Understand your business like never before
The Challenge
Financial systems obscure visibility into the true drivers of profit for your business. While transaction systems capture contribution margin by product and customer, the cost to bring products to market and serving different customers varies, leading to significant variations in profitability.
As Reported
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Contribution Margin by SKU
Contribution margin by SKU shows all SKU’s are profitable…
Fully Costed
Economic Profit by SKU
… but end-to-end economics show ~40% of SKU’s are unprofitable…
Economic Profit by Customer
… and ~20% of customer relationships are unprofitable.
Impact of Using Granular Profit
Granular profit is the backbone to making strategic changes like:
-
Reallocating resources to drive growth of the most profitable segments
-
Fixing unprofitable segments through targeted cost or pricing changes
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Exiting chronically unprofitable segments
These changes have the potential to completely transform your business portfolio.
Case Examples
Client
Actions
Impact
A $3.5B specialty
chemicals business
Refocused investment and growth in their most profitable segment, exited chronically unprofitable segments and reduced excess capacity.
Grew $6M Economic Profit to $160M in 3 years
A $2.5B medical diagnostics business
Restructured deal pricing model to reflect true deal cost, reduced emphasis to grow in an unprofitable segment, rationalized costs and created a playbook to manage customer profitability.
Reversed $140M of negative EP to $100M positive EP in 3 years
A Fortune 100 heavy equipment manufacturer
Granular insights across products, models, geographies and even customers informed investment decisions, pricing, new models and cost management initiatives.
Delivered TSR’s 2.5x the
S&P 500 over 8 years.