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
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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