PROFITABILITY ANALYSIS:

GAINING VALUABLE INSIGHTS ON

PROFITABILITY BASED ON BASE CAMP’S
DATA-DRIVEN APPROACH
 CONTENT
1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.1 Relevance of profitability analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1.2 Objectives & Advantages of profitability analysis. . . . . . . . . . . . . . . . . . 5

1.3 Holistic Profitability Analysis Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. BASE CAMP’S STANDARDIZED PROFITABILITY ANALYSIS APPROACH. . . . . . . . . . . . 8

2.1 Design Phase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2 Implementation Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.3 Pilot Phase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2.4 Group-Wide Rollout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3. PROJECT EXAMPLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.1 Status Quo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3.2 Project Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3.3 Project Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3.4 Project Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3.5 Project Achievements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4. ABOUT BASE CAMP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

PROFITABILITY ANALYSIS: GAINING VALUABLE INSIGHTS ON PROFITABILITY BASED ON BASE CAMP’S DATA-DRIVEN APPROACH | Page 2
 INTRODUCTION

PROFITABILITY ANALYSIS: GAINING VALUABLE INSIGHTS ON PROFITABILITY BASED ON BASE CAMP’S DATA-DRIVEN APPROACH | Page 3
 According to a recent study about the investment investment selection process, at the latest during
criteria of private equity (PE) portfolio companies, the holding period of a portfolio company:

1.1 Relevance of
profitability
especially leveraged buyout funds and growth
equity funds focus on profitability within their
investment selection process1. These results are
• What are
segments?
the most profitable business

analysis consistent with base camp’s project experience • What are the products/services which generate
that a portfolio company’s profitability is an the most profit?
essential measure within the PE investment cycle as • Who are the customers that are most
well as a significant lever for increasing enterprise profitable?
value during the investment period.
Beside satisfying the investor’s thirst for knowledge,
To quantify and steer such significant value the use of a customized and automated profitability
creation lever, the following questions usually arise analysis solution also offers additional value add
for PE fund investment managers if not during the for the portfolio company’s management.

1
Private equity investment criteria: An experimental conjoint analysis of venture capital, business angels and family
offices; Block Joern, Fisch Christian, Vismara Silvio, Anres René; Journal of Corporate Finance 58 (2019); p. 346.

INTRODUCTION | Page 4
 In general, profitability analysis delivers important
information for steering a company. Using
1.2 Objectives &
Advantages of
systematic ERP-system-based profitability analysis
approach enables a company to calculate and
evaluate their costs company-wide. By using those
profitability analysis insights, the value creation procedures can be
planned and managed accordingly. Based on such
a gain in knowledge about a company’s own cost
structure, the management will be able to control
and improve all production processes to increase
monthly profitability measures like EBITDA or EBIT.
Beside the previously mentioned deep insights, within
a company’s cost structure, the usage of a company-
wide profitability analysis offers further value-add
potential for portfolio companies:
• A systematic profitability analysis simplifies the
implementation of a budgeting process. The usage
of a detailed, universal, and well-designed cost
A functional profitability centre structure increases the planning accuracy
analysis enables an of the driver-based budget procedure.
enhanced company-wide • The profitability analysis will provide essential
transparency input information for a pre- and post-product
margin calculation, which is key in determining and
ensuring profitable sales prices.
INTRODUCTION
• A fully integrated profitability analysis will increase
a financial transparency. A realistic view of the
costs improves the input quality for break-even
calculations as well as for make-or-buy decisions.
• To calculate the book value of a company’s
finished and unfinished goods, the costs per
product that have been derived from the
profitability analysis can be used as a fiscal
inventory valuation base. Furthermore, a more
accurate inventory valuation will increase the
quality to manage a company’s working capital,
with inventory being an essential element of
working capital management.
To maximize the profitability analysis’s value-add
potential, integration into the company’s system
landscape should have the highest possible
degree of automation, and strong integration of
the controlling function into decision procedures
is crucial. The result, if these two requirements
are fulfilled, will be a controlling function which
delivers a strong value add for the decision-making
process on the top management level as well as on
company-wide decisions.
| Page 5
 To achieve the above-mentioned advantages, it is not sufficient to look at the aggregated absolute costs,
revenues, and profits of a company within a respective period in isolation. To gain further knowledge and

