How is your company working through the impact of COVID-19? How are you deciding what products to sell and what should be eliminated? How are you deciding the priority of applying your Supply Chain Risk Management resources to your most important suppliers?
Is the driving criteria for these decisions the same type of financial measurements used pre-COVID? Standard financial measurements that do not tell you what small percentage of your customers and products are actually driving the vast majority of your profits and net cash flow?
This is the time for the smart re-tooling of your business based on profit contributions by customer, product and channel. Re-tooling that breaks away from the “Herd Mentality” that your competitors are pursuing?
But how do you get there? What are the roadblocks that come to mind?
Roadblock 1: Data
A popular and profitable apparel company wanted to better understand the profit contributions for every product, customer and channel. They had tried to do this analysis internally and failed. At the urging of their new EVP of Global Supply Chain a subsequent meeting was held with their CFO.
Mike walked up to the projector screen to see the actual cost and profit details by product and customer and said:
“I just don’t think our data is good enough to provide this type of analysis. It is fragmented and inconsistent. I do not trust it enough to deliver these types of results.” - CFO of a leading Apparel Company
4 months later …. $25 Million Opportunity To Reduce Inventory Working Capital
Today, solutions exist that can validate and transform transactional data into actionable insights quickly and efficiently. Companies that move from the crutch of data limitations to addressing data as a significant asset will be the ones that are crossing the bridge to have sustainable profit margin contributions. Actionable data that is specific, accurate, trusted and repeatable.
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All the best,