Guess CFO Markus Neubrand attributed the company’s growing operating margins in part to “clean inventories” and “carefully managed” costs. In today’s volatile operating environment, it is a difficult problem to solve. One critical consideration is understanding the specific and accurate cost and profit performance for each SKU in every inventory location.
The company highlighted below found hidden inventory reduction opportunities of over $400k out of a total Cost to Serve and Net Landed Profit opportunity of $2.9 million (40x return on investment).
Figure 1 Identifying Unprofitable SKUs With High Inventory Levels
Understanding the true costs and profit performance for inventory investments can provide the actionable insights needed to develop more profitable inventory deployment strategies. In one case, an international company serving over 50 countries had significant profit leakage issues. They knew they needed accurate and repeatable inventory insights on their Cost to Serve and Profitability opportunities across their international operations. In meeting this objective, the company was able to pinpoint the significant opportunities noted above.
Using traditional information in managing your inventory investments can lead to missed cost reduction and profit generation opportunities. Accurate, specific, trusted and repeatable Cost to Serve insights positions companies to out pace their competition and delight their stakeholders.