Think business, not spreadsheets™

 

Engagements: Customer x Product Profitability

Client National Chemical Distributor
Challenge Improve profitability of business with huge diversity of product-customer segments and widely variable segment profitability in many local markets.
Solution Estimate profitability of products, customers and product × customer segments. Use activity-based costing to allocate costs of products, warehousing, delivery, selling, and administration to products and customers. Recommend price changes.
Client Impact Significantly increased profitability at three locations by improving retention of profitable customers, increasing profitability of some customers, and ceded some unprofitable customers to competitors.