Smartly Pinpoint Significant Cost Reduction Opportunities

Everyone of your customers provides a specific profit contribution to your Quarterly Earnings. It may be very positive, marginal or negative. Clearly knowing and trusting profit performance information at the Customer / SKU level goes beyond what is typically available in a P&L Statement. Having this information on a repeatable basis can lead to actionable strategies on sourcing, pricing and customer related operating costs. For most companies, not having this information leads to a “one size fits all” approach.

A previous client had a typical complex supply chain network of manufacturing locations, D.C.s, local service centers, their own private fleet and third-party service providers. Their network serves 110,000 customers across the United States. Want to guess how many customer locations provided 80% of their operating margin on a repeatable basis?

As shown in the chart, 2,843 customers provided 80% of their recurring profits. 106,362 were very marginal contributing 20% and the remaining 40,517 were unprofitable draining ($5 million) off their yearly earnings.

The Executive Team immediately identified 24 new operating strategies based on the financial performance insights that were provided. One of them was to no longer offer next day service to unprofitable customers.

This change dropped $3 million dollars off of their Outbound delivery costs.

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All the best,

Richard Sharpe
CEO – Competitive Insights