ORACLE BRIEF Profit Improvement in Retail Increase the bottom line with the Profit Focused Enterprise Framework™ The business objective of retail organizations is to make a profit, but it’s often difficult to assign accountability and responsibility for each component of the profit picture. At what point do delivery problems, shelf stocking issues, or out of stock items for key customer product inquiries become part of the performance discussion? In order to embrace profitability as a core theme in management discussions, organizations need supporting solutions to collaborate on and make decisions about how to improve profitability. The Solution Oracle, together with Alvarez & Marsal (A&M), has developed a retail-centric framework that provides a synchronized view of profitability. A Profit-Focused Enterprise (PFE)™ is one that that uses the same profit information across the entire enterprise to create strategies for day-to-day decisions. There are four key steps in the A Profit-Focused Enterprise (PFE)™ is one that uses the same profit information across the entire enterprise to create strategies for day-to-day decisions. framework that direct the enterprise to quantify benefits. The Profit-Focused Enterprise Framework ™ (see Figure 1) begins with a maturity assessment of the organization to uncover key areas where a pragmatic solution will provide the most value. ABOUT ORACLE HYPERION PROFITABILITY &COST MANAGEMENT (HPCM) Oracle Hyperion Profitability and Cost Management (HPCM) is a systematic and sustainable solution that transforms traditional accounting information into strategic and tactical profit and loss statements. Figure 1 – PFE Framework™ The first step – Profit Clustering – is the benchmarking step used to identify the immediate profit opportunities and to determine the current profit maturity level. For example, perhaps marketing understands the target customer profile for a particular These strategic and tactical P&L’s facilitate the rapid identification of actionable insights based on profit performance in the target profit clusters. It drives business performance by benchmarking the drivers of cost and profitability and empowers decision makers to improve resource alignment. market basket or promotion, but has not shared that profile with merchandising or operations. As demand for the promotion is driven on-line and into the stores, the target customer experience may be sub-optimal as not all areas of the business are aligned on the promotional expectations and service levels. In conjunction with A&M Profitability and Cost Management Services, HPCM drives business performance by highlighting the drivers of cost and profitability and empowering users to improve resource alignment. Disclaimer: This document is for informational purposes. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described in this document remains at the sole discretion of Oracle. ORACLE BRIEF After executing the Profit Clustering step - Revenue Attainment, Operations Oracle Hyperion Profitability and Cost Management leverages the power and flexibility of the 30 year history and evolution of Oracle Essbase for faster, more accurate and timely multidimensional analysis. Optimization and Resource Alignment initiatives are created from best practices to improve profit clusters. Depending on the profit maturity level of the organization, profit improvement opportunities of .5% to 2% or more can be identified. As product moves through the Retail Profit Chain (see Figure 2) from procurement to customer, decision-makers for each process along the conveyer belt need to understand profitability. Since product (SKU) is associated with every process in the DEPENDING ON THE PROFIT MATURITY LEVEL OF THE ORGANIZAT ION, PROFIT IMPROVEMENT OPPORTUN ITIES OF .5% TO 2% OR MORE CAN BE IDENTIFIED chain, Strategic Profit &Loss statements (P&Ls) by supplier, distribution center, transportation, store, customer, etc., are available to support critical profit strategies. Organizations can choose to focus on one or two processes for immediate value, or focus on the entire profit chain to become a true Profit-Focused Enterprise™. BENEFITS Figure 2 Retail Profit Chain In recent Oracle sponsored research, 75% of respondents indicated they currently • Identify and prioritize profit initiatives with multi-dimensional analysis • Accurately assign, allocate, and match costs to revenues for the target profit clusters • Strategically match resources to the most profitable opportunities • Improve marketing and sales programs by focusing on targeted customers, products, and channels • Target improved profitability of customer service across all channels • Share profitability insight across the organization for consistent data driven decision making • Gain confidence in revenue and cost assignments with graphical traceability maps • Use profitability as a performance metric to benchmark operational efficiencies perform product profitability reporting, and two thirds of respondents indicated an intended move towards customer profitability analysis. Oracle Hyperion Profitability and Cost Management (HPCM) is the enabling technology to become a ProfitFocused Enterprise™. About Alvarez & Marsal Companies, investors and government entities around the world turn to Alvarez & Marsal (A&M) when conventional approaches are not enough to activate change and achieve results. CONNECT W ITH US blogs.oracle.com/oracle Privately-held since 1983, A&M is a leading global professional services firm that facebook.com/oracle delivers performance improvement, turnaround management and business advisory twitter.com/oracle services to organizations seeking to transform operations, catapult growth, and oracle.com accelerate results through decisive action. Their senior professionals are experienced operators, world-class consultants and industry veterans who draw upon the firm's restructuring heritage to help leaders turn change into a strategic business asset, manage risk and unlock value at every stage. FOR MORE INFORMATION Contact: 1.800.ORACLE1 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners. June 24, 2014