Product Profitability
Understanding Product Profitability has challenged companies with hundreds of thousands of products or SKUs. Product profitability if further complicated with a complex supply chain or services required to source, make, deliver, market, sell and return these products.
To better understand the indirect costs of their products, these firms have implemented average-based cost allocation, OLAP and rate-based activity based costing, but have found the results to be insufficient to make meaningful decisions, inaccurate and expensive to maintain.
Acorn Systems delivers the most accurate product profitability analysis at the lowest total cost of ownership. Acorn solves for product profitability by accurately driving revenue, direct costs and indirect costs to every individual SKU or product class based on the processes/services performed and unique packaging of each individual product. Acorn does not use average or rate based allocations that have been the source of inaccuracy and expense with traditional activity based costing. Rather, Acorn’s innovative Consumption Driven Activity Based Costing, endorsed by Dr. Robert S. Kaplan, the father of activity based costing, provides for accurate, sustainable profitability analysis of hundreds of thousands of products.
Acorn’s product profitability solution:
- Identifies the profitability of every individual SKU or product class and their profit drivers – from the point of sourcing to the store shelf
- Empowers managers with drill down information to determine the materials and processes that are driving product profits
- Delivers executive level reporting to understand the profitability of product classes in order to drive marketing, sales and SKU rationalization decisions
- Provides performance metrics by SKU such as picking cost/ SKU, delivery cost / SKU, promotion cost/SKU, rebates/SKU, inventory carrying cost / SKU and return in inventory investment
In addition, Acorn’s product profitability solution enables supply chain partners to better understand each partner’s performance in order to optimize efficiencies throughout the supply chain. Retailers and manufacturers rely on Acorn’s product profitability information and drill down when forming pricing and policy decisions for their partnership.