Methodology

Find the Hidden Profit

There is hidden profit in every business. Cost Management Specialists know where to find it.

Cost Management Specialists view cost as an investment incurred to generate a return. Successful organisations maximise their return on investment (ROI).

Cost Management Specialists appreciate the opportunity to assist clients maximise their ROI by using a framework that explores the interrelationship between:

• Strategy - The common goal with specific and measurable outcomes. What is the stated business goal and is this consistent with our observation of day to day operations?
• People - Are they motivated & capable? Do they 'buy into' cost management as a basic operational philosophy? We believe in Learning Organisations and work with staff in a way which promotes life long learning and jobs skills for life
• Process - Is it efficient and effective and focussed on delivering customer value or does it just keeping staff busy or utilising capacity?
• Product - Is what is produced & procured judged by clients to be 'fit for purpose' the first time every time? What actions will improve quality?

to focus on the management, not simply the measurement, of cost.

Not just numbers, but qualitative and quantitative information for informed decisions on maximising return on your cost investment.

This framework enables Cost Management Specialists to manufacture profit using a multiplier effect while investing in developing strong ongoing revenue streams and even greater ROI.

Cost Management Specialists use a number of proven methodologies to manufacture profit for clients.

Value Chain - viewing an organisation as part of an overall chain of value-creating processes focused on the customer.

Systems Thinking - best expressed by Senge in the Fifth Discipline. Organisations are systems. Cause and effect need to be understood for sustainable and ongoing improvement in ROI.

Lean Thinking - starts by defining customer value, rather than the capability and utilisation. Traces steps in the value chain to design, order, build, deliver and maintain a product/service asking how each creates customer value.

Six Thinking Hats - serious creativity is a powerful tool. This framework leads to thinking 'outside the square' and assists in more informed decision making on how to move resources to areas of higher yield and productivity.

Theory of Constraints - constraints exist in any system. Causes can be physical e.g. capacity or psychological e.g. change averse. By identifying constraints, we can identify the benefits of removing them and what it takes to achieve a significant improvement in performance.

Six Sigma - identifies and removes the causes of defects and errors in manufacturing and business processes. Follows a defined sequence of steps to achieve quantified financial targets such as improved cost management and greater ROI.

Kaizan - a process to eliminate waste in business processes by focussing on continuous improvement and improving standardized activities and processes.

Hoshin Kanri - a method to capture and cement strategic goals and bring these to fruition. Helps an organization focus on a shared goal, communicate better, involves all leaders in planning and hold participants accountable for achieving their part of the plan

Just In Time (JIT) - an inventory strategy to improve ROI by reducing in-process inventory and associated costs leading to dramatic improvements in quality and efficiency.

Ultimately Client's have a choice of the best approach to meet their cost management objectives. We see value in many methodologies and incorporate aspects of each where appropriate.

Using a combintion of methodologies, Cost Management Specialists have developed a Find the Hidden Profit methodology focussed on client value and revenue to manufacture profit as outlined below.

Cost Management Specialists work clockwise around the circle using relevant steps for individual clients from defining your Value Proposition to Measure Review and Refine profit manufacture initiatives.

The steps in more detail are:

	1. VALUE PROPOSITION - TARGET CLIENT PROFILE Objectives: Determine Value Proposition - Clients perception of value while achieving your profitability and sustainability objectives. Target Client Profile - who value proposition is highest for.
	2. PEOPLE/CULTURE Objectives: Promote staff 'buy in' and 'ownership' of cost management initiatives to pursue continuous improvement 'Cost Management Mindset' - develop staff capability using tools Develop value chain thinking, 'outcome focus' & measurement
	3. WASTE & PROCESS EFFICIENCY Objectives: Identify waste across the organisation. Identify inefficiency, re-rengineering and improvement targets. Minimise waste on an ongoing basis.
	4. SUPPLY MARKET - BEST VALUE Objectives: Assess existing supply contracts & competitive environment. Identify scope for added value from incumbents & others. Tender to achieve added value using the following criteria: Service, Quality, Price, Information, Expertise, Integration, FIT, Innovation
	5. IMPROVE WORKING CAPITAL Objectives: Reduce debtor days to credit terms. Manage inventory to reduce outflows Use improved working capital for further cost management.
	6. IMPROVE CLIENT PROFITABILITY Objectives: Identify relative % of profitable and unprofitable clients. Increase % of profitable clients and their profitability. Demarket unprofitable clients with no long term value.
	7. HIDDEN PROFIT ACTION PLAN Objectives: Develop an Action Plan based on steps 1 - 6. Set specific & measurable objectives including timelines. Focus initially on items with greatest yield and celebrate success.
	8. MEASURE, REVIEW AND REFINE Objective: Ingrain a Cost Management Mindset for continuous improvement and the manufacture of profit