SUSTAINED INCREASE IN RETURN ON ASSETS
is it measured?
margin (revenue-expense) divided by assets, period over period.
addresses the competitive objectives of profitability and can easily be measure
How is the
By increasing revenues,
and/or decreasing the cost structure or the asset base.
How does VCM influence the result?
To only list a few of the areas:
Higher revenues from sales
New market segments targeted with
Revenues from new service offerings.
New geographies covered through
partnerships and alternate channels.
Faster time to market through joint
development with suppliers and vendors.
Repeat purchases from satisfied
customer getting more value and service.
Less customer churn and acquisition
costs from satisfied customers.
Lower cost through process
improvement and collaborate system design.
Less returns /problem resolutions
through process coordination and quality management.
Reduced procurement costs and
Reduced distribution costs through
Lower cost of innovation/roll-out
through joint development and coordination.
Improving asset turn-over
(utilization) or reducing investment requirements:
Lower inventory and in-process
resource requirements through supply efficiency.
Lower work-in-capital from supplier
credit and on-time payment by clients.
Optimal capacity utilization from
synergy, specialization and leverage of network relations.
Re-allocation to higher margin
producing business by identifying value segments willing to pay a premium for
the superior value and service.
Shared investments or “borrowed”
resources through partnerships.
Minimal investments required
through strategic distribution partners.
Asset reduction through elimination
or outsourcing of certain functions, or shifting functions to strategic partners
capable of synergy and specialization or capacity availability at lesser cost than
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