In pursuit of excellence enterprises take up multitude of initiatives.
Often ideas get rejected by the financial controllers as no perceptible improvement is visible to the bottom line; worse, at times the bottom line dips post an initiative.
Not all results of operations and quality will lead to cost reduction and asset reduction.
It may result in reducing tomorrow’s cost and investment today.
Challenge is in tracking and trapping the impact
Initiative Life Cycle:
Challenges through the Initiative Life Cycle:
- Validating the relevance of an idea in the business context
- Lack of clarity on the financial impact of the proposal
- Paranoia of Operations (so called Non-Finance Executives) towards Financial Numbers
- Tendency to view every operational excellence initiative as Cost Reduction initiative. Most of the Quantification models like Kaizen Costing, Zero Based Budgeting and Loss Cost Tree focus on the Cost impact as the major theme.
- Tracking the financial impact through the implementation
- Trapping the financial impact post implementation.
PRIDEM™ (Profitability Impact of Decision Making)
PRIDEM™ is a method developed by Savoir faire that addresses the challenges an Initiative Life Cycle goes through.
- Tracks the financial impact under NINE parameters through the various stages of implementation, thereby provides a revalidation process
- Inculcates a mindset that purpose of an initiative is to ultimately enhance Long Term Profitability.
- Integrates Operational Excellence methodology like Value Stream Mapping with Financial methodology like Activity Based Costing.
- Encourages the operations to Self Appraise their proposal before putting it up for financial approval
- Provides the Finance a well structured approach to Financial Appraisal
- Tracks and traps the financial impact post implementation
- Enables communication across various functions in pursuit of Long Term Profitability