In the organization where I am working, there are various independent profit-making centers, but the names of these centers are vague and cannot be distinguished. I am in the process of restructuring the profit centers by categorizing them as Teams, Groups, Departments, Divisions, Strategic Business Units, or using any other suitable term.
It would greatly assist me in completing my task if someone could shed light on this subject and provide a few samples from existing practices in other industries.
Wilson
From India, Hyderabad
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4It would greatly assist me in completing my task if someone could shed light on this subject and provide a few samples from existing practices in other industries.
Wilson
From India, Hyderabad
Acknowledge(0)Amend(0)
PROFIT CENTERS.
There are four key critical success factors . Failure to have these crucial support planks in place will doom the conversion. Most importantly, unless the CEO and the senior executives are in full support of the center being a profit center and the associated impacts that systems cause, the conversion will not succeed. Like most other corporate activities, politics plays a role and, in this matter, it plays a significant role that can not be underestimated.
Critical Success Factors
1.CEO and senior executive peer support.
2. A business plan with full chargeback (in terms of cost) must be in place along with a methodology for project justification. A good plan includes adequate time to shake down the bugs in the business model;
3. The center has at least one distinctive competency, creating at least one competitive edge.
4.An internal profit center has to be successful operated before external clients can be considered.
PROFIT CENTERS
-BUSINESS UNITS
-DEPARTMENTS [ SALES/ MARKETING/]
-PRODUCT
-PRODUCT GROUPS
-BY INDIVIDUAL PROJECT [ assignment should be named]
-BY A GROUP [ TEAM ] [ assignment should be named ]
========================================
Customers, every business has them, but why would you want to classify them. Are some customers worth more than others? Well, yes and no - some customers are more profitable than others are, while all customers could be equally profitable. Classifying customers helps you take the action right for them, targeting your marketing, and serving their different needs - while improving your profits. Different customers require different actions to reach in marketing, to deliver your product to, or in how they implement your product. Your customers can be broken down into general groups reached with different triggers. Some customers are self-service, while others want you to come to them. Remember its "different strokes for different folks." Your ability to customize your marketing will determine how far you can reach into a targeted audience that will purchase your product. Not only does each of your customers respond differently, but also they need to be marketed differently. Information gained from this understanding can improve the targeting of your customer lists, while you giving you a better response for your specific products. Group those customers with different qualifications; perhaps identify volume accounts verses infrequent buyers or premium product verses standard product purchasers. Those characteristics that make each group unique should be the strength that focuses your marketing to get the results you desire for your business. We have talked a little already about the fact different customers have different needs, this is very important in classifying customers. These needs spanned product features, financing, shipping requirements, and any other aspect you could imagine in your business. Extending our thinking to look for cycles of individual purchases reveals other aspects of customer categorization. If your product is consumed or wears out over a certain period, group together customers that may need a little call before their product runs out. Another useful mechanism for categorization is to find those customers that recommend your product, because they are a great channel to share new product enhancement or to tell about specials. These individuals are most likely to share the news or to communicate those things you make privy to them first. Categorizing customers into groups by needs and identifying what is important to them allows you to serve them better while fulfilling their desires with your products.
PROFIT CENTERS - DIRECT CUSTOMERS
-KEY ACCOUNT [ individual ]
-MAJOR ACCOUNTS [ individual ]
-MEDIUM CLASS ACCOUNTS [ individual or grouped]
-SMALL CLASS ACCOUNTS [ individual or grouped]
ETC
EACH OF THESE CLASS CAN GROUPED
AS PROFIT CENTER.
==========================
As you get to know your customers, you may find that some customers are not the actual end users of your product. When classifying customers, understand not all customers may buy direct from you, but their needs have to be considered to maintain a viable product. Depending on what you are selling, you may find the actual end user is further down the line - this line we will loosely call a ‘supply chain', which represents "how" your product gets to your customers. With any analysis, we want to start with the beginning in order to gain the bigger picture of what is going on with our product .
PROFIT CENTER-- RESELLERS
-RETAILERS GROUP [ BY ACCOUNT]
-DISTRIBUTORS [ BY ACCOUNT]
-AGENTS [ BY ACCOUNT ]
-WHOLESALERS [ BY ACCOUNT ]
-KEY RETAILER
-KEY DISTRIBUTOR
ETC ETC
EACH OF THESE CLASS CAN GROUPED
AS PROFIT CENTER.
==========================
A simple diagram can say a lot about your business. Mapping your operation system Your operation system [ process ] is very simple to map, yet so powerful. Start with a simple workflow diagram, move along to customer interaction points, and then finally clear up the picture with specifics.
regards
LEO LINGHAM
From India, Mumbai
Acknowledge(0)Amend(0)
There are four key critical success factors . Failure to have these crucial support planks in place will doom the conversion. Most importantly, unless the CEO and the senior executives are in full support of the center being a profit center and the associated impacts that systems cause, the conversion will not succeed. Like most other corporate activities, politics plays a role and, in this matter, it plays a significant role that can not be underestimated.
