to adopt IFRS before 2015.
This week I got a chance to get a view from senior management of two companies on Activity Based Costing (ABC) for their organizations. Neither of these companies is using ABC, nor do they have any plans to go for it in a near future. In this part of the blog series - “How can IT help in implementing Activity Based Costing?”, let’s discuss the perspective of these two companies. Let’s also see how IT can make ABC viable for more and more organizations.
My previous blogs series “Why do you need profitability analysis?” sets the context for profitability analysis. The next blog “Activity based costing for profitability analysis (Part 1)” highlights the need for Activity Based Costing (ABC) for profitability analysis. Once we are convinced about the need for profitability analysis and ABC, we have to figure out how to go about implementing ABC for our organization. This blog discusses the typical challenges in implementing ABC.
In the previous blog series titled - “Why do you need profitability analysis?” we discussed how profitability analysis can help a business analyze the profitability of one’s offerings (product, customer, channels etc); manage costs by identifying the non-value adding activities; and provide a benchmark to measure the output of an improvement initiative.
In my previous blog, I have discussed pros and cons of SAP BusinessObjects Planning and Consolidation as a unified tool for planning and consolidation vs. multiple planning applications. In this blog, I will further illustrate benefit of using SAP BPC for planning and consolidation. SAP BPC as a single application for planning, budgeting, forecasting, consolidation, and reporting functionalities, eliminates the need of multiple applications that require manual integration.SAP BPC offers following features and functionality from a single enterprise scale application.
Reporting & analysis
In the part 1 of this blog (http://www.infosysblogs.com/sap/2009/09/why_need_profitability_analysi.html#more), we discussed few of the pain points that business are facing today. Moving ahead let’s see how would profitability analysis help solve them and how can such a solution be implemented.
Consider a scenario where your company creates profitability report for its products, product lines, customers, channels and geography; or any combination thereof. You as a sales manager sort the customers based on their profitability and know the most profitable and least profitable customers. You treat your most profitable customers best. You also analyze the unprofitable customers and devise plan either to make them profitable or divest them. You have information about the customer-product profitability and clearly know which products to focus for maximizing the company’s profit.
In my previous post, I introduced you to the new ‘financial controlling’ order and how SAP has evolved to keep abreast with the ever changing business requirements, especially the CFO’s office.