Concepts

The Importance of Adequate Profit

All companies pledge their dedication to the importance of adequate profit, but few use profit as the "set point" to which they "dynamically" control their money machine - company operations.

The "Gear" Train

Your company's money machine is analogous to a complex gear train. The gears in your company's gear train are represented by the components of cost:

• direct labor

• direct materials

• subcontractor expense

• Factory overhead

• selling expense

• administrative expense

• Research and development or engineering expense

For a given set of operating conditions, each component of cost has a defined gear ratio relative to every other component of cost.

We use our tool, the Profit Model Package ^®©, to create a detailed financial model of your company's operations based on accounting and operating information you provide. The PMP we create for you simulates your company's unique gear train and allows us to predict the amounts and ratios of resources required to build your company's products under changing operating conditions.

We apply light and agile business practices in our business consulting services along with our tools, the Profit Model Package ^®©, Profit Scheduling ^®© and Profit Share ^®©, to your company's operations to optimize your company's gear train to generate the maximum net profit before interest and taxes for a given set of operating conditions.

You know that business and operating conditions change from one job to the next. Our tools offer visibility into these varying conditions, putting you more in control of your organization's success, than ever before.

The Target is Profit, Not Sales

Companies typically manage their operations to achieve sales forecasts. Future health and stability are judged by the size of their sales backlog. The assumption is made that adequate profits will automatically be achieved.

Nothing could be further from the truth!

Companies should, instead, set period profit goals.

Our products, the Profit Model Package ^®© and Profit Scheduling ^®© determine the sales required by period to achieve stated period profit goals.

Measure Profit Where and As It Is Created

Rather than looking at and analyzing historical financial information at the end of the financial period, SetPoint offers another way: immediate insight into each business day's profit scenario.

We believe that business process and manufacturing resource utilization should be should be measured while products are being produced to give operations management the near real-time knowledge they need to control the "pace" of company operations to meet or exceed period profit goals, while they still have an opportunity to do so.

Click here to learn more about our products and test your corporate insight.