Strategic Planning
So, a new product range launched last year is
eroding profits. What can you do about it?
 | Perhaps you’ve set up a new production line for this product. How heavily
is it utilised to date? |
| Is demand falling short of plan? Could you save money by switching other
products to this line? |
| Is low reliability causing a problem? Do you understand the root causes? |
Now that you know how much it’s costing, perhaps it’s worth investing to
prevent the problem(s) at source.
Meanwhile two of your top ten customers
cost more to service than they contribute . . .
How about the first unprofitable customer?
| Are they “forcing” you to take back out-of-life stock? |
| Do they frequently order the wrong goods, only to return them
much later? |
| Are they consistently late payers? |
Do you want them as customers, or would you rather let them erode your
competitors’ profits?
Let’s look at the other loss-making customer.
| Loyal for years |
| The major buyer of last year’s new (and
unprofitable) product |
| Perfectly positioned to help us sort out the
teething problems |
| Perhaps this will lead to higher demand |
Is the loss caused by their behaviour or our product?
How we can help
We can:
| Analyse problem areas, run special reports |
| Separate fixed from variable costs |
| Debate options with your managers |
| Build scenarios |
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