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Majority of pharmaceutical companies are persisting with decade old processes and routines. They have transactional relationships with suppliers, lack of concerted efforts to progress ahead, and no vision to reap productivity rewards. The reasons for continuing with these traditional practices include tax regimes, regulatory hurdles, and stable revenues from customers dependent on existing industry offerings.
Disruption—spurred by technological Innovation, fluctuating customer demand patterns, and more agile and creative competitors—has forced the pharmaceutical sector to think of ways to face these challenges, survive, and thrive. One of the strategic response to this competitive disruption—by leading manufacturers—is to reexamine their manufacturing operations, embracing agile principles, reducing costs, revolutionizing procurement and distribution functions, and striving to achieve Operational Excellence. Above all, they view their supply chain not as a cost center, but as a source of Competitive Advantage.
The increasing influence of generic drugs is another challenge for large multinational pharmaceuticals. In the past, multinational companies (MNCs) dominated the market owing to possessing a number of high-market drugs protected under patents. Patent protection afforded them the leverage to set high prices on each product. The scenario is fast changing. Expiry of high-market drugs patents is creating a huge opening for generic competitors and the space is widening compared to the past.
In the past, pharma manufacturers were able to counter the threat to generic competitors by developing new drugs. However, this is becoming difficult and the new drugs pipeline is shrinking with time. R&D expenditure has continuously gone up, however, drug approval from the authorities has not kept paced with it. It has rather declined, straining the MNCs further.
Other disruptive factors include newer distribution methods, public health plans favoring generic drugs over proprietary ones due to cost effectiveness, the newer internet / mail delivery options displacing traditional pharmacy dispensing options. Pharmacy chains—e.g. Walgreens—have given a leverage to the retailers to negotiate reduction in medicine prices where again generics have an edge over MNCs.
Moreover, the trend of drugs purchased through a formal tender process is increasingly gaining acceptance, adding to the difficulties of large pharma manufacturers. Additionally, strict regulations are minimizing the cost benefits that MNCs traditionally enjoyed in the past.
All these factors have forced the pharma companies to reorganize their Supply Chains in a more flexible manner to manage complexities, bring in efficiency, and contain costs to compete in off-patent segment with generics.
Reorganization of a conventional pharmaceutical Supply Chain into an Agile, flexible, and inexpensive Supply Chain warrants developing Operational Excellence and Cost Reduction competencies. This necessitates 5 strategic steps (phases):
Let’s discuss these steps in detail.
Large pharma MNCs typically maintain the Supply Chain of all of their drugs with a single strategy of retaining high inventory and service levels. Such a strategy can only work for products having a high profit margin, in a static environment. It is not suitable for low-margin products, contrasting environments, and does not take into account fluctuations in demand patterns. An appropriate approach is to implement a multiple Supply Chains model based on individual products and markets.
The 2nd step in Pharma Supply Chain Reinvention involves quick distribution of different versions of products to markets based on demand. For low-margin products with high demand volatility, the Supply Chain Management Strategy should be to employ Pack-to-Order system. The Pack-to-Order approach involves developing a version of a product that could be timely dispatched to several markets of varying demand across the globe. This approach coupled with Postponement Strategy—where products are packed to order during later stages of production based on regional demand—assists in trimming down the inventory, reducing complicatedness, and enhancing Supply Chain nimbleness to demand volatility.
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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
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– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
Business and technology resources are aligned using Enterprise Architecture (EA) in order to achieve strategic results, improve organizational performance, achieve Cost Optimization and Operational Excellence, and guide departments to fulfill their central missions more efficaciously.
Federal Enterprise Architecture Framework (FEAF) does that for any U.S. federal agency and helps systems transcend interagency boundaries.
Planning is one of the most important elements for bringing about change in an organization, if not the most important. Planning methodology for the Federal Enterprise Architecture Framework is called Collaborative Planning Methodology (CPM).
Collaborative Planning Methodology is the next-generation successor to Federal Segment Architecture Methodology (FSAM).
Collaborative Planning Methodology encompasses 2 phases and a total of 5 steps under these phases:
Organize and Plan phase lets planners facilitate partnership between sponsors and various stakeholders in order to ascertain and prioritize requirements, explore other organizations with same needs, and devise plans to tackle the stated requirements.
