Manufacturing Vendor Unlocks Directional Profitability

Top 3 Areas of Impact

Measure customer profitability with greater granularity

Established new pricing and bundling strategies

Improved operational efficiency, segmentation, and pricing

Summary

A division of a multi-million dollar integrated transactional, payment, and marketing solutions provider had grown rapidly. Specifically, it needed support with profitability visibility for two lines of business. 

SERVICES PROVIDED
Management Consulting


Challenge

Due to its rapid growth, the company lacked a common ERP reporting system which impaired access to standardized data and reporting. This meant the company had little visibility into profitability based on project, customer or service and needed to understand directional profitability to reach its desired future state. 

Approach

To address the client’s needs, BDO built a “first generation” cost-to-serve model that incorporated operational site data to provide a granular view of customer and product profitability for both lines of business. Our model pulled in data across business entities, site locations, products and operational cost drivers and broke down cost allocation to the product and customer levels. As a result of our analysis, we recommended “go forward” pricing strategies and helped the company assess the profitability of new sales. 

Results

BDO's work delivered the following benefits for the client: