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Article . 2025
License: CC BY
Data sources: Datacite
ZENODO
Article . 2025
License: CC BY
Data sources: Datacite
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Margin Leakage Detection Through Cross-System Analytics: A Framework for Finance and Operations Alignment

Authors: Thatikonda, Rahul Kumar; Donepudi, Sucharitha;

Margin Leakage Detection Through Cross-System Analytics: A Framework for Finance and Operations Alignment

Abstract

Margin leakage frequently emerges before it is visible in financial statements. Supplier cost increases may appear in procurement systems, expedited freight in transportation systems, price-cost mismatches in sales and billing systems, discount leakage in quoting tools, production disruption in manufacturing systems, and inventory write-down risk in warehouse or planning systems. Finance often observes the margin effect after intervention windows have narrowed. This paper proposes a Margin Signal Governance Framework to detect and route margin-leakage signals across fragmented enterprise systems. The framework consists of six stages: margin signal identification, cross-system margin pathway mapping, leakage classification, margin exposure translation, finance-operations ownership routing, and intervention outcome measurement. The proposed architecture preserves legacy systems of record while adding a governed analytics control layer for Physical Data Element (PDE) mapping, signal extraction, leakage taxonomy management, financial-exposure scoring, decision-rule orchestration, workflow activation, and traceable action closure. A discrete-event simulation was conducted over 180 operating days using 13 enterprise systems, 1.8 million sales-order lines, 420,000 purchase-order lines, 310,000 logistics events, 95,000 pricing records, and 38,000 manual adjustments. Results show that the proposed framework reduced median margin intervention latency from 55.4 h to 12.6 h relative to spreadsheet margin-bridge reconciliation, reduced P95 latency from 148.7 h to 41.8 h, improved leakage-detection precision from 62.8% to 86.9%, increased preventable leakage containment from 33.6% to 76.4%, and produced USD 7.42 million in annualized net economic value. The findings position margin leakage as a cross-system finance-control problem that requires governed interoperability among finance, pricing, procurement, logistics, operations, and commercial functions.

Keywords

decision support, finance analytics, cross-system analytics, pricing governance, enterprise systems, profitability analytics, Margin leakage

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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