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Profitability Modeling

“Our store managers now have access to the latest data by utilizing BPC. VantagePoint provided skills in designing and delivering a process and technical solution that added immediate value to our core business”
– Senior Project Manager, Retail

In today’s tumultuous economy, an organization needs a clear picture of which products, customers, and channels are successful, and are worthy of investment and attention. Industry studies show that up to 40% of a company’s customers can be unprofitable. Sadly, this information is often not readily available and companies make decision based on “gut feel” rather than accurate data points or predictive modeling and assessment.

By applying profitability modeling principals to an existing EPM system, VantagePoint has shown organizations how to develop a closed loop system to drive improve revenue and margins. This closed loop system encompasses standard EPM tools for budgeting, forecasting and reporting, but extends those to incorporate cost allocation engines to fully burden the underlying data. Using SAP Profitability and Cost Management (PCM) cost pooling functionality, or SAP Business Planning and Consolidations (BPC) standard allocation logic, or even SAP Analytics Cloud allocation scenario modeling capabilities, our customers are able to set up routines to automate the production of profitability analysis. For advance analytics, SAP’s Predictive Analytics software can apply the advance algorithms of data science to the company’s data in order to define what factors are most positively correlated to profitability.

pic_profitabilityProfitability reporting gives you comprehensive and detailed visibility into margins, so management can make informed decisions on where to allocate resources to maximize profit. A comprehensive business model holds relevant detailed information that easily produces profitability reporting, which is otherwise very difficult to create.

VantagePoint consultants have real world business experience and extensive knowledge in designing business models to produce management and profitability reporting. Applications are designed to include the level of granularity necessary to provide meaningful reporting and analysis based on business requirements.

pic_profitability_VPProfitability reports are typically viewed by:

  • Customer
  • Product
  • Region
  • Market segment
  • Store/Location
  • Entity

The profitability report above illustrates an example where the business user is able to select profitability by Customer, Brand, Package and Time.