1.3 Holistic Profitability

Analysis Approach
insights about the company’s actual profitability, it is necessary to structure the absolute values by cost
types, cost centres and cost units. Therefore, every comprehensive cost and revenue accounting system
must be able to provide answers to the following three questions and consequently contain the following
three subsystems:

• Cost-type accounting: Which costs occurred?
Classifying the costs as:
» Direct costs like material costs for one unit of
a finished product.
» Overhead costs like costs for electricity
usually cannot be allocated directly on a single
product level.
• Cost centre accounting: Where did the costs • Cost unit accounting: For what did the costs
occur? To ensure a causal allocation of the indirect occur? This final analysis step can be carried out
costs, the cost centre accounting consists of: along different dimensions:
» Cost centre structure » Product
» Internal cost allocation » Customer
» Indirect cost rates calculation » Product Group
» Machine hourly rate calculation » Region/Geography

INTRODUCTION | Page 6
As shown in figure 1, profitability analysis always starts
with cost-type accounting. Based on the information from COST TYPE ACCOUNTING COST CENTRE ACCOUNTING COST UNIT ACCOUNTING
external accounting, cost-type accounting subdivides
the costs into overhead costs and direct costs. Such Which costs Where did For what did
differentiation allows a cause-based allocation of the occurred? the costs occur? the costs occur?
overhead costs within the cost centre accounting. As a
final step, cost-unit accounting considers direct costs as
well as the allocated overheads on the cost-unit level and
1 2 3
combines them with the revenues accordingly. As a result, OVERHEAD COSTS OVERHEAD ALLOCATION
a calculation of profitability per cost unit is possible.

DIRECT COSTS
By combining the profitability analysis approach with
different time dimensions, a deviation analysis for actual
versus budget/forecast is possible. Such deviation
analysis delivers valuable insights into the company’s Figure 1. Fundamental elements of the profitability analysis
profitability and gives the company the opportunity to
identify its own operational levers, which are crucial for
fulfilling the desired level of profitability.

INTRODUCTION | Page 7
 BASE CAMP’S STANDARDIZED
PROFITABILITY ANALYSIS
APPROACH

PROFITABILITY ANALYSIS: GAINING VALUABLE INSIGHTS ON PROFITABILITY BASED ON BASE CAMP’S DATA-DRIVEN APPROACH | Page 8
In order to ensure the efficient integration of a company-wide holistic approach which enables the portfolio company to analyse profitability, base camp uses a
practical-proven approach which could be structured along the following four phases:
The design phase is characterized by analysing the
customer’s current situation, and based on these
2.1 Design Phase insights, by developing the best individual solution for
the customer. Therefore, all customers, cost units,
production sites, the implemented ERP system as well
as the existing finance processes and their deliverables
will be analysed precisely at the beginning of a project.
Based on such analysis, the three pillars of a functional
profitability analysis will be designed accordingly:
The target of the implementation phase is the
2.2
realisation of the approved design approach. To
Implementation achieve this target, the required activities consist of:
Phase
• Implementation of a cost centre structure,
all predefined cost units and their aggregation
levels, as well as the calculation scheme and
internal cost allocation within the ERP system.
• Implementation of the designed machine hourly
rate calculation approach for all main production
cost centres.
• A full-processed profitability analysis conducted
on predefined test cases. Thereby it is possible to
BASE CAMP’S STANDARDIZED PROFITABILITY ANALYSIS APPROACH
• Cost-type accounting: This pillar focuses on the
recording of costs and revenues.
• Cost-centre accounting: Within this pillar the
design of the cost centre structure, internal cost
allocation and machine hourly rate calculation are
predominant topics.
• Cost-unit accounting: Relevant cost units and
their aggregations are defined in the last pillar.
Additionally, the calculation scheme which will be
used for cost units is designed within the last pillar.
validate that all implemented parts also work in
the larger context. Thus, some test cost units are
defined by base camp, which will go through the
whole process of profitability analysis. As a result,
basic functions within cost-type, cost-centre and
cost-unit accounting can be verified and critical
aspects for the customer are detected early and
can be resolved accordingly. During such testing,
relevant project participants of the customer
are closely involved and advised by base camp.
Such involvement creates an atmosphere that is
conducive to becoming familiar with the created
profitability analysis solution.
| Page 9
 The main activities of the pilot phase consist of: Before the actual go-live of the newly designed
solution, company-wide communication of the new

