Julie Fraser: Mapping the path to profit
Julie Fraser -- Manufacturing Business Technology, 5/1/2007
It is often the case that manufacturers’ improvement initiatives do not deliver expected gains. Failure of projects and initiatives to achieve anticipated benefits has many causes. For one, there is the common disconnect between operations metrics and business metrics. In fact, only 3 percent of companies believe they are linked very effectively.This is one of the major findings of the Industry Directions 2006 study, Metrics that Matter. Underlying that disconnect is the complexity of a manufacturing business, and its competing interests and metrics.
For example, introducing a greater mix of products into a single production plant or line to satisfy a broader range of market demands may meet a business objective to capture greater market share. However, it will almost certainly reduce total throughput in that plant or line because changeovers from one product to another consume time on equipment.
Whether increasing mix will make the plant and the business more successful and profitable is therefore not always clear. There are many approaches that can be used individually or in combination, from simply reducing set-up times, moving to a lot size of one, redesigning products, or changing inventory policies.
It is equally challenging to predict the impact on profitability resulting from any one of those activities. Even if they all have the desired local effect, they often don’t create the potential business benefits because they are offset by training expenditures, increased automation, and other costs that are redistributed rather than removed entirely.
Select U.S. manufacturers are using a consulting methodology and forward-looking software to support this type of decision and create a road map to ensure that the strategy works. This new breakthrough, called Profit Mapping, was developed by Anil Menawat and Adam Garfein. The trademarked name is ProFIT-MAP, for process and finance integration technology mapping.
What makes ProFIT-MAP different from other methods for aligning activities with strategy? To begin, the ProFIT-MAP approach sheds new light on how to translate strategy into effective actions in the operation:
c Profit Mapping starts by asking whether a business objective is feasible given current capabilities and capacity, and if not, what additions are needed.
c The scope is holistic across processes, resources, and finance for an entire strategic business unit.
c It not only envisions, but actually models and reconstructs, future “what-if?” scenarios.
c Product focus is defined by what customers care about.
c Conflicting and competing business objectives are expected and balanced.
c The model considers process dynamics and multiple types of constraints.
c The outcome is an actionable and detailed execution road map.
For those who are serious about making improvements that matter to overall business performance, ProFIT-MAP can be an atlas for new worlds to conquer.
To receive the book, Profit Mapping: A Tool for Aligning Operations with Future Profit and Performance, attend one of the two Society of Manufacturing Engineers (SME)-sponsored workshops being held this month—May 15 in Dearborn, Mich., and May 17 in Birmingham, Ala.—or in Ireland/U.K. this fall. Register for Accelerating Execution with Profit Mapping at www.sme.org/profitmapping.
To learn more about the total ProFIT-MAP approach, visit www.menawat.com
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