- What are your top three Cost of Goods Sold (COGS) drivers?
- Do you have 6% year-over-year productivity rates or better?
- How do you measure cost improvement and results?
- What costs are rising in your business? Why?
- What costs are falling? Why?
- What do you expect costs to do the next two years and why?
Targeting Improvements in Cost Productivity
When it comes to the optimal financial management of an enterprise, cost is essential to the longevity of any successful business. Ongoing earnings and cash flows are predominantly based on the full-delivered cost of an enterprise and the continuous improvement of those costs in times of peak and valley revenue cycles. Without a good navigation through the intricacies that lead to cost productivity, a company can lose control of its financial stability. DemandPoint can work with you on determining the correct places to apply cost productivity in your continuous improvement strategies.
Total Value Chain Expense
Total Value Chain Expense is the full activity cost vs. the commodity cost of a business’s delivered products and services. This is a comparison of how complexity and requirements compare to how the core commodity nature of the business could be. This activity and spending cost is often 15-35% gross revenues and includes Gross-to-Net Revenue, COGS, SG&A, R&D, Capital and other cause and effect costs that often are not evident or driven by standard variance accounting or activity cost-based systems. DemandPoint specializes in the identification and optimization of these total value chain expenses as they relate to Demand-Driven and Flow-Based needs and transformations.
Product Cost Improvement
Simply put, this is cost productivity as it relates to the gross margin and inventory valuation costs of a business. Accountable and traceable cost reduction that ties to the P&L is the direct result of DemandPoint Demand Flow Technology transformations. This includes demand, manufacturing and supply- based cost reductions that are derived from Demand Flow tools, processes and integration.
Infrastructure Cost Down/Controls
Infrastructure Cost Down/Controls refer to the control and cost reduction of non-product cost related activities in the full value chain of a business. This can be income statement (revenue to earnings) or balance sheet (income facilitated related, working capital, CAPEX and cash related) and the removal and streamlining of those costs. Income increase, cost-to-carry inventory, receivable and payable cost issues, system costs, CAPEX spending, overhead costs and the remainder of value chain costs outside of product are included and improved by Demand Flow principles and execution.