2.3 Pilot Phase • The go-live of the whole profitability analysis

solution
• The assurance of sustainable solution usage
cost centre structure and corresponding to that
an instruction from all cost centre managers is
conducted by the management and supported by
base camp. Such instruction includes:
Based on the project participant’s first testing
experience from the implementation phase, the • Cost centre-specific procedures and tasks
degree of involvement further increases within the pilot • Descriptions and advice for the cost centre
phase, gradually in a way that employees in the finance manager, this ensures a sufficient input quality
department are still able to fulfil their operative tasks. which is essential for reliable profitability
Additionally, these employees are trained extensively, analysis results.
with a focus on processual changes and the execution
of their tasks within the ERP system.

This fourth project phase is only relevant if the Based on the implementation experiences from the

2.4
portfolio company has several production sites pilot entity, an efficient group-wide rollout for the
Group-Wide as this phase is required to ensure a group-wide additional locations can be ensured, as such pilot
Rollout consistent profitability analysis. entity approach leads to focused implementation
procedures during the three phases. Furthermore,
Therefore, base camp’s approach considers the this approach gives the opportunity to develop
above-described phases, which have been finalized best practices that accelerate implementation of
for the predefined pilot entity, for the remaining the profitability analysis for the other locations.
production sites: Therefore, information about customers and
products, as well as details of production
• Design Phase processes, have been considered very early within
• Implementation Phase the design phase of the pilot entity.
• Pilot Phase

BASE CAMP’S STANDARDIZED PROFITABILITY ANALYSIS APPROACH | Page 10

 PROJECT EXAMPLE

PROFITABILITY ANALYSIS: GAINING VALUABLE INSIGHTS ON PROFITABILITY BASED ON BASE CAMP’S DATA-DRIVEN APPROACH | Page 11
 The customer of this use case is a world leading the management on fact-based decisions for
midsize metal-processing company, operating in questions such as:

3.1 Status Quo the home appliance market. The company has six
multinational production sites in: • What are the most profitable business
segments?
• Germany • What are the products/services which
• France generate the most profit?
• Italy • Who are the customers that are most
• Poland profitable?
• Czech Republic
• United States of America The finance and accounting staff have been busy
with manual workload, such as data validation. As
A lack of transparency on Based on a lack of standardised procedures and a result, the ad-hoc reports could not establish

profitability prevented a an insufficiently maintained enterprise resource the required trust in the correctness of the
planning (ERP) system across all production reported figures. In addition, the submission of
company-wide profitable sites, the centralised global finance organisation tenders for new products could hardly be validated.
business model. faced serious challenges in providing value-add Consequently, the company often offered prices
business insights for the portfolio company’s past deadline and could not ensure a profitable
management and investors. Instead of supporting business based on the offered prices.

PROJECT EXAMPLE | Page 12

 Facing those serious profit analysis challenges, the
portfolio company’s management engaged base

3.2 Project Scope camp to enable a profitability analysis solution by

base camp’s extensive
considering the following requirements: requirements analysis
ensures to consider
• The analysis function must be integrated within
the existing ERP system proALPHA. essential customer needs.

