Analyzing Your Corporate Tools

A ‘corporate tool’ in this context is the key component of your company operations - your key operational asset that you make money with. A production equipment for a manufacturer, a warehouse for storage outlet, a fleet of trucks for a transportation provider, a kitchen equipment for a restaurant, an aircraft for an airline.

Therefore, your productive assets are your key instruments for generating financial value and satisfying the needs on your consumers. And the key objective of managing a particular tool and a portfolio (system) of your corporate tools is how to get the most out of each tool and the whole portfolio in terms of financial value.

Which means that you must employ the services of an experienced financial analyst (supported by appropriate sales, marketing and operations professionals) to develop a comprehensive and accurate financial model for each of your productive assets.

Supported by an operational plan and sufficient business plan for generating financial value with your operational asset in question. These plans must address three main issues: (1) acquiring the asset in question; (2) using it to generate financial value and (3) disposing of this toll in the most financially profitable way (in terms of cash flows and financial value).

Therefore, each of your corporate tools is essentially an investment project with all usual KPI – breakeven point, payback period, NPV, IRR/MIRR, WACC and economic profit. Which means that each of your corporate tools must (1) make financial and economic sense; (2) fit your criteria for approving investment projects and (3) be competitive with alternative investment projects (of which there are always plenty).

Operational KPI of your corporate tools are important only as they help you measure, manage and maximize financial value generated by the asset in question.

Generating the maximum amount of financial value with your corporate tools requires close cooperation between your specialists in sales, marketing, operations and finance. You might also need to bring in someone from IT and personnel departments. This cooperation typically takes the form of an interfunctional workgroup (usually established officially).

It also requires tight integration of your corporate tools (a) into a highly efficient manufacturing or operational process; (b) into your whole company operations and (c) into your whole business system.

To make your corporate tool generate the maximum amount of financial value, you will obviously need comprehensive, detailed and high-usability documentation (manuals, blueprints, etc.) to be used by competent and experienced operators and maintenance personnel.

Who must be aide when necessary by technical support professionals of vendors of your corporate tools (or distributors/dealers – depending on how it works on that end). That must provide timely high-quality service and support.

Companies compete in the marketplace on the basis of productivity of their corporate tools as well. Therefore, you must make sure that you have better (or at least equally good) tools than your competition.  

In our fast-paced world things change very quickly in your corporate environment. Your corporate tools can become obsolete much faster than you thought. Therefore – in order not to lose your competitive edge - you must implement a highly efficient process of monitoring your corporate environment and replacing your corporate tools.

For obvious reasons, your corporate tools must match your operational strategy and your strategic plans.