Implement and Measure phase has the planners in assist role to other key personnel working to implement and monitor change related activities by supporting investment, procurement, implementation, and performance measurement actions and decisions.
Each step under these 2 phases has a number of activities that need to be completed in order to obtain the outcome for that step. There are regular and essential iterations within and among the phases even though the phases have been displayed as successive. Let’s discuss the key steps of the methodology in detail.
The objective of the 1st step is to ascertain what is required to be attained, comprehend the main drivers for change, and afterwards delineate and prioritize the goals with stakeholders and operational staff.
Key outcomes of the step include:
The aim of this step is to detect organizations and service providers who have already fulfilled or presently have requirements similar to those identified in Step 1. This necessitates studying their experiences and outcomes in order to discover if they can be used and leveraged or whether an alliance can be created to fulfill the needs together.
Key outcomes of the step include:
The purpose here is to form the integrated plan for the alterations essential to fulfill the requirements determined in Step 1.
Key outcomes of the step include:
Point of this step is to carry out investment decision and effect the changes as delineated in the Integrated Plan produced in Step 3.
Key outcomes of this step include:
Objective of this step is to execute operations and measure performance outcomes against established metrics. The recently applied changes are leveraged by the organization in Performance Management.
Key outcomes of this step include:
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– Roderick Cameron, Founding Partner at SGFE Ltd
Enterprise Architecture (EA) conveys management best practices for positioning business and technology resources to fulfil strategic goals, enhance Organizational Performance, and guide departments to achieve their core missions more successfully via Operational Excellence.
The Federal Enterprise Architecture Framework (FEAF) realizes this goal for U.S. Federal agencies and assists systems surpass interagency boundaries. FEAF facilitates through documentation and information, and conveys a summarized outlook of an enterprise at various tiers of scope and detail.
The FEAF comprises of 6 interconnected Reference Models, linked through Consolidated Reference Model (CRM), each relating to a sub-architectural domain of the FEA framework.
Data Reference Model (DRM) is a FEA tool for ascertaining the data that the Federal government has and the process through which that data will be shared when business/mission requirements occur.
DRM is propounded as a theoretical framework from which actual implementations may be derived.
DRM offers a uniform way to describe, categorize, manage, share, and reuse data/information within and across the Federal government. DRM also enables detection and communication of core information across organizational boundaries.
What DRM is not is static and invariable nor is it a data management manual for how to build and maintain data architectures. It is neither a pan-government conceptual data model nor an all-embracing / fully attributed logical data model. DRM is not supposed to be a comprehensive collection of XML schemas or a substitute of prevailing data structures within the agencies.
DRM works in consonance with other reference models in various ways. For example, it identifies opportunities for strategic coordination through relationships among data sources by linking with Performance Reference Model (PRM) while improving business processes and decision-making performance through data sharing with Business Reference Model (BRM).
Data Reference Model arrangement is demarcated by a 3 layered hierarchy. The 3-layer arrangement of the Data Reference Model delineates domains, subjects, and topics.
DRM refers to data and information required to execute Federal business and mission functions. In order to assist agencies in consistently categorizing, describing, and exchanging their data, there are 3 fundamental method areas associated with the DRM:
Let us delve a little deeper into the DRM methods.
Data Description offers an approach to consistently arrange, portray, and share data. Customarily, Data Description was exclusively concentrated on arranging and describing structured data. To tackle the challenge of unstructured data, DRM Data Description section was revised to focus on Metadata.
Metadata is broadly classified into 2 types, business or technical.
Data Context is any information that gives added sense to data and a perception of the reason for which it was created. Data Context permits Data Governance and forms the basis for exhaustive Data Description. Data categorization methods such as Data Asset Catalog and Information Discovery and Search portray common data architecture artifacts.
Data Sharing concentrates on architectural patterns for sharing and exchanging data. Data Sharing assists in retrieving and swapping of data, where access involves supplementary requests and exchange involves permanent, repeating transactions between interest groups.
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– Roderick Cameron, Founding Partner at SGFE Ltd
Strategy is about the methods used to attain goals. It’s the “how” of achieving goals—desired future conditions and circumstances towards which effort and resources are spent until their achievement.
If Strategy has any meaning at all, it is in relation to some aim or end in view.
