How do I maximize corporate profitability?
The short answer: evaluate the cost and impact of marketing initiatives and the costs and capacities of all operations simultaneously using a strategic supply chain design optimization-based advanced analytics tool. The details: traditional strategic supply chain design tools (aka network design tools) focus on minimizing the cost of operations (procurement, manufacturing, distribution center, transportation and so on) in light of relevant physical and managerial constraints (manufacturing, throughput, storage, customer service, and so on), given a fixed demand forecast for a given scenario. Unfortunately, this approach suffers from several limitations. First, the focus is on cost minimization instead of profit maximization. Second, it fails to take into account the impact of various marketing initiatives. Third, it ignores the fact that not all customer demand is profitable; the corporation is losing money when chasing unprofitable demand. Solution: relax the assumption of a fixed forecast and explicitly incorporate the demand (“lift”) and cost impacts of marketing initiatives into a comprehensive strategic supply chain design tool. Result: the tool selects the maximally profitable forecast and corresponding set of marketing initiatives, facilities and commodity flows required to achieve it; i.e. a profit-maximized corporate strategy. The relevant tool is Insight Enterprise Strategy (IES), the first and only advanced analytics tool capable of finding optimal corporate strategies across all of operations as well as marketing.