Traditional data analytics platforms and software vendors, specifically profit analytics, measure in great detail the profit margin each product unit yields. Taking this fundamental business metric a crucial step further, Profit Velocity also takes into consideration how fast each unit physically flows through key production assets to calculate the “profit per time” generated by those assets when making that item. This next step empowers Profit Velocity to reveal new insights obscured from other business intelligence analytics software, manufacturing analytics tools and software vendors.
From an investor’s perspective, what matters most is how fast an asset makes money. Return on Investment always has been and always will be measured per period of time. While the traditional margin per unit metric is vitally important, it is not the metric investors want to maximize. To gain complete alignment between the goals of investors and the day-to-day decisions and actions of management, decision-makers in marketing, sales, supply chain, and finance need to know in great detail how fast the products they sell are making money.
Yet until now, the challenges of inadequate data and a lack of effective information tools, particularly in complex manufacturing businesses with bewildering arrays of customers, products, and assets, it has been impossible for management teams to convert data into visibility and precisely quantify how fast each order, customer, product, or asset produces money. Without access to up-to-date and precise metrics on profit per time, managers have had no alternative but to rely on the profitability figures their conventional systems provide, “margin per unit,” when setting plans, priorities, policies, and prices. The misalignment between investor time-based goals and management unit-based metrics leads to revenue and profit shortfalls that can be quickly remedied by access to the new visibility the PV System uniquely provides.