This PPT slide, part of the 56-slide Strategic Pricing Framework and Tactics PowerPoint presentation, presents a comparative analysis of profitability modeling across various operational aspects, categorized from "Poor" to "Good." Each category outlines specific practices related to order processing, production costs, pick and pack, freight, and overhead.
In the "Poor" column, practices are characterized by a lack of clarity and efficiency. For instance, order processing relies on fixed and variable cost drivers based solely on total sales, which may not accurately reflect the true cost structure. Similarly, production costs are allocated without consideration for product size or complexity, leading to potential misallocations. The pick and pack process shows a simplistic approach, treating labor charges without integrating the complexities of item packing. Freight costs are managed on a per-ton basis, which could overlook variations in delivery efficiency. Overhead allocations appear to be generalized, lacking specificity in how costs are distributed among different areas.
The "Good" column illustrates improved practices that enhance profitability modeling. Order processing is refined to allocate fixed costs by the number of line items, which provides a more accurate reflection of costs. Production costs are now aligned with product groups, considering factors such as size and stock levels. The pick and pack process has evolved to include warranties and detailed item tracking. Freight management has shifted to a more nuanced approach, factoring in material tonnage and inter-region transfers. Overhead allocations are now based on specific product drivers, leading to a more precise understanding of cost distribution.
This analysis highlights the importance of detailed and accurate profitability modeling. By moving from poor to good practices, organizations can gain better insights into their cost structures, ultimately leading to more informed decision-making and improved financial outcomes.
This slide is part of the Strategic Pricing Framework and Tactics PowerPoint presentation.
EXPLORE MORE SLIDES FROM THIS PRESENTATION
EXPLORE MORE PRESENTATIONS ON
Flevy is the world's largest knowledge base of best practices.
Leverage the Experience of Experts.
Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.
Download Immediately and Use.
Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.
Save Time, Effort, and Money.
Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.
