- ProFIT-MAP Methodology
ProFIT-MAP is a business methodology for improving organizational performance and managing execution. Its objective is to help organizations achieve their cost and operational targets. It does this by identifying the relevant parameters that managers can control, linking them to the business objectives, showing which changes will be effective, and creating an execution roadmap that will achieve the objectives.
For any business improvement challenge, ProFIT-MAP answers four important management questions. Managers then use this information as an input into their decision making process.
# Can it be done? Is it possible? If not, then what additional capabilities are needed?
# Will it be profitable?
# What is the impact of my decision across the product mix and the functional capabilities of the organization?
# How do I transform operations from point A to point B? That is, what is the operational roadmap for achieving the business objectives?
How it works
The process of using the ProFIT-MAP methodology is referred to as
Profit Mapping. ProFIT-MAP assesses the current and future operational requirements of any business challenge from three integrated perspectives representing the business process, its associated resource requirements, and the financial characteristics. Understanding the cost and profitability implications of any process improvement decision prior to its implementation is central to Profit Mapping.
The methodology consists of six phases which must be completed in order. There is built-in flexibility to iterate within and between the phases as managers refine their thinking and gain additional experience with the particular business challenge.
Focus on Business Execution
Profit Mapping is used by companies to execute their strategy no matter what it is. Strategy can range from everything to improving profitability, increasing customer satisfaction, reducing costs, becoming more flexible in product or service delivery, reducing waste, and so on.
As companies translate strategy into measurable objectives, Profit Mapping then bridges the gap between planning and execution. It does this by identifying:
* The nature of the problem within the context of the capabilities and constraints of the organization.
* The specific parameters under management control that are linked to the business challenges.
* The sensitivity of the various parameters for improving business performance.
* An execution roadmap showing the specific steps and actions required to achieve the business objectives.
Profit Mapping complements the many strategic frameworks, improvement approaches, and measurement options in business today. It does not replace what companies already find helpful. Rather, its integrated and dynamic nature enhances existing business improvement efforts by providing additional critical “perspective” and guidance that might not otherwise be available to decision makers.
For example, there is an implicit assumption that becoming
leanor reducing product defects through Six Sigmaleads to cost savings. Many companies have learned through experience that while these are sound improvement strategies, they do not always have the intended impact on overall business performance relative to the financial and time investment devoted to the efforts.
Such results should not be surprising as lean and Six Sigma are designed to improve process efficiency, but do not explicitly focus on the overall effectiveness of the organization. Profit Mapping can help these types of process-focused initiatives by showing precisely which lean or Six Sigma activities will lead to both process as well as financial improvement. This helps managers understand the cost and profitability implications of their change options so they can make more effective decisions.
Parametric activities based framework
Activities are at the core of ProFIT-MAP. The methodology employs a parametric activities based framework for capturing the business structure and dynamic characteristics of operations. ProFIT-
* Develops a more integrated and refined understanding of operations based on the activities required to produce products at each plant and line – or site and service.
* Translates the activities composition into the resource requirements and associated cost and profitability implications for the product or line.
* Quantifies all identified management options for improving the business (i.e., business scenarios) in an integrated, holistic, and dynamic manner.
* Tests the business scenarios for sensitivity to changes in order to create a more profitable environment.
* Identifies activities that will lead to business success.
* Identifies activities that do not further the objectives, and thereby avoid wasting time and resources.
* Creates a profitable and sustainable operational roadmap.
Methodology and analytical requirements
ProFIT-MAP is a non-proprietary methodology and is described in the book Profit Mapping. As managers develop ideas in the form of business scenarios for improving the organization, analytical capabilities are required that can quantify the impact of the various business improvement options. The objective is to help managers select the “best” option(s) from the standpoint of the overall business – not just those that may result in isolated improvements but not necessarily for the organization.
ProFIT-MAP requires the integrated assessment of each decision option in terms of the process characteristics, resource requirements, and financial effects. There are many software tools that address aspects of each of these areas individually. Most importantly, any software tool must enable apple-to-apple comparisons within each of these domains as well as between them. Otherwise, managers will not have a level playing field to holistically evaluate and compare their alternatives for improving the business.
ProFIT-MAP was created by Anil Menawat. Its foundation is based on
systems theory, which is an integrated approach for studying complex, dynamic, and interdependent systems. It also had roots in parametriccosting which dates back to World War II where government planners needed a better way to forecast the cost of manufacturing aircraft.
The name ProFIT-MAP is derived from two elements. “ProFIT” comes from “process and finance integration technology.” This refers to the methodology’s integrated multi-perspective focus on business execution. “MAP” refers to the methodology’s ability to create a highly detailed roadmap for improving the business.
Menawat & Co.
Menawat & Co. [http://www.menawat.com/] has a trademark for ProFIT-MAP for consulting services and a brand of software.
Manufacturingand business services
Business context (enhances):
Activity-based costing Balanced scorecard BenchmarkingBusiness planning Business process improvementCapital investment planning Continuous improvementCorporate or divisional strategy Design for manufacturability Economic value added Financial modeling Flexible manufacturing Human resources management Lean manufacturingLean operations Management accounting Mergers and acquisitions Process design/ redesign Performance management Product design Product planning Research and development Risk analysis Six SigmaSourcing decisions (e.g., insourcing, outsourcing, offshoring) Strategic management Supply chain management Theory of Constraints Toyota Production System Value Stream Mapping
*Profit mapping ISBN 0-07-147228-2
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