Welcome to RightOn Economic Profit Optimizer!
As a member of the SAP Startup Focus program, our company builds products on the SAP HANA platform.
Our app is an elegant predictive analytics technology that leverages data in SAP to optimize Economic Profit. Economic Profit is a measure of your company's financial performance based on your net operating profit after taxes minus your opportunity cost of capital. Inventory uniquely impacts both ends of Economic Profit and this app determines the inventory level that optimizes Economic Profit.
Inventory is among the biggest investments a manufacturer, retailer, or distributor makes. Inventory and production planning are therefore expensive problems for manufacturers, retailers, and distributors all over the world, and finding and maintaining the optimum level of inventory to produce or order can be extremely difficult.
Inventory is a complex business process that impacts both the income statement and the balance sheet. Order too frequently and a business will experience excess ordering costs. Order too much and a business will experience excess cost of capital. This makes Material Requirements Planning (MRP) very important to business performance.
The algorithms in today’s MRP systems are relatively simple in order to keep computation time small; however, they were developed as much as 100 years ago and no longer fit the world of business today. These algorithms do not account for the complex inter-relationships between the MRP settings and these settings are frequently static and not updated on a regular basis. In today’s fast paced world, businesses need to quickly adjust to changes and static settings slow the response time.
ePhiphony Incorporated provides patented predictive analytics software that can automatically find the optimum level of inventory from an investment perspective and a customer service perspective.
Our patented technology stems from decades of experience with businesses all over the world and reinvents today’s outdated and static MRP systems with dynamic MRP parameters that optimize Economic Profit.
Economic Profit (also known as Economic Value Added or EVA, trademarked by Stern Stewart) is a measure of a company's financial performance based on Net Operating Profit After Taxes minus the Opportunity Cost of Capital.
Solutions are provided in terms of classification and clustering of Economic Profit comparing optimum level of inventory, actual inventory level, and the current settings in SAP.
To make MRP real time without utilizing dynamic settings would not truly unleash the power of HANA. To do the unthinkable, this must also be done around technology that evaluate the complex tradeoff’s that must be weighed with inventory and not with models developed many decades ago, such as the Economic Order Quantity or EOQ developed 100 years ago or the Groff Reorder Procedure developed 34 years ago.
These models persist today because they keep computation time small; however, they no longer fit the world of business today. They frequently over estimate inventory requirements. EVA is a complex analysis that leverages the power of HANA. EVA balances the tradeoffs between Net Operating Income After Taxes against the Opportunity Cost of Capital. EVA treats inventory as the investment that it is. It conveniently summarizes into a single statistic the value created above and beyond all financial obligations. From a commercial standpoint, EVA is considered by many to be the most successful performance metric used by companies and their consultants. In traditional applications, it has the limitations of any single-period, historical metric; however, our solution leverages the power of HANA to model which MRP parameters will optimize EVA in real time.
RightOn also uses HANA's Predictive Analytic Library to help turn information into insight by leveraging clustering algorithms to identify groups of materials that provide the best opportunity. With today's ever increasing complexity of product portfolios, this makes it easier to focus on the right materials.