Title: A case analysis on the invisible profit in liquor manufacturing industry

Authors: V.N. Sundharam, I.S. Stephan Thangaiah

Addresses: ITM-BIT Collaborative Research Programme, Balaji Distilleries Limited, Poonamallee, Chennai 600 056, Tamil Nadu, India. ' Department of Production and Engineering, Balaji Distilleries Limited, Bangalore By Pass Road, Poonamallee, Chennai 600 056, Tamil Nadu, India

Abstract: Operating profit is being derived by subtracting expenses from goods sold or services rendered to customer. The available financial data do not capture the performance issues for today|s manufacturing environment. Manufacturing managers are more perplexed to read the company income statement at the end of year which shows loss even where higher volume of production and sales have been achieved. Since no framework is available to analyse how profit is being distributed among the various activities that form an industry|s operation value chain, they are not fully aware of the real cost implication. This can be achieved by having a clear vision into cost drivers and establishing sound linkages between operational and financial data. A study conducted in a leading liquor manufacturing industry presents implementation of business process reengineering and has improved its profitability and has helped to link critical operational data across its value chain with financial statement.

Keywords: manufacturing costs; invisible profits; business processes; business process reengineering; BPR; value chains; liquor manufacturing; alcohol; operating profits; expenses; goods sold; services rendered; customers; financial data; performance issues; managers; income statements; production volumes; sales; end of year accounts; profit distribution; industry operations; cost implications; cost drivers; linkages; operational data; profitability; financial statements; Balaji Distilleries; India; United Spirits; business innovation; R&D; research and development.

DOI: 10.1504/IJBIR.2011.040099

International Journal of Business Innovation and Research, 2011 Vol.5 No.3, pp.280 - 297

Published online: 07 Mar 2015 *

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