A fundamental question for every business; “Where do we make money and where are we losing it?”

Answering this question is important, but of itself not enough – knowing what drives profitability and how to change it is the essential element that enables you to improve. The AdvisorBase profitability analysis not only delivers analysis on profitability by:

By customer

By product

By customer by product

By product by customer

… it also identifies what drives profitability in each area.

Profitability analysis can be a daunting task, there are so many interdependencies. For example, changing pack size (say 24 to 12 per case) has multiple effects:

Production packaging costs change

Warehouse handling costs change for less than full pallet orders – eliminating those expensive less than case picks … but more cases per pallet increases cost of less than full pallet picks.

Freight costs may change, depending on contract structure.

A small order quantity market may open up, leading to many small, high cost to serve orders.

… do you know the real cost of new product development?

Our approach is to:

1.

Understand which product and customer combinations make or lose money – to understand the current business.

2.

Understand what makes each of the product and customer combinations profitable, or not - to understand the drives of profit for the business.

3.

Use a scenario model to test initiatives that may improve profitability, initiatives such as:

•

Dropping or enhancing product lines

•

Changing route to market, changing how business is done with each channel or customer group

•

Limiting or expanding the territories served

•

Including or excluding third party distributors from the supply chain

•

Re-locating distribution centres.

Profitability analysis can be undertaken as an in-house coached project or a face-to-face conventional consulting project.