True Profitability

A Highly Adaptable Approach

True Profitability is highly adaptable

It can be used as a top line diagnostic to identify opportunity and set direction or to drill deeper into the data to refine business processes and systems to a granular level.

Our diagnostic health scan is an easy start where you can identify and optimize the likely impact on your business. This builds clarity and confidence in the process and defines a roadmap to deliver results.

Build understanding, capability and sophistication

Our approach goes further to help build understanding, capability and sophistication over time. The beauty of how we have built the True Profitability Engine is that each layer of the digital twin, progressively builds in depth, complexity and constraints, until you have a powerful digital cost to serve model. Gone is the 80/20 spreadsheet

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TAKE OUR FREE SELF ASSESSMENT

The Approach

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It starts with a conversation about 80/20 and True Profitability, with Patrick, Roland, Pedro, Roger or Steve (or one of our partners in US or Europe)

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We can talk you through a self-assessment, providing guidance to the results as well as insights from what we have seen elsewhere

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Then at some point we need to get our hands onto data. We run an initial series of workshops underpinned by analysis. This will provide powerful insights and the workshops will enable you to prioritise actions and align business leaders

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How we work with your data

We bring a sensible and down-to-earth approach to data gathering, analysis and insight, not only by automating cumbersome Excel work but by combining detailed transaction data with GL data to analyze, evaluate and prioritize improvement actions. Further value is added with sophisticated calculations and scenario modeling, accessed through highly curated visualizations.

Our True Profitability engine is rapidly deployable (weeks) and easily sustainable with subscription and “rent to build” options. It is highly agile in terms of data enrichment, AI & ML, as well as scalable and adaptable to support further capabilities and sophistication.

How we work with you

Our services are designed to deliver high impact with a light touch. We equip our clients by transferring 80/20 knowledge and capabilities so they can operationally sustain initiatives without us. We offer three main ways of working with us :

Workshop Services: “how to” training and coaching / facilitation that is sufficient for the business to go ahead under its own power

Enablement Services: Above + “hands on” analysis and interpretation support to drive accountable change as you execute over the next 6-12 months, tracking progress and delivery of actions

Advisory Services: Periodic, ongoing consultation as desired / needed to further transform and drill deeper into important themes such as:

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Portfolio optimization & sales effectiveness

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Pricing

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SKU rationalization

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BOM simplification

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Supply chain & inventory optimization

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Cost-to-serve & operational improvements

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One size definitely does not fit all when it comes to True Profitability. Every company has a different start point and as such we adapt the approach:

Maturity and complexity of customer and product portfolio. This is the core of the problem and solution. Variety sells, but over time the variety can become value destroying – unfortunately most organizations cannot see that erosion in margins

Functional/BU alignment. Not every organization operates harmoniously; sometimes TP can be used as the catalyst for dialogue (and ultimately alignment) or it can be piloted and proved with 80/20 believers before rolling out

Access to (reasonable) quality financial data. For some we work at revenue data initially, whereas for others we can go deeper quicker. Don’t let nervousness about your data delay taking action – TP adapts to what there is available and of sufficient quality

Business Unit, Corporate Structures and System Configurations. Every organization is built differently. Although it would simplify the process if everyone was standardized, we find modelling the nuances and differences are core to generating the valuable insights and game changing performance drivers

How Adaptable is True Profitability?

The True Profitability approach is extremely adaptable to your needs and circumstances. It can be used as a strategic assessment providing performance insight; or as a tool to drive commercial innovation regarding precision pricing, sales focus and portfolio alignment; or even digging into the operational detail creating dynamic cost-to-serve insights and decision support.

One global FMCG business engaged us, having completed a SKU rationalisation programme to address performance and complexity with an MBB strategy house. Despite reducing from 1250 to 1000 SKUs, the client found that its margin after conversion (MAC) was 5% worse than its direct competitors. So we used our True Profitability approach to build a Complexity Management Tool, uncovering the waste and complexity opportunities across the portfolio, identifying anomalies across the value chain and creating a complexity score per SKU (which enabled the business to challenge the margin of SKUs).

Another chemical manufacturer, whilst managing long term volume decline in its legacy film divisions, asked us to use the True Profitability approach to quantify the cost of complexity as volumes dropped, challenging the businesses assumptions around MTO/MTS, MOQ and product substitution.

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CASE STUDY

Interested in improving performance and profitability? Get in touch to find out more about True Profitability or book a free consultation.

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