Improving Cost to-Serve and Maximizing Sales and Margins
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Transcript of Improving Cost to-Serve and Maximizing Sales and Margins
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The Supply Chain Intelligence Company
Brent GlendeningVP, Supply Chain Solutions - Halo
Halo Cost-to-ServeImproving Cost-to-Serve and Maximizing Sales and Margins
Lora CecereFounder - Supply Chain Insights+
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Supply Chain Insights LLC Copyright © 2016, p. 2
Study Overview
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Supply Chain Insights LLC Copyright © 2016, p. 3
Summary of Groups, Processes, & Programs
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Supply Chain Insights LLC Copyright © 2016, p. 4
Half of Respondents Report It Is Difficult to Get Total Supply Chain Costs for Operations
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Supply Chain Insights LLC Copyright © 2016, p. 5
The Finance Tactics with Greatest Opportunity Are Risk Management, S&OP, and Cost-to-Serve
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Supply Chain Insights LLC Copyright © 2016, p. 6
The Finance Tactics with Greatest Opportunity Are Risk Management, S&OP, and Cost-to-Serve
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Supply Chain Insights LLC Copyright © 2016, p. 7
About Half Have a Cost-to-Serve Program
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Supply Chain Insights LLC Copyright © 2016, p. 8
A/R Processing and Returns Are the Lowest Causes of Cost-to-Serve Variability
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Supply Chain Insights LLC Copyright © 2016, p. 9
Easy to Start. Hard to sustainCompanies with Cost-to-Serve applications improve profitability
High correlation of Cost-to-Serve and companies that out perform their peer group in managing cost
Cost-to-Serve Programs
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Supply Chain Insights LLC Copyright © 2016, p. 10
A better approach to Cost-to-Serve Analytics
Brent GlendeningVP, Supply Chain Solutions
Halo
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Traditional Profitability Management
Data from disparate systems hard to get
Not viewed as part of S&OP process
Measurement is costly, manual process
Sales comped on revenue or gross margin, not true profitability
Fear of losing customers, even if unprofitable
Existing approaches lack the flexibility to respond fast enough
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And traditional systems are disintegrated
Profit management is often crippled by lack of data insight
Cost Management
Visibility
Resiliency
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Analytics for Enterprise and Supply Chain Planning
Proudly Serving 10,000+ UsersHalo DW - Data Warehouse Automation
Halo Data Discovery and Reporting for LOB
Halo Forecasting – Standard and Custom Algorithms
Data Quality Solutions
Dashboards & Visualization
Pre-built Vertical Solutions
S&OP Optimization
Forecasting & Demand Planning
Customer & Supplier Portal
Data Science Managed Services
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Cost-to-Serve
Product Profitability
Customer Profitability
A Three-Pronged Approach Starts with Customer Profitability
What is my customer order and demand history?
What is my customer profitability?
How am I doing with respect to my major customers?
Am I putting any of my customer relationships at risk because of poor performance?
What is my true product profitability?
How can I rationalize my product portfolio?
Which products should I remove? Which should I emphasize?
What is my true Costs-to-Serve – by major customer, region?
Can I segment my customer base with differentiated service offerings?
What can I afford to provide to my customers?
Data“One Source”
HeterogeneousAnalyticsMobilityCloud
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Halo Cost-to-ServePre-built dashboards for
complete visibility into buying trends,
demand and profitability
Understand who are the most profitable customers and maximize overall profitability, revenue, and retention.
Analyze channel performance and take action in real-time.
Know where to focus resources and re-align sales strategies.
Address the five elements that affect overall customer profitability:
Volume Price Cost
Cost to Serve Mix Impact
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Profit ProfileConsumer Goods Manufacturer
Impact
Gross Sales
Net Sales
GrossProfit
NetProfit
1. Selling Costs 2. Cost of Goods Sold 3. Cost to Serve
Sales DiscountsTrade
ProductionCosts
MaterialCosts
WarehouseLogistics
Sales and Marketing
Customer Service
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The Cost-to-Serve LadderCombining CTS will dramatically shift how you see the profitability of a customer, channel or product
Standard Costs• Standard costs, freight
costs and credits
Selling Costs• Also selling costs and
samples
Deeper Costs• With more work, include
rework, returned material or scrap
Service Costs• Finally, add customer
service costs, quality
Net Delivery Costs (and recovery) Distribution Allowances Unplanned Expediting Costs Supply expedited costs Supplier penalties Terms of Sale
Discounts and Trade Spend Merchandising Allowances Performance Spending Listing Fees, Claims & Bonus Costs Special packaging Processing Costs/Order and
Cancellations Contracted Inventory and VMI
Costs of Returns Warehousing & Re-Stocking Discounts and Trade Spend Merchandising Allowances Performance Spending Listing Fees, Claims & Bonus Costs Special packaging Processing Costs/Order and
Cancellations
Costs of non-quality returns, including unsold by contract
Re-Inspection, Testing and Re-packaging Re-Invoicing/claims costs
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Let’s see how it works!
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Scheduled and Alert Based ReportsAnticipate disruptions and take immediate action
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Start Process with Customer Scorecard
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Then Investigate Margins by Unit, Product, Channel
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Drill Down to Customer Level Detail
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Understand the Impact
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Root Cause Analysis with Sales Detail
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Understanding Service Problems
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Finally, Examine Customer Service Detail
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The Supply Chain Intelligence Company
Join Halo at the Supply Chain Insights Global Summit!September 5-8 | Atlanta, GA
+halobi.com | [email protected]