Strategy is 1 of the 4 dimensions of an enterprise structure:
Strategy and tactics – integral part of Strategy Development – bridge the gap between goals and the methods used to achieve those goals. These 4 dimensions of enterprise structure relate to one or both of the 2 domains; Policy and Management. Policies determine the goals of an enterprise, whereas attaining goals is typically a matter of Management. Tactics belong to the managers; strategy is the combined realm of the governors and managers; whereas resources are controlled jointly.
The employed resources through use of Strategies and Tactics give us “certain” conditions. Inspecting them in light of the “desired” conditions enables us to determine future employment of the resources and thus emerges a pattern of actions and decisions which makes Strategy an adaptive and evolving view of what is required, to achieve goals.
We take a look at various perspectives on and definitions of Strategy, as explained by 8 of the most impactful and renowned Strategists in modern times. Familiarity with the perspectives of these strategists enables us to develop a more holistic and thorough understanding of the topic, helping us improve our strategic thinking, decision making, and analytical skills. All of these experts agree on the fact that Strategy is a means to implement a policy or a view envisioned by those who matter. Let’s see how the following strategists define Strategy:
Let’s break down how a few of these renown strategists define “Strategy.”
Michael Porter, the father of modern Business Strategy, views Competitive Strategy as “intentionally opting a collection of activities that are dissimilar to the competitors in order to provide a unique mix of value”– i.e. Competitive Advantage. Porter states that Strategy is about:
Mintzberg is credited with co-creating the Organigraph. He has written extensively on management and business Strategy. His contribution to Organizational Theory in the form of “The Organizational Configurations Framework” is a model that describes 6 valid organizational configurations or Organizational Design.
Mintzberg argues that the contrast of changing realities with intentions necessitates accommodation, generating Strategy. According to him Strategy is a combination of:
Treacy and Wiersema’s Value Discipline Model talks about 3 different value disciplines: Customer Intimacy, Product Leadership, and Operational Excellence. Their research on market leading organizations reveals that they outdid their competitors through mastering 1 of these 3 disciplines.
Treacy and Wiersema assert that companies achieve leadership positions by narrowing, not broadening, their business focus on any one of the following:
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“Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat.” – Sun Tzu
For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics. Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy. Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.
These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.
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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
Restructuring becomes essential at some stage in the lifecycle of any organization. In order to emerge triumphant through this tumultuous challenge, it is necessary that the focus remains on the challenges impeding the organization, Strategy Development to tackle the challenges, and prioritizing Strategic Initiatives to deliver radical results that lead the organization to Operational Excellence.
Redeployment is the most significant phase in the Restructuring process. Within Redeployment, the Assessment phase is critical as the revitalization of the whole organization is dependent on correct Assessments and right placement of employees based on those Assessments.
Proper Redeployment Assessment Management is of utmost importance in Restructuring, and it should follow a structured approach, which means managing 5 core areas:
Managing 5 core areas ensures smooth implementation of the Redeployment Assessment process, which is a major milestone of the Restructuring project.
The Redeployment Assessment process has to be detailed, accurate, and prompt. Due Diligence in documenting the process, verifying particulars, and balance between Rapidity and Accurateness is essential because:
Assessments are based on Data Integration which involves a complex set of Data Points. Therefore, Data Integration has to follow a strict process for it to be productive. Following guiding principles will help in comprehensive and unbiased Data Integration:
Grounded on these guiding principles, strict adherence to the following 8 Key Steps can steer the Data Integration phase in the right direction and make it productive:
Let us look at the first 3 steps in further depth.
1. List all measures
This list includes both qualitative and quantitative aspects, i.e., job performance data as well as the performance measures.
2. Weight all measures
Relevant weightage should be assigned to each measure. Job performance measures normally have more weightage than the potential measures.
3. Identify minimum qualifications
It is important to build checks into the system for anomalies, such as someone scoring overall high while failing to meet the essential criteria. For such eventualities a minimum qualification criterion has to be set.
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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
Restructuring is a turbulent process that shakes the foundations of the organization. The goal of Operational Excellence cannot be realized merely by the surgical removal of human resource during Redeployment after Restructuring.
Keeping focus on moving the organization forward with vitality means boosting the sagging morale of the employees who survive this storm. It is the attention to the surviving employees that is going to kick-start the Revitalization process and usher in a new Organizational Culture.
