ValuMax

The ValuMax product has been developed from our desire to build a product that will assist organizations to add VALUE, customer value, product value and organizational value. Value is added when the revenue generated by a product, customer or the organization is greater than the cost of doing so. “Cost” is often misunderstood and twisted to serve user’s objectives and many business decisions are made based on incorrect cost, often with catastrophic results.

We attempt with ValuMax to provide a transparent and as accurate as possible reflection of the true costs of products, customers, services and processes and through this to assist organizations to identify waste, to identify opportunities for growth and business improvement. The costing process can become complex due to the complexity of modern organizations and ValuMax has been developed to cater for this but also to keep the “cost-of-costing” low. It is s sophisticated Activity-based costing system that can not only handle complex, multi-company, multi-branch environments but because of its affordability, can be deployed for smaller organizations as well. For organizations that strive to deliver value using Economic Value Added (EVA™) concepts, the product can assist in making this an operational reality.

Why organizations need Activity-based costing?

Accurate costing of Business activities is now more important than ever. The business scene has changed dramatically in the last few months and virtually every business has to re-assess its strategies for market positioning, growth or even survival. Most businesses lack quality information to assist them in evaluating and formulating such strategies. Activity-based costing (ABC) of business activities provides insight into the cost drivers that affect a business, will indicate which products or customers are not profitable and generally assist in the formulation of business strategies to survive and become a better business.

Activity-based costing is a technique that can be deployed by organizations to determine:
    ·     Which products or customers are more/less profitable or do not add value, to focus marketing or
            even cull products
    ·     Which marketing or distribution channels are not delivering the required returns and may
            require changes
    ·     What the impact of different levels of capacity utilization will be particularly with reduced
            demand, fully understanding resource consumption
    ·     True fixed and variable costs to assist with pricing policies for the tougher economic times and
            to use this for effective budgeting an planning
    ·     Understanding the costs “below the line” such as Supply Chain costs
    ·     What functions or activities to outsource in order to cut costs

ABC can be applied in virtually any industry including manufacturing, services, logistics, chemical, pharmaceutical, educational institutions, hospitals, etc. It typically is most useful when a large number of products are delivered or many customers serviced or the organization is very complex and it is difficult to understand the reaction of costs

Activity-based costing is logical and common sense and need not be an expensive exercise to measure costs accurately. But is requires a good methodology and the right technology to make this work and can yield a fantastic ROI by identifying unprofitable areas of the business, poor productivity, the impacts of low capacity utilization and even facilitate good benchmarking.

When business is good, few businesses concern themselves with cost cutting or cost management but when the tide turns, costs become the major focus. The problem is most organizations then do not know where to start and may do more harm than good, cutting capacity, capability and often create so much instability that the business falters.

ValuMax can provide answers to most of the type of issues described above

Types of decisions supported by a ValuMax implementation

   ·   Drop or add products/customers
   ·   Outsource activities/functions
   ·   Build new facilities/factories
   ·   Supply chain modeling
   ·   Mergers and acquisitions or rationalization studies
   ·   Activity-based budgeting
   ·   Contract negotiation
   ·   Evaluation of marketing or distribution channels