Finding cost-to-serve opportunities buried in the P&L
In this tough operating environment, companies are often forced to use a generalized strategy on cutting costs in key areas like minimizing supplier replenishment orders
Importantly, the specific total cost-to-serve and profit performance contributions by SKU, Customer and Channel are buried and certainly not visible through the P&L. So what is at stake? Hidden opportunities to realize significant cost reductions while increasing profit margins!
Case In Point: The following table shows the segmentation of customer performance by unprofitable customers (Unprofitable column), marginally performing customers (Bottom 4% column) and very profitable customers (Top 96% column). The same analysis can be done by products, markets, regions and channels.
: Specific and accurate Cost-to-Serve and Net Landed Profit performance knowledge is essential in managing dynamic and changing operating environments. Using generalized information in managing your operation can lead to missed cost reduction and profit protection opportunities. Accurate, specific and repeatable Cost To Serve insights will allow you to out pace your competition and delight your stakeholders.