Employee Engagement is an absolutely vital aspect of the revitalized organization. Re-engagement of the remaining employees after Redeployment is important because:
To handle such state of affairs, management must do the following:
Poor management of the Employee Re-engagement process is bound to have repercussions, such as:
Active Employee Re-engagement ensures that the employees are:
Redeployment in the Restructuring process affects all employees regardless of whether they stay or leave.
Employees typically showcase 4 types of reactions during this transition:
Typically, the organizational focus is more on the employees who are leaving, assuming that those who get to stay are happy employees. This may not be the case. Care must be taken to address the motivational drivers of all employees in this transitory process.
Let us examine the Employee State, their Motivational Drivers, and appropriate Actions to take during Restructuring, a little more deeply.
The motivational drivers that induce the state of “departure grief” in employees include:
To help employees cope with Departure Grief, the organizational leadership should take some key actions, such as:
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“If you don’t transform your company, you’re stuck.” – Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox
Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction.
Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail.
Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing “Transformation Traps.”
Learn about our Business Transformation Best Practice Frameworks here.
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
Organizations typically focus on Customer-centric Design in their Strategic Planning and overlook the critical driver of Performance, Growth, and Operational Excellence—their employees. With cut-throat competition now the norm the realization has become clearer that employees are:
Employee Engagement has emerged as one of the significant pillars on which the Competitive Advantage, Productivity, and Growth of an organization rests. What, exactly, does it mean when an employee is engaged? Employee Engagement, over the years, has been thought of in terms of:
Although Employee Engagement is widely seen as an important concept, there has been little consensus on its definition or its components either in business or in the academic literature.
Kumar and Pansari’s 2015 study define Employee Engagement as:
“a multidimensional construct that comprises all of the different facets of the attitudes and behaviors of employees towards the organization”.
The multidimensional construct of Employee Engagement has been synthesized into the following 5 components (or dimensions).
The 5 dimensions of Employee Engagement have been found to have a direct correlation with high profitability, as substantiated by a number of research studies:
For instance, a study of 30 companies in the airline, telecom and hotel industries shows a close relationship between Employee Engagement and growth in profits. After controlling other relevant factors—i.e., GDP level, marketing costs, nature of business, and type of goods, the study found:
Research reveals that Employee Engagement affects 9 performance outcomes; including Customer Ratings, Profitability, Productivity, Safety Incidents, Shrinkage (theft), Absenteeism, Patient Safety Incidents, Quality (Defects), and Turnover.
The differences in performance between engaged and actively disengaged work units revealed:
These 5 dimensions become the base for measuring Employee Engagement in a meaningful manner that permits managers to identify areas of improvement. To assess an organization’s current status of Employee Engagement, a measurement system is needed that includes:
Let us delve a little deeper into the first 2 dimensions of Employee Engagement.
Definition
Employee Satisfaction is the positive reaction employees have to their overall job circumstances, including their supervisors, pay and coworkers.
Details
When employees are satisfied, they tend to be:
Metrics
The 5 metrics that gauge Employee Engagement in terms of Employee Satisfaction include:
We take a look at another dimension central in significance.
Definition
Signifies what motivates the employees to do more than what’s in their job descriptions.
Details
Employee Commitment is much higher for the employees who identify with the organization. This element:
Research has found that employees with the highest levels of commitment:
Metrics
The 3 metrics that gauge the Employee Commitment dimension of Employee Engagement include:
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As the business and operating environment changes, there has been a greater demand for transparency and accountability as to the integrity of internal control. This has become very critical today as businesses drive to enhance the likelihood of them achieving their objectives and be able to adapt to changes in the global business environment.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released in 1992 the Integrated Internal Control Framework that will enable organizations to effectively and efficiently develop and maintain systems of internal control. It also includes enhancements and clarifications that will provide organizations the ease of using and applying the Framework.
The COSO Framework is the globally recognized framework for designing, implementing, conducting, and assessing internal control. It is recognized as the definitive standard against which organizations measure the effectiveness of internal control systems.
If we look at the internal control, this is not a serial process but a dynamic and integrated process. It is a process effected by an organization’s Board of Directors, Management, and other personnel designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. It can be considered an enabler when it comes to achieving Operational Excellence.
The COSO Framework provides for 3 categories of objectives. These categories allow organizations to focus on different aspects of internal control. It ensures that the internal control system is operationally efficient and effective, reporting reliable data, and remain compliant to laws and regulations.
