Dot.MARG is an essential module for approaching the issue of management control. The control is closely related to operational planning, which determines the targets to be reached and serves as a benchmark to detect deviations from expected performance. These measurements can be made on different axes (by product or product line, by season, by customer, etc.), in order to test for each level of analysis the effectiveness of its own operational strategy.
Management control is divided into three phases:
1. Antecedent control
2. Concomitant control
3. Subsequent control
The first phase involves the verification of the goodness of the set targets (ie, generating a profit, measurable and attainable); the second step is done by updating the budget with the orders actually arrived; the third stage takes place at the end of the process, and allows an assessment at various levels, and prepares the groundwork for future budgeting.
Once established operational goals you must disaggregate these results to obtain useful information. Therefore, we will need to understand how to do measurements able to determine the effectiveness of the strategy (and therefore the deviations from the expected results) and before making a preventive control, to estimate the amount of resources needed to achieve the objectives.
This will determine the calculation of contribution margin which, if positive, would mean full coverage of fixed costs. Globally, we can then decide, depending on the importance of the customer / order, to accept a negative contribution margin for a task, if the deviation will be covered by other lines of profitability.
Dot.MARG paves the way for a management by objectives (MoB – Management by Objectives), if these are properly splitted to determine the performance of each element that has contributed to achieving this result. The costs are then divided into fixed costs and variable costs, which in turn will go to fall under the related responsibility centers, in order to assess the different business stages.
These centers can be cost centers (standard or discretionary), revenue centers, profit, investment. All are called to maximize their performance (which can always be translated into a margin of contribution, hence the name of the software) and the splitting of costs allows us to understand which are the causes of these performances (preventive and final), and to prepare suitable corrective actions.
Dot.MARG, finally, allows you to translate the objectives into not random values, laying the foundations for a “scientific” company management, to minimize the risks and identify opportunities otherwise hidden.
A comprehensive module, which in synergy with Dot.COST automates the management control.