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Client: A leading manufacturer of heating components for specialized medical equipment. |
Challenges: Profits were declining although the client's industry segment was growing. The client had no direct knowledge of exactly how their products were being used in the finished products manufactured by their customers. Neither did they have any useful data about the size of their potential marketplace. Further, their cost accounting practices masked the manufacturing cost variations among their products so that the actual profit contribution for each of their products was not known.
Solution: In the absence of solid sales data, Management Analytics Group "backed into" some crude estimates based upon the demographics of the ultimate users of selected healthcare and medical equipment. Management Analytics Group also inferred some crude cost estimates based upon interviews with the company's engineers and used these for a rough profitability analysis. With these rough estimates, we identified a small number of high-volume, high-revenue but low-profit products as candidates for price adjustments. At the same time, we identified several extremely low-volume products that became candidates for being discontinued as unprofitable. Management Analytics Group also used its discoveries to help focus the inside sales team upon cross-selling opportunities among the company's existing customers.
Results: Management Analytics Group's discoveries reversed declines and helped put profitability back into the black in just 6 months!
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