Operational Profitability: Systematic Approaches for Continuous Improvement / Edition 4

by Robert M. Torok, Patrick J. Cordon

Overview

Add value to services and increase revenue while giving your clients more of what they need

Operational Profitability, Second Edition explains in complete detail how to conduct a management audit that will give clients the essential information they need in today's fiercely competitive marketplace. At the same time, it enables CPA firms and CEOs to expand their range of services, strengthen business relationships, and increase profits. This newly updated and revised Second Edition walks you through all the steps of a management audit and explains:

• The basic techniques of the management audit, what it involves, how to set it up, and how to establish a clear set of organizational goals
• How to rethink and rebuild an organization from the bottom up
• How to use a full range of analytical tools for identifying problem areas throughout the company
• How to assess the way a firm manages inventory, purchasing, production planning, and operations
• How to evaluate and reduce operating costs

Praise for the First Edition of Operational Profitability...

"A great operating manual for general managers and vice presidents . . . A complete how-to program."
—William Hoban, CEO, Green Bay Drop Forge, Green Bay, Wisconsin

"The most complete profitability program I've seen. The examples and checklists are excellent. It has saved my clients millions."
—Chuck Wadowski, CEO, TMQ Consultants, Detroit, Michigan

"[An] outstanding reference source for the modern manager; very impressive."
—Arnold Bradburd, CEO, Interstate Steel Company, Philadelphia, Pennsylvania

"[Operational Profitability] provides valuable data on operational efficiency and additional service opportunity beyond the usual audit . . . [It] provides the basis of helpful recommendations [and] provides much useful reading guidance for the performance of a management audit."
—Alexander A. H. Bohtling, CPA, CPA Journal

Product Details

ISBN-13:	9780471214731
Publisher:	Wiley
Publication date:	03/21/2002
Edition description:	SECOND
Pages:	336
Product dimensions:	7.22(w) x 10.26(h) x 1.22(d)

About the Author

ROBERT M. TOROK, CPA, is Vice President of the accounting firm of Zalick, Torok, Kirgesner, Cook & Co. in Cleveland, Ohio.
PATRICK J. CORDON is President of The Patrick J. Cordon Company in Berea, Ohio.

Read an Excerpt

Operational Profitability

Systematic Approaches for Continuous Improvement

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By Robert M. Torok Patrick J. Cordon

John Wiley & Sons

ISBN: 0-471-21473-6

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Chapter One

The Basic Approach

This book explains in detail how to maximize your Business System through the use of effective experienced-based financial, business analysis approaches, and profit strategies. You get the benefit of over 1,500 company analyses and 50 profitability system implementations for large, medium, and small companies just like yours.

Operational Profitability explains in detail the basic and advanced techniques of profitability analysis and profit strategies, what it involves, how to set it up, how to revitalize your system, and how to establish a clear set of organizational goals. This book will explain:

1. How to rethink and rebuild the business from the bottom up; 2. How to use a full range of real, value-added analytical tools for improving problem areas throughout the company;

3. What a complete business analysis requires;

4. An overview of the analysis approach;

5. Supply-chain strategy until the year 2005;

6. International expansion;

7. The impact of technology;

8. The effectiveness of systems and the efficiency of business operations;

9. Practical advice on profitability;

10. A typical "process" analysis trail; and

11. Business assessment.

Inaddition to profitability tools, there are a number of assessment tools in this book; these tools are designed to help you measure your operations and improve your profitability. This is a "how to" book, not a book on modern profitability theory. Complete the quick assessment of your business in Exhibit 1.1 and see if you're currently measuring your operations. These questions are some of the key indicators and rivers behind your success or lack of success in your profitability. If you are not assessing your business using similar indicators, perhaps you will give some consideration to reading this book completely and to conducting a comprehensive assessment to strengthen your overall operations and profitability.

How well did you do? Are there some things missing in your measurement system? Now take a detailed assessment of your business control processes by completing Exhibit 1.2. These controls develop the accuracy of your reporting system that you will put in place.

INDICATORS OF A PROFITABLE BUSINESS OPERATING SYSTEM

Now let's take a look at what an effective business enterprise does.

Management is involved and committed in the process;

Return on operating assets and inventory turns remain high from quarter to quarter;

Cash flow and net income remain positive and consistent;

There is management enforcement of declared aims;

There is enforcement of a monitoring system;

Analyses are carried out to get to the root cause of problems;

Analyses are reviewed and acted on appropriately;

An audible system is provided that can be verified by external analysis;

Management helps to successfully implement the feedback loop;

There is focus on customer needs;

You apply a supplier/customer relationship with well-defined and mutually agreed-upon requirements;

A prevention attitude is developed throughout the company, accompanied by an early detection and correction system;

Clearly understood documented procedures are established for everyone involved;

Procedures are deployed;

There is control of all appropriate documents and data;

Adequate quality training is provided for everyone that includes general comprehension of what quality means and training in the use of specific financial, operating, and quality tools;

You foster a good working relationship with external analysis; and

All corrective actions are closed out to prevent reoccurrence.

Manufacturing Effectiveness

Forecasting is centered around customer production demand;

Bill of materials is accurate; material shortages are nonexistent;

Sales and operations management planning is accurate and coordinated with inventory planning for every product;

Set up times are reduced; inventory buffers are reduced;

Time and the amount of processes are synchronized;

Products are produced to what is needed at the time needed;

Work flow is synchronized during work-in-process so that stocks don't accumulate during work-in-process;

There is a balancing of uneven work flows with flexible workers and equipment;

Transport and material movement is removed as much as possible;

Set up times are shortened and lead time is reduced;

Waste is reduced or eliminated;

Motion and walking is minimized;

The manufacturing process is designed to prevent defects; and

Manufacturing and vendor lead times are reduced.

WHAT THIS BOOK WILL DO FOR YOU

Operational Profitability; Systematic Approaches for Continuous Improvement, Second Edition will teach you in detail how to maximize your business through the use of effective financial, operational, and analysis approaches and effective business strategies, whether your company is profitable or becoming profitable.

This book presents a common sense, experienced-based approach for improving business and covers:

Process Timing-The aspects of a process's activities are modeled to identify bottlenecks and reduce the overall duration of a business process.

Costing-A true picture of the costs incurred by an organization is given by attributing expenses to the activities that consume resources.

Process Scenarios-Business processes by nature do not follow the same path each time they are performed. Differing paths through a process are identified to compare alternatives.

Process Analysis-Simulation results are examined to identify opportunities to improve productivity, decrease response time, lower costs, and so forth. Because the analysis is model based, parameters can be changed and the process rerun.

(Continues...)

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Excerpted from Operational Profitability by Robert M. Torok Patrick J. Cordon Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Preface.

The Basic Approach.

A History of American Business and the Impact on Profitability.

The Effectiveness of Systems and the Efficiency of Business Operations.

Case in Point Using the Business Assessment.

Profitability in Today's Market.

Types of Financial Statements.

Performance Measures.

Pricing Policies.

Operations.

Operations Efficiency Measures.

Reducing Operating Costs.

Inventory Controls.

Production Planning and Control.

Appendix A: Process Improvement Flow Diagrams.

Appendix B: Business Analysis.

Index.