• The relevant analysis dimensions product,

product group and customer must be considered.
Based on the presentation of base camp’s
• Beside the implementation of the standard standardized approach for profitability analysis
analysis function, a pre- and post-margin and the corresponding coordination with the
calculation function must also be implemented. management, the German production site was
defined as a pilot entity. This pilot entity should get
• Additionally, automated profitability reporting, the profitability analysis solution within six months.
which will be the basis for the monthly The successful implementation of the solution for the
management and investors reporting, must be pilot entity afterwards served as an implementation
created and integrated. template for the five remaining production sites.

PROJECT EXAMPLE | Page 13


3.3 Project Structure
DESIGN PHASE
OBJECTIVE System design which ensures a
profitability analysis on product,
product group and customer level.
ACTIVITIES • Analysis of existing profitability
analysis tasks
• Design of cost type accounting
• Design of cost centre accounting
• Design of cost unit accounting
• Presentation of designed approach
to management board
DELIVERABLES • Cost overview
• Cost centre structure
• Internal cost allocation
• Machine hourly rate calculation
• Cost units overview
• Calculation scheme
OUR VALUE • Structured and holistic company
ADD overview
• Overview about product range and
customers
Figure 2. Comprehensive use case overview
PROJECT EXAMPLE
Within this project use case the profitability analysis was implemented based on base camp’s standardised
approach from chapter two. All detailed project activities, deliverables and base camp’s value add can be
found in figure 2.
IMPLEMENTATION PHASE
Realization of the designed profitability
analysis approach
• Implementation of cost centre
structure, internal cost allocation,
machine hourly rate calculation, cost
units and calculation scheme
• Close collaboration with ERP provider
• Validation of process times and bill of
materials
• Testing of implemented profitability
analysis solution
• Process improvements
• Realised deliverables of design phase
• Successfully conducted profitability
analysis of test cases
• Improvement of existing processes
• Design and implementation of new
processes
• Introduction of machine inventory
• Improvement of energy
measurements structure
• Increased input quality for further
calculations
EXECUTION PHASE
Integration of the implemented
profitability analysis solution within
customer’s daily processes
• Go-live of the implemented
profitability analysis solution
• Company-wide instructions and
communication of implemented
profitability analysis solution
• Intensive training of finance
department
• Pre calculation of potential
production order
• Training series for cost centre
managers and finance department
• Process handbook
• Increased awareness for importance
of profitability analysis
• In time submission of tender for
potential production order
• Increased accuracy of finished and
unfinished goods valuation.
GROUP-WIDE ROLLOUT
Realisation of the profitability analysis
solution for further production sites
• Conduct design, implementation and
execution phase for every production
site
• Based on experience of pilot entity
approach
• Deliverables per production site
according to design, implementation
and execution phases
• Group-wide cost centre structure
• Group-wide profitability analysis
• Intracompany benchmark
comparisons
• Profitability analysis on region level
• Approach ensures that company
resources will not be overloaded
| Page 14
In the following sub-chapter, we describe specific
use-case situations and activities that shall give
more detailed information on how base camp realises
profitability analysis by combining the standardised
project solution approach from chapter two and the
consideration of customer-specific requirements.
Design Phase – Generation of a holistic company
overview: To structure such profitability analysis
project, base camp conducted the following activities:
• Expert interviews with C-level management of the
customer at project start.
• Based on such interviews, base camp created an
extensive overview of the status quo of relevant
profitability analysis procedures and the IT system
landscape.
• After the status quo assessment, a fit gap
analysis was conducted, which illustrated the
main areas of work and which tasks need to be
fulfilled to reach the project goal, group-wide full
transparency of profitability by product, product
group and customer.
As a result, the management of the customer
company received a structured and holistic overview
of the company and the value creation procedures,
including main customers and products, based on
the fit gap analysis.
PROJECT EXAMPLE
Design Phase – Consideration of already existing
profitability analysis parts: Another important
task with far-reaching impact for the whole project
was the decision as to what could be used from
the already existing profitability analysis. For this
project we were able to use some parts from the
existing cost centres and their corresponding
