improving cost to-serve and maximizing sales and margins

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+

Supply Chain Insights LLC Copyright © 2016, p. 2

Study Overview


Summary of Groups, Processes, & Programs


Half of Respondents Report It Is Difficult to Get Total Supply Chain Costs for Operations


The Finance Tactics with Greatest Opportunity Are Risk Management, S&OP, and Cost-to-Serve


About Half Have a Cost-to-Serve Program


A/R Processing and Returns Are the Lowest Causes of Cost-to-Serve Variability


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


A better approach to Cost-to-Serve Analytics

Brent GlendeningVP, Supply Chain Solutions

Halo

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

And traditional systems are disintegrated

Profit management is often crippled by lack of data insight

Cost Management

Visibility

Resiliency

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

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

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

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

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

Let’s see how it works!

Scheduled and Alert Based ReportsAnticipate disruptions and take immediate action

Start Process with Customer Scorecard

Then Investigate Margins by Unit, Product, Channel

Drill Down to Customer Level Detail

Understand the Impact

Root Cause Analysis with Sales Detail

Understanding Service Problems

Finally, Examine Customer Service Detail

The Supply Chain Intelligence Company

Join Halo at the Supply Chain Insights Global Summit!September 5-8 | Atlanta, GA

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improving cost to-serve and maximizing sales and margins

Data & Analytics