The trivial many
Not all of your products contribute to the same extent to your business. On the contrary, as for many other things in life, the Pareto rule applies for your products as well. A few important products make your business, while the trivial many mostly add complexity. To identify correctly which products are important to you, an accurate understanding of the product profitability is needed. By allocating the real costs to every product – be it through simple distribution codes or more complex activity-based costing models – Equazion provides insights into the true profitability of your product portfolio.
Unaware of the full complexity
Since product portfolios often grow historically, many companies are unaware of the full complexity generated by the diversity of their products and the effect on the product profit. This mainly translates into suboptimal departmental decisions, as the various functions approach the assortment questions from a different angle. Production will focus on the cost-to-make - including change-over complexity, lot-size cost, asset utilization, etc. Supply chain is worried about the inventory levels and logistic impacts of a broad product mix. Sales and marketing, on the contrary, think more in segments and assortment offerings, reflecting a market-driven view on the product portfolio. To overcome this silo thinking and to make the company-wide complexity transparent, Equazion combines all those perspectives into one platform supporting your product profitability calculation and product decisions .
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Managing the product lifecycle
Having the numbers right and every stakeholder around the table is already a big step forward towards a sustainable decision-process. Nevertheless, you need to realize that, during workshops and discussions, project members tend to forget the broad picture and dive into the details. People lose sight of the strategic direction and the potential product-lifecycle effects. To capture the future potential, those less-tangible aspects should be incorporated into the product profitability analyses and decisions. After all, decisions taken today should not jeopardize future innovation and profitability.