structure. Obviously, further cost centres were
added, and some changed to get the final cost
centre structure.
Implementation Phase – Machine Hourly Rate:
During the design phase the decision was made to
calculate machine hourly rates not within the ERP
system. Therefore, the controlling department will
be enabled to do a machine hourly input variation
analysis and get a feeling of how such variations
affect the machine hourly rates. base camp
implemented a machine hourly rate framework
that takes such specifications into account by the
following activities:
• Framework design which ensures consideration
of all the relevant input variables as well as a user-
friendly calculation concept and standardized
file structure.
• base camp supported the portfolio company
also at input collection and validation for the
machine hourly rate calculation.
• The input collection required company-wide
coordination to determine the correct machine
hourly rate values since no systematic approach
for calculating machine hourly rates has so far
existed at the company.
Implementation Phase – Process times and bill of
materials validation: The portfolio company has so
far used the proALPHA ERP system to plan and steer
the production processes, as well as to record
and evaluate production orders. Nevertheless, the
company could not confirm that the used process
times and bill of materials are up to date. However,
process times and bill of materials are crucial
input parameters for determining the correct
production costs. To validate the actuality of the
input parameters, base camp applied the following
validation approach:
• In cooperation with production planning, base
camp defined some test cost units at the end of
the implementation phase.
• By conducting the whole profitability analysis
for these specific test cost units, the whole
process times as well as all relevant bills of
material were validated and at the same time
the functionality of the profitability analysis
could be proven.
| Page 15
Pilot Phase – Consideration of different process
times: After the go-live of the implemented profitability
analysis it became clear that two different production
lines, which are used for the same production
process, have different process steps. In other words,
both machines are used for the same production
process but one of these production resources has
deviating process steps and consequently deviating
process times. As a result, the production costs of
the deviating resources were considered incorrectly
in the initial implementation. To ensure reliable cost
values and comparability between both production
lines, base camp approached such issues as follows:
• Based on coordination with the production planning
department, base camp adjusted the resource-
specific processes and process times within the
ERP system.
• After these adjustments, some test production
orders, which are related to these specific
production processes, were calculated to validate
the cost effect based on the differentiation of the
production processes.
• As a result, it is now possible to compare both
production lines and get the correct costs per
PROJECT EXAMPLE
production order depending on the chosen
production line.
Pilot Phase – Consideration of production support by
office employees: Another issue that arose after the
go-live was the office employees’ production support
in peak times and the correct recording of these costs.
In the past such support was valued with the hourly
rates of a production employee and consequently with
the wrong cost value. The customer wanted to keep
such fallback solutions in cases of missing production
employees during production peaks.
• Therefore, base camp discussed and analysed
the scope of such production support with the
responsible production planning department.
• Based on this discussion, base camp created a
solution which considers the average hourly rates
of the affected office employees and thereby
determines the actual costs of such support
procedures.
After successful adjustment of the two above-
mentioned issues and a functional profitability analysis
proven, the implementation for the predefined pilot
entity was successfully finished.
Group-Wide Rollout – Consideration of potential
customers: The group-wide rollout always starts
with interviews of the local experts like site
management and employees from production
planning. During such an interview session
for another production site, the site manager
mentioned that it is very possible that they would
soon start production for a new customer. Based
on the interviews and the additional need of the
site manager, base camp integrated this additional
customer as an analysis possibility based on the
following activities:
• Coordination with the sales department to get all
the relevant customer and product information.
• Integration of the above-mentioned information
within the ERP system.
• Testing and validation based on the specific
cost units.
Based on experience from the pilot entity in
general, the group-wide rollout for the remaining
five production sites abroad could be finished
within four months, which corresponds to a 33.33%
shorter project time.
| Page 16

