One of the biggest challenges in measuring profitability is the assignment of costs that derive of a company function as well as of serving customers. Cost reduction analysis can help to identify cost drivers of a business. QUANTOS proposal on cost reduction is based on the Activity Based Costing, a contemporary cost analysis methos which can reply to questions such as:
- Which clients and market segments are more profitable?
- Which products or groups of products are more profitable?
- Which distribution and sales channels have more profit?
- Proportion of everyday activities adds no value to the business operation?
- Which activities add value on clients and business?
- Are there any activities a business can skip without negative effects on the business operation?
ABC forecasts and budgets include various factors and indicators (target driver units, and unit rates) to estimate the resources needed to achieve business' objectives so as the management can easily identify the valuable activities.