Activity Variable Costs Shrinkage/Damage Manpower/Productivity Product/Sales Mix Realization Cash Flow - financing Utilization Rates Accounts Payable turns Gross Margin % Just in Time Inventory Controls Tracking/Reporting Training Equipment Technology Systems – Work Flow Time/Motion Efficiency Downtime Re-Work Teamwork Innovation - Kaizen – Empowerment Profit Center Approach - Budgets Performance Bonuses - Incentives LESS OH $ Salaries, Benefits, Overhead - fixed expenses Efficiency Technology Work Flow Purchasing Controls Budgets/Actual Teamwork A/R A/P – Innovation Injuries Absenteeism Tardiness Poor time Employee Turns Empowerment - Education Profit Center Approach Budgets Performance Bonuses or Incentives EQUALS Net Operating Profit Existing # Customers Lost + New = # Customers – # Customers X Frequency X Avg. $ = Gross Revenues Gross Revenues Cost of Goods Overhead = Net Profit – – The Profit EquationSM Questions # Existing Customers, Acquisition, Attrition, and Closing Activities Do you have your customers in a database? Is it a contact management database?
Activity Variable Costs Manpower/Productivity Realization Utilization Rates Gross Margin % Shrinkage/Damage Product/Sales Mix Cash Flow - financing Accounts Payable turns Just in Time Inventory Controls Tracking/Reporting Training Equipment Technology – Systems Work Flow Time/Motion Efficiency Downtime Re-Work Teamwork – Innovation - Kaizen Empowerment Profit Center Approach - Budgets Performance Bonuses - Incentives LESS Overhead - fixed expenses OH $ Salaries, Benefits, Efficiency Technology Work Flow Purchasing Controls Budgets/Actual Teamwork A/R – A/P Innovation Injuries Absenteeism Tardiness Poor time Employee Turns Empowerment - Education Profit Center Approach Budgets Performance Bonuses or Incentives EQUALS Net Operating Profit Existing # Customers – Lost + New = # Customers # Customers X Frequency X Avg. $ = Gross Revenues Gross Revenues – Cost of Goods – Overhead = Net Profit The Profit EquationSM Questions # Existing Customers, Acquisition, Attrition, and Closing Activities Do you have your customers in a database? Is it a contact management database?