Profit Improvement

PCG works through a tiered process, performing a diagnostic by scoping the main elements contributing to performance, and analysing the data to determine the key value drivers. The challenge is to identify the company’s most critical areas for improvement and establish the opportunities and goals for the business to reach its potential.

In many organisations there are unrealised profit improvement opportunities. While there may be an internal understanding of the business’s key profit levers, PCG works with clients to identify the ‘sweet spots’ which could improve profitability in these areas. PCG brings a structured external focus by helping companies understand how to manage profit drivers to improve financial performance. We frequently test our recommendations and map the initiatives required to achieve these results.

The focus is on reducing a client’s cost base by developing better efficiencies through their supplier management and negotiation of key inputs. PCG works with organisations to assist them in innovating procurement practice.

Key questions need to be considered to determine the financial profitability of products and product lines and create a profitable plan. What is the true profitability of the client’s products and brands and different distribution channels? Which stock keeping units, customers, channels and brands drive or destroy profitability? What opportunities exist to improve profitability, either by cost reduction or margin improvement, and what actions should be implemented to realise these opportunities?

PCG’s approach is to develop a detailed cost-to-serve model by product by channel. We develop and validate methodology for allocation of overheads and fixed costs, identify strategies for profit improvement and put together a high-level business case and implementation recommendation.

With the pressure to attract and retain customers, building long-term relationships with the most valuable customer segments gives a business a competitive advantage by winning a loyal and profitable customer base. PCG works with companies in the planning and execution of successful customer segmentation strategy.

PCG has assisted a number of companies in this service. We take a systematic and fact-driven approach to support companies in identifying efficiencies in their existing procurement process, and in consolidating key areas of spends with principal suppliers to achieve pricing efficiencies.

We help companies achieve sourcing excellence through a range of services including outsourcing partner selection and transition, supply structure review, offshore implementation and support, overhaul and renegotiation of contracts, renegotiation of payment terms with vendors and optimising value delivery.

The effects of complexity in organisations can lead to a decline in growth and inhibit business processes along the value chain.

PCG takes a holistic approach to reducing complexity by working with clients to ensure that the proposed strategy aligns with the overall company strategy. The right governance is critical for decisions regarding where to reduce processes or what product lines or stock keeping units should be eliminated. The result of successful complexity reduction is sustainable, optimised product portfolios.

PCG focuses on the levers of greatest value that will deliver both immediate and sustainable improvements in companies. Our approach is initially diagnostic, where we map the existing process and identify the critical issues. We can assist companies define optimal supply chain strategies and structures, and assess systems to identify the greatest opportunities while supporting the business’s service proposition.

We minimise costs and capital by focusing on reducing transactional costs through open technology architecture, deploying facilities to alternate lower warehousing costs, strategic global sourcing, lean supply chain and production, and transport optimisation. We have proven capabilities in delivering sustainable improvements and significantly increasing margins and supply chain responsiveness.

PCG’s cash and capital management expertise has assisted our clients to effectively manage working capital and address liquidity issues. With the impact of the credit squeeze post GFC, a key issue for CEOs and CFOs is maintaining a strong hold on financial management while also focusing on strategic growth.

We work with our clients to create new approaches in systems management and finance to release working capital for investment back into the business. With an increased focus on retention of liquidity lines, stock turnover and optimising debtor quality, a business is better positioned to ride out the challenges of the current cycle.

Business process redesign (BPR) provides a fundamental rethinking of the existing business process, addressing the efficiencies of the business’s critical performance. BPR has historically been applied to logistics and manufacturing, but PCG uses this process to support significant improvements in commercial and operational functions. We identify priority functions and processes based on analysis of operational data, then roadmap what’s required to generate the results and solutions for improved profits and effectiveness.

BPR is a tool used to provide clients with surety to support new initiatives, compare alternative business processes and underpin major structural change. It allows a business to manage complex processes when there is not an established road map and the potential downside is capital loss and exposure to risk.