Case study REF#13
THE CHALLENGE
Eliminate systemic cost drivers in Supply Chain
A global construction products technologies company faced a 2-3% year-over-year increased cost of goods sold in a competitive and price-sensitive marketplace. The client tasked ArMur Consulting with eliminating systemic cost drivers in Supply Chain decision-making to simplify and optimize the business portfolio.
OUR FINDINGS
Identified four items for improvement
- No visibility to contribution margins at the SKU and customer level
- Product Management spent most of its time in tactical firefighting with product issues
- Minimal effort to manage margins
- No customer segmentation, and pricing decisions were decentralized
IMPLEMENTATION
We focused on 3 areas of impact
Modeled the contribution margin by SKU and customer.
Created a cross-functional process to allow purging of unnecessary SKUs from the system.
Conducted a customer segmentation to service each customer more effectively.
Designed a Product Management Review by Product Family to make portfolio decisions in a dynamic market.
Established a pricing desk to create consistency and eliminate margin leakage.
Established a sustainable automated profitability report for each product line.
RESULTS
All delivered at a 5:1 Return on Investment
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ArMur was instrumental in putting together the building blocks to better manage our portfolio, up to the point that they knew our data better than we did. We appreciate getting a sustainable solution with the invaluable knowledge-transfer and coaching
VP of Business
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