3.4 Project Outcomes
An agile project
management approach
aims to integrate and to
consider a standardized
solution efficiently
as well as to consider
customer-specific needs.
PROJECT EXAMPLE
Besides the project phase’s specific
deliverables, as mentioned in figure 2, this use case
project resulted in further company-individual
outcomes, which will be explained in the following
section.
Standard Scope:
• Management and Investor Reporting: To give
an overview of the profitability analysis main
results, base camp created Microsoft Power
BI-based business intelligence reporting
management and investors. Such visualisations
give overviews of profitability for every production
site, customer, product group and product.
Based on the combination of an implemented
profitability analysis within the existing ERP system
and a comprehensive BI-reporting solution, the
management of the company is now able to get
profitability insights within a few minutes.
main As the reporting is based on the proALPHA ERP
system, real time data will be visualized within the BI-
reporting, either on a single entity level or on a group
wide level. The following screenshot of one exemplary
dashboard shows you the important features of the
BI-reporting solution.
• Budget implementation: Beyond the profitability
analysis and the reporting solution, base camp
was asked during the project to design and
implement a budgeting process which allows an
for actual vs. budget comparison on profitability level.
The budget implementation was designed based
on the approach of planning on the cost centre
and cost unit levels. base camp supported the
company by implementing the designed budget
planning process which is fully integrated into the
profitability analysis solution. Thus, management
can now use actual vs. budget comparisons, within
a single system, to control costs.
| Page 17
 1 Customer Month Fiscal Year

Overview Contribution Margin I All 1 9 2020 2020

6 Sales ACT [k€] Sales BUD [k€] Δ Sales [k€] EBITDA ACT [k€] EBITDA BUD [k€] Δ EBITDA [k€]

€ 23.444 € 21.109 € 2,336 € 2.765 € 2.428 € 337

Sales, Profit Contribution I [k€] and Contribution Margin I [%] Customer by total sales [%]

2 Total Sales PC I CM I 3 8,42%

70% Customer
€ 3.000
23,6% Customer 1
60% 66,79% Customer 2
€ 2.500 Customer 3
Customer 4
50%
40,8% 40,0%
€ 2.000 39,2% 38,6%
36,5% 37,5%
36,1% 35,6%
34,4% 40%

€ 1.500 Part group by total sales [%]

30%
4 8,06%
€ 1.000 Part group
20%
11,43% 32,1%
Part group 1
Part group 2
€ 500 10%
Part group 3
20,72%
Part group 4
27,68% Part group 5
2020 01 2020 02 2020 03 2020 04 2020 05 2020 06 2020 07 2020 08 2020 09

Production Sites

5 Site 1 Site 2 Site 3 Site 4 Site 5 Site 6 Site 7 Site 8

Figure 3. Exemplary profitability dashboard

1 The filter options at the top of the dashboard allow the user to filter along the dimension’s customer and date. Once the filter is set, it is valid for every dashboard within the whole BI-reporting.
2 This combined column and line chart shows the development of Total Sales, Profit Contribution I and Contribution Margin I based on the configured filter options in number 1, 3, 4 and 5.
3 The pie chart shows sales split up by customers. If a customer is selected in this chart, all the information on this dashboard is linked to this specific customer.
4 The pie chart shows sales split up by part group. If a part group is selected in this chart, all the information on this dashboard is linked to this specific part group.
5 The filter at the bottom of the dashboard allows the user to select for one or more production sites. In combination with filter numbers 1, 3 and 4 it is, for example, possible to analyse the share of sales for customer 1 in production sites 1,3 and 7.
6 The important data for management and investors, Sales and EBITDA, are additionally included in the time dimensions actual and budget as well as the corresponding delta. These values also interact with the filter options from numbers 1, 3, 4 and 5.

