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. |