Why Activity Value Management®?
The short- and long-term success of any organization rely on the knowledge of its financial and senior management regarding costs, customers, and competition. However, conventional financial systems that measure aggregated performance are completely inadequate for decision support. MRT provides Activity Value Management® that answers such questions as:
- Do costs reliably reflect how resources are consumed by processes and activities?
- Are shared, indirect and overhead costs properly assigned to products and services?
- Does the cost information produced by the financial systems adequately reflect true costs?
- Are stakeholder experiences considered when making financially-based decisions?
- Are financial implications taken into account when making decisions that affect stakeholder loyalty?
- Are the financial systems the primary source for performance-based decisions and recognition?
A good decision-support system must provide both quantitative and qualitative intelligence coupled with analytical tools necessary to improve competitive performance at all levels within the organization - that is the purpose of AVM®.
When any of the following occur, your organization will benefit from an AVM® review:
- Changes in the business environment due to economic downturns, loss of market share, product/service maturity, mergers and acquisitions, deregulation, etc., that affect performance.
- Growing costs without a similar growth in revenues.
- Increased demands for performance accompanied by budgetary constraints.
- Lack of knowledge regarding the true cost and profitability of products, services and market channels.
- Declines in employee commitment and/or customer loyalty affecting competitive performance.
- Overlap, duplication, and non-mission critical effort expended on activities across functional boundaries, generating excessive and unnecessary costs.
- Challenges related to Sarbanes-Oxley with respect to identifying, measuring, and establishing necessary controls pertaining to critical processes and activities (Sec. 404) as well as requirements to provide timely information related to financial and operational performance (Sec. 409).
- When you need to grow the business but cannot afford to do so.
The AVM® Advantage: AVM® provides added value over all other performance management methods because AVM® provides the following primary benefits not available with conventional approaches:
- Integration of stakeholder experiences ensures that changes enhance customer loyalty and employee satisfaction, contributing to improved operational and financial performance.
- Preservation of a complete "bi-directional" audit trail linking all cost elements to both activities and lines of business - necessary for effective cost management, identification of misplaced effort/expense, and to validate process/activity controls with respect to regulatory compliance.
- Direct assignment of all expenses, without using pooled or averaged costs, are made to activities, products, and services improving line of business costing and profit measurement - all products and services are costed independently.
- Improved "time-to-benefit" since AVM® normally requires ¼ the time and ¼ the cost to implement.
- National Recognition: AVM® has been nationally recognized through numerous independent articles and received "Best Practice" recognition from the American Productivity and Quality Center (APQC).
- Activity Value Management® represents the next-generation of performance management that effectively integrates financial information with non-financial stakeholder experiences in ways never before achieved. AVM® responds to business needs by providing a unique perspective of financial and operational results not available through any other performance management approach. The focus of AVM® is to derive fact-based solutions to some of management's most pressing issues. AVM® is implemented through a unique partnership to develop a specific set of organizational activities, across lines of business, to which employee and non-employee expenses are assigned and combined with information representing the views of the organization's stakeholders. The objectives of AVM® are to:
- Determine the true cost and profitability of specific products and services - validate pricing while focusing on underperforming areas of the business.
- Identify and eliminate unnecessary and avoidable costs.
- Uncover opportunities to improve profits (expense management coupled with revenue growth), market share, and stakeholder loyalty - securing jobs while improving competitive performance.
- Create a mission-critical workforce by increasing concentration on those activities that directly impact the fundamental value of the organization.
- Implement change based upon an enhanced understanding of processes, activities, and core competencies.
- Provide knowledge transfer from the consultants to the client, eliminating reliance on external resources to continue and/or expand the improvement initiative - enabling clients to identify and remove barriers that prevent breakthrough performance.