Critical Success Factors
1.CEO and senior executive peer support.
2. A business plan with full chargeback (in terms of cost) must be in place along with a methodology for project justification. A good plan includes adequate time to shake down the bugs in the business model;
3. The center has at least one distinctive competency, creating at least one competitive edge.
4.An internal profit center has to be successful operated before external clients can be considered.
PROFIT CENTERS
-BUSINESS UNITS
-DEPARTMENTS [ SALES/ MARKETING/]
-PRODUCT
-PRODUCT GROUPS
-BY INDIVIDUAL PROJECT [ assignment should be named]
-BY A GROUP [ TEAM ] [ assignment should be named ]
========================================
Customers, every business has them, but why would you want to classify them. Are some customers worth more than others? Well, yes and no - some customers are more profitable than others are, while all customers could be equally profitable. Classifying customers helps you take the action right for them, targeting your marketing, and serving their different needs - while improving your profits. Different customers require different actions to reach in marketing, to deliver your product to, or in how they implement your product. Your customers can be broken down into general groups reached with different triggers. Some customers are self-service, while others want you to come to them. Remember its "different strokes for different folks." Your ability to customize your marketing will determine how far you can reach into a targeted audience that will purchase your product. Not only does each of your customers respond differently, but also they need to be marketed differently. Information gained from this understanding can improve the targeting of your customer lists, while you giving you a better response for your specific products. Group those customers with different qualifications; perhaps identify volume accounts verses infrequent buyers or premium product verses standard product purchasers. Those characteristics that make each group unique should be the strength that focuses your marketing to get the results you desire for your business. We have talked a little already about the fact different customers have different needs, this is very important in classifying customers. These needs spanned product features, financing, shipping requirements, and any other aspect you could imagine in your business. Extending our thinking to look for cycles of individual purchases reveals other aspects of customer categorization. If your product is consumed or wears out over a certain period, group together customers that may need a little call before their product runs out. Another useful mechanism for categorization is to find those customers that recommend your product, because they are a great channel to share new product enhancement or to tell about specials. These individuals are most likely to share the news or to communicate those things you make privy to them first. Categorizing customers into groups by needs and identifying what is important to them allows you to serve them better while fulfilling their desires with your products.
PROFIT CENTERS - DIRECT CUSTOMERS
-KEY ACCOUNT [ individual ]
-MAJOR ACCOUNTS [ individual ]
-MEDIUM CLASS ACCOUNTS [ individual or grouped]
-SMALL CLASS ACCOUNTS [ individual or grouped]
ETC
EACH OF THESE CLASS CAN GROUPED
AS PROFIT CENTER.
==========================
As you get to know your customers, you may find that some customers are not the actual end users of your product. When classifying customers, understand not all customers may buy direct from you, but their needs have to be considered to maintain a viable product. Depending on what you are selling, you may find the actual end user is further down the line - this line we will loosely call a ‘supply chain', which represents "how" your product gets to your customers. With any analysis, we want to start with the beginning in order to gain the bigger picture of what is going on with our product .
PROFIT CENTER-- RESELLERS
-RETAILERS GROUP [ BY ACCOUNT]
-DISTRIBUTORS [ BY ACCOUNT]
-AGENTS [ BY ACCOUNT ]
-WHOLESALERS [ BY ACCOUNT ]
-KEY RETAILER
-KEY DISTRIBUTOR
ETC ETC
EACH OF THESE CLASS CAN GROUPED
AS PROFIT CENTER.
==========================
A simple diagram can say a lot about your business. Mapping your operation system Your operation system [ process ] is very simple to map, yet so powerful. Start with a simple workflow diagram, move along to customer interaction points, and then finally clear up the picture with specifics.
regards
LEO LINGHAM
From India, Mumbai
Acknowledge(0)Amend(0)
Thank you very much for the inputs.
The Business Divisions have been in existence for the past 20 years as detailed below:
- Special Purpose Division (SPD)
- Industrial Equipment Division (IED)
- Infotec
- Micronel
- Business Service Group (BSG)
- Surya Tech Park (STP)
For example, the Industrial Equipment Division (IED) focuses on Automotive Equipment, Airport Equipment, Machine Tools, Bio-medical systems, and related Projects & Products.
Regarding STP, it does not signify as mentioned in the example for IED. Could you please shed some more light on this?
Thanks & Regards,
Wilson
From India, Hyderabad
Acknowledge(0)Amend(0)
The Business Divisions have been in existence for the past 20 years as detailed below:
- Special Purpose Division (SPD)
- Industrial Equipment Division (IED)
- Infotec
- Micronel
- Business Service Group (BSG)
- Surya Tech Park (STP)
For example, the Industrial Equipment Division (IED) focuses on Automotive Equipment, Airport Equipment, Machine Tools, Bio-medical systems, and related Projects & Products.
