The Product Cost Compass may be described as a staircase, describing a company's structure (the steps), interdependence and how to manage and control your business.
Your customer and market decide what products or services your company produces. Your production is based on an efficient refinement process from suppliers, flowing through your company, to reach your customers.
Organization is a consequence of the above steps with the task of controlling in-depth activities in your process. Human Power is in turn a consequence of the skills the organization's organizational structure requires.
IT carries the flow of information that connects the different steps and the Product Cost Compass is the setpoints and actual values you need to manage and control your business. In a Relationship Economy, these setpoints (such as KPI:s, Quality, Time and Amount) and actual values also need relations to each other and a connection to money to be useful.
The Haystack Syndrome (Eliyahu M. Goldratt, 1990) points out that "Non-financial measurement are equivalent to
anarchy. You simply cannot compare apples, oranges and bananas, and you
definitely cannot relate them to the bottom line (result). The goal is to make
money. Every measurement must, per definition, have a dollar sign in it”.
The orienteer runs according to the compass bearing. Consequently, if the compass shows errors, the orienteer gets into trouble. The income statement and product cost calculation are the compass of a business.Read more
For those organizations that stick with their sales force, sales costs are peaking. The problem is that they just don’t know how to attack them.Read more
25 years ago, the cost of IT and soft refinement was microscopic. Today, the situation is the reverese. The cost of for example screws & nuts in product calculations is in many cases minor relative soft refinement and IT.Read more
Business is about the process of processing products & services which generates more money from customers than you have to pay for the resources they consume. But what if productivity is blurred by a fog, with no or little transparency?Read more
Post-Industrial Management Model
PIMM is models
and methods for managing and controlling existing operations, as well as implementing changes, from an operational, tactical and strategic perspective. At the bottom there is a Responsibility Unit (department, cell) within the business with defined goals, setpoints,
powers and right to influence, as well as need for information and skills. The framework for a responsibility unit is a part of Value Chain.
Value chain is a chain of collaborative responsibility units where input of resources into a responsibility unit, through refinement and activities, results in a product or service, which in turn becomes a resource into the next responsibility unit. PIAM delivers setpoints to responsibility units respectively, and the outcome in form of actual values.
The Staircase means structures (the steps) that set requirements on the Value Chain in the form of customer and market demand, product or service and supplier, as well as on structures to the Value Chain, organization, skills, IT and PIAM.
Book a free webinar for a discussion about PIMM linked to your busines.
- Short Training linked to your business
- Run a Business Scan focusing on challenges to introduce a process-oriented organization
- Selection of a suitable pilot department in your business for definition of responsibility and measurable objectives, exercise and right to influence, information and knowledge
- Do the same for your entire Value Chain
- Implementation plan
- Realization for your entire value chain or an appropriate part of it
- Realization for your entire business
Post-Industrial Management Model (PIAM)
PIAM implies a strengthening of economic governance within the framework of GAAP's regulatory framework for the legal, fiscal official accounting, focusing on a process-oriented Value Chain that includes both traditional hard refinement as well as soft, and linked to IT.
Everything that is happening within your business is clearly linked to the product or service in terms of value creation. Implementing PIAM in your business means your management will get visibility required to manage and control your productivity and business, as well as run continuous change to strengthen both competitiveness and profitability. What we call The Productivity Fog of overhead costs are minimized.
Initial concepts within the framework of PIAM are Real-Time Economics and Relationship Economics, concepts that enable PIAM (unlike Lean Accounting), to fully support Lean initiatives in terms of delivering customer value, people in focus, continuous improvements, flow, waste reduction and quality built-in.
Book a free webinar for a discussion about PIAM linked to your business
- Short training linked to your business
- Status analysis existing accounting, product structures and existing IT support
- Selection of a suitable pilot department in your business
- Implementation plan
- Roll-Out to other units within your business
Important to remember for soft refinement is that it's better to measure roughly right than exact error, and not allow a denser overhead cost fog.