In an effective internal control system, 5 Components of the COSO Framework must be present to support the achievement of an organization’s mission, strategies, and related business objectives.
Component 1: Control Environment. This is a set of standards, processes, and structures that provide the basis for carrying out internal control across the organization.
Component 2: Risk Assessment. This forms the basis for determining how risks will be managed. It involves a dynamic and iterative process for identifying and assessing risks to the achievement of objectives. It determines the possibility that an event will occur and adversely affect the achievement of objectives.
Component 3: Control Activities. The 3rd component ensures that Management’s directives to mitigate risks to the achievement of objectives are carried out. These are actions that are established through policies and procedures. It may be preventive or detective in nature.
Component 4: Information and Communication. This component focuses on the generation of relevant and quality information to support the functioning of other components. It is a continuous iterative process of providing, sharing, ad obtaining the necessary information. This is necessary to enable businesses to carry out internal control responsibilities to support the achievement of its objectives.
Component 5: Monitoring Activities. Monitoring activities, as a component, ascertains whether each of the 5 components of internal control is present and functioning. It includes the conduct of ongoing evaluations, separate evaluations, or a combination of both.
The 5 Components of the COSO Framework are essentially important as they represent what is required to achieve the objectives and the organizational structure of the organization. Each component has its underlying principles and key elements to better guide organizations in putting the components in place.
The COSO Framework sets the requirements for an effective system of internal control. An effective system reduces, to an acceptable level, the risk of not achieving the organization’s objectives.
There are additional key considerations that organizations must take note of. One consideration is that each of the 5 components and relevant principles is present and functioning. Present refers to the determination that the components and relevant principles exist in the design and implementation of the system of internal control to achieve specified objectives. Functions refer to the determination that the components and relevant principles continue to exist in the operations and conduct of the system of internal control to achieve specified objectives.
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A commonly quoted statistic is that 80% to 95% of the cost of a product is determined by its design and is therefore set before the item enters manufacturing. This assumption suggests that the dominant focus of Cost Management should be during Product Development and not during Manufacturing.
However, contrary to a widely held assumption, companies can integrate a variety of Cost Management techniques not only in the design phase but throughout the product life cycle. This is to ensure that there is a substantial reduction in costs. In fact, companies achieving Operational Excellence and competing aggressively on cost might consider the adoption of some form of an Integrated Cost Management Program that spans the entire product life cycle.
An organization must have a good understanding of Integrated Cost Management and the 5 Cost Management Strategies that they can use to reduce costs but still attain the desired level of functionality and quality at the target costs.
The 5 Cost Management Strategies play a crucial role in the company’s integrated approach to Cost Management.
The 5 Cost Management Strategies can be applied throughout the product life cycle with one technique used during the product design and the rest during manufacturing.
Kaizen Costing as known as continuous improvement costing. It is a method of reducing managing costs. Kaizen Costing has a similarity with Target Costing but it also has its differences. (Note: Kaizen is the Japanese term for Continuous Improvement and often tied to the philosophy of Lean Management.)
Both Kaizen Costing and Target Costing can achieve results with lower resources. This is basically their similarity. On the other hand, the differences lie in their usage and involvement.
Target Costing is used on the design stage and requires the involvement only of designers. On the other hand, Kaizen Costing is used during the manufacturing stage and requires high involvement of employees. The general idea of Kaizen Costing is to determine target costs, design products, and process to not exceed those costs.
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Post-merger Integration is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size-fits-all approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the identification and capturing of synergies will help maximize deal value.
Because of the complexity of the PMI process, it is of utmost importance that organizations—both the Buyer and Target, the integration team, and integration manager—have a guide that will provide them the detailed requirements of the process. The Post-merger integration framework has a structured approach that can direct attention to important integration areas to maximize deal value and achieve Operational Excellence. The inability to focus on priority areas can be a waste of resources, time, and investments.
The Post-merger Integration framework drives a structured approach to identify important Integration Areas to focus on during the transition. There are 12 Integration Areas that need to be prioritized.
The first 2 integration areas within the full checklist:
The next 2 integration areas within the full checklist:
The third 3 integration areas within the full checklist:
The last 5 PMI integration areas within the full checklist:
Organizations must take adept steps in undertaking the Integration Checklist as this will enable both the Buyer and the Target to reach the most strategic state necessary for the 12 Integration Areas.
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