Regarding STP, it does not signify as mentioned in the example for IED. Could you please shed some more light on this?
Thanks & Regards,
Wilson
From India, Hyderabad
Acknowledge(0)Amend(0)
The Business Divisions have been in existence for the past 20 years as detailed below:
Special Purpose Division (SPD)
========================================
Industrial Equipment Division (IED)
- For each product group, you can set up a profit center and name it by the product group. For example, AUTOMOTIVE EQUIPMENT PROFIT CENTER.
A. SALES
B. COST OF GOODS [direct raw materials + direct labor]
A - B = GROSS CONTRIBUTION
This is the best way to monitor the profit center. Anything beyond this, like net operating profit for the center, is difficult (not impossible) because the accounts department must provide you with all details like depreciation/direct overheads/operating overheads, etc., which are not really required to monitor the profit center and are also very time-consuming.
Profit centers are used to track the performance of the gross contribution against the budgeted figures. It is the gross contribution that can make or break the success of the center.
-------------------------------------------------------------------------
Industrial Equipment Division (IED) [PROJECT]
- For each project, you can set up a profit center and name it by the project name. For example, AIRMARSHAL PROFIT CENTER.
A. SALES [airport equipment/machine tools]
B. COST OF GOODS [direct raw materials + direct labor]
C. ADDITIONAL PROJECT OPERATION COST
A - [B + C] = GROSS CONTRIBUTION
I am not sure what these units are, but I am assuming as follows:
nfotec
- As an information servicing unit
- Treat as individual accounts. For example, CLIENT A.
A. SALES
B. SERVICING COST
A - B = GROSS CONTRIBUTION.
Or as a one-time project
A. SALES
B. COST OF GOODS
C. ADDITIONAL PROJECT OPERATION COST
A - [B + C] = GROSS CONTRIBUTION
Micronel
Business Service Group (BSG)
- As a project
A. SALES
B. COST OF GOODS
C. ADDITIONAL PROJECT OPERATION COST
A - [B + C] = GROSS CONTRIBUTION
Surya Tech Park (STP)
For example, Industrial Equipment Division (IED) focuses on Automotive Equipment, Airport Equipment, Machine Tools, Bio-medical systems, and related projects & products.
With regard to STP, it does not signify as mentioned in the example for IED.
If you can briefly explain how the units like
- Micronel
- STP
etc.
function in an operational sense, I CAN HELP YOU.
Regards,
LEO LINGHAM
From India, Mumbai
Acknowledge(0)Amend(0)
Special Purpose Division (SPD)
========================================
Industrial Equipment Division (IED)
- For each product group, you can set up a profit center and name it by the product group. For example, AUTOMOTIVE EQUIPMENT PROFIT CENTER.
A. SALES
B. COST OF GOODS [direct raw materials + direct labor]
A - B = GROSS CONTRIBUTION
This is the best way to monitor the profit center. Anything beyond this, like net operating profit for the center, is difficult (not impossible) because the accounts department must provide you with all details like depreciation/direct overheads/operating overheads, etc., which are not really required to monitor the profit center and are also very time-consuming.
Profit centers are used to track the performance of the gross contribution against the budgeted figures. It is the gross contribution that can make or break the success of the center.
-------------------------------------------------------------------------
Industrial Equipment Division (IED) [PROJECT]
- For each project, you can set up a profit center and name it by the project name. For example, AIRMARSHAL PROFIT CENTER.
A. SALES [airport equipment/machine tools]
B. COST OF GOODS [direct raw materials + direct labor]
C. ADDITIONAL PROJECT OPERATION COST
A - [B + C] = GROSS CONTRIBUTION
I am not sure what these units are, but I am assuming as follows:
nfotec
- As an information servicing unit
- Treat as individual accounts. For example, CLIENT A.
A. SALES
B. SERVICING COST
A - B = GROSS CONTRIBUTION.
Or as a one-time project
A. SALES
B. COST OF GOODS
C. ADDITIONAL PROJECT OPERATION COST
A - [B + C] = GROSS CONTRIBUTION
Micronel
Business Service Group (BSG)
- As a project
A. SALES
B. COST OF GOODS
C. ADDITIONAL PROJECT OPERATION COST
A - [B + C] = GROSS CONTRIBUTION
Surya Tech Park (STP)
For example, Industrial Equipment Division (IED) focuses on Automotive Equipment, Airport Equipment, Machine Tools, Bio-medical systems, and related projects & products.
With regard to STP, it does not signify as mentioned in the example for IED.
If you can briefly explain how the units like
- Micronel
- STP
etc.
function in an operational sense, I CAN HELP YOU.
Regards,
LEO LINGHAM
From India, Mumbai
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