Profit zone examples

Identify your profit zones, and focus your time and resources on making them grow. Consider your strategy, will you increase profit, or minimize current costs?

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Short-term profits 2 - 8 weeks

Consolidate suppliers to reduce complexity costs

A very effective way to reduce costs is by consolidating suppliers. It might be impractical across large suppliers, but trimming it will reduce your supply chain complexity.

With fewer suppliers you will, naturally, be purchasing more goods from each supplier. It might even be at better prices and definitely with reduced overall complexity cots.

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Increase profit on your best-selling products

Some products are more appreciated by your customers than others - and the price is rarely the single most important factor.

Which of your best-selling products are your customers willing to pay a little extra for? Even a minor increase in price will have a major impact on your profits.

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Competitive bids from vendors

Engage in a competitive bidding process with major suppliers and negotiate the best deal to decrease spending.

Get out of the comfort zone and benchmark high-impact spending. Even if you plan on staying with your current supplier, this will keep their pencils sharp.

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Dead items - don't let them ruin your KPI's

Dead items ruin your Key Performance Indicators because they blur the picture.

Isolate them in your KPI dashboard and measure it. How big is the problem? Set up crystal clear guidelines on how to handle dead items. Create a road map and take appropriate action: return it, swap it with a high-runner or mark it down.

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Tune stock policy parameters to support diversity

How well are your stock policy parameters configured to handle diversity?

Your product portfolio is always unbalanced. Less than 10% generates more than 50% of the value created. Analyze the "big picture" and use policy differentiation to balance your stock.

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Ask for discounts

Asking may seem awkward or "not nice", but not asking is a surefire recipe for high-end costs.

To get what you want, ask. Train your team to ask for high-impact discounts and remember to recognize and reward team members who do this.

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Product profitability - do you loose money selling?

How good does your product portfolio look when you combine net sales with the gross margin?

A simple profit analysis reveals how your products are dispersed into different segments - from 'Very Good' to 'Very Unprofitable'.

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Long-term profits after 8 weeks

Avoid peanut butter approach

Avoid the risky "peanut butter approach" - spreading the same tactics to all aspects of the business.

Spend and spread your resources wisely by defining clear targets to each segment. From high-impact business to low-impact business.

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Take good care of new items

Are you regularly feeding in new items to please customers? Help keep your customers grateful, but do not lose profitability in return.

A few new items run high, some run low - and the most run dead. Address these categories by favoring "shooting stars" while systematically liquidating those newbies with a proven failure-to-thrive.

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Negotiate cash-to-cash terms

Working capital is high-priority to many businesses. Even without a focus on liquidity, you are being squeezed by customers and suppliers.

Analyze high-impact account payables and accounts receivables to improve your cash flow cycle.

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Reduce inventory levels - increase service level

Most of our customers reduce their inventory levels by 20-30 % the first year. And they increase their service level. How?

Using structured analytics provides an overview of your complex supply chain, allowing you to identify patterns and to set up procurement strategies for each pattern detected. Everything becomes much easier.

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Nurture the right customers

At the end of the day some customers are more important to your business than others.

But do your colleagues know precisely who to walk the extra mile for? Analyze your customers and divide them into different categories based on their importance, then apply differentiated service levels.

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