PROJECT EXAMPLE | Page 18

Additional Specific Project Support:
• Personnel hourly rate: Based on the management
requirement to create the option to consider and
analyse the production-related personnel costs
per one-hour production, base camp developed
a so-called personnel hourly framework. This
framework includes the labour costs for workers
and other employees who have a direct impact
within the production processes as direct costs.
The indirect personnel costs consist of the
labour costs for team and segment leaders which
have no direct output impact on the production
procedures. By realizing some changes within the
ERP system, we could implement the personnel
hourly rates, simultaneously to the machine hourly
rate logic, within the profitability analysis solution.
• Calculation of potential production orders:
Once the function of the implemented
profitability analysis solution had been proven,
PROJECT EXAMPLE
base camp was asked to support the company The responsible employees from the controlling
during the pilot phase by the calculation process and sales department were integrated within this
of a potential production order during the pilot calculation process. Thereby it was ensured that
phase. The main tasks of this pre calculation the customer would be familiarised with the new
process were: procedures and approach of calculating potential
production orders. Additionally, base camp
» Entry of new parts and materials and documented the whole pre-calculation process and
updating the associated prices within the required input within the process handbook,
proALPHA. which was handed over to the customer after
successful project completion of the pilot entity.
» Adjustments of machine hourly rate
calculation based on new machines which As a result of the implemented profitability analysis
would be required to carry out the production usage, the company was able to hand over the offer for
order. the potential production order in time. Furthermore,
the customer benefited from a practical proven
» Entry and update of the bills of material concept for the pre-calculation and the certainty that
concerning the new products and the the submitted price ensures a profitable business. A
corresponding production procedures. further advantage lies in the fact that the company
is now able to pre-calculate their products and can
» Execution of the calculation itself and analyse how much they can reduce their offered price
coordination with the company’s sales team. and at the same time still be profitable.
| Page 19
 Based on the combination of profitability analysis,
management and investor reporting as well as
3.5 Project
Achievements
the implemented budget, the management of the
portfolio company is now able to fully monitor,
manage, and analyse profitability on the group level
as well as on the production site or cost centre level,
based on real-time data. Furthermore, base camp was
able to deliver the following benefits for the company:
• Increase in financial transparency: Based
on a comprehensive profitability calculation
the management can find decisions under full
consideration of profitability.
• Establishment of a single source of truth:
Business insights can be delivered in a
The finalized project
considerably shorter time and with increased
solution offers efficiency. The running ERP system serves as a
improvements in the standardised database for the controlling and
accounting department. Thus, time consuming
whole company, based on data validation tasks based on different table
an efficient and accurate calculation files are not required anymore.
data processing. • Reduction of process time by 50%: The
calculation process could be accelerated due
PROJECT EXAMPLE
to a standardised database and calculation
scheme. As a result, the time until potential sales
offer would be finalized could be reduced from
four to two weeks.
• Accurate data: During the design phase several
procedures could be identified that led to
inaccurate data and prevented a comprehensive
profitability analysis. Within the implementation
and execution phase such inefficient processes
were optimized to be more efficient and generate
usable data. For example, based on our project
the company started to perform a machine
inventory to increase the input quality for the
machine hourly rate calculation.
• Corporate governance improvements: Based
on the implemented single source of truth, the
corporate governance structure of the company
has improved as well. Due to continuous evaluation
of the data within the ERP system by the finance
department, it is ensured that inaccurate
numbers will be detected faster. Therefore, the
risk that management decisions will be based on
incorrect facts can be significantly reduced.
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 ABOUT BASE CAMP

Transparency is key. That’s why base camp management

consulting is your digital Partner when you are dealing with
challenges in terms of transparency and management
reporting as well as sustainable value creation. We are
specialized in solving those challenges for private
equity investors and their portfolio companies.

base camp is a management-consultancy with hands-on

mentality. We are not only preparing slidedecks for
management and investors but we also support
operatively to execute projects and initiatives, if desired.

E. info@basecamp-consulting.com Mühlbaurstraße 1
T. +49 (0) 89 2441 998 – 41 D-81677 Munich
www.basecamp-consulting.com CEO: Marcus Höfer
PROFITABILITY ANALYSIS: GAINING VALUABLE INSIGHTS ON PROFITABILITY BASED ON BASE CAMP’S DATA-DRIVEN APPROACH | Page 21