Profitability by Customer and Product
A leading manufacturer required assistance in understanding the total cost of serving their customers at a customer and product level, as well as the impact of each cost activity on the total cost to serve.
Parity conducted interviews with each of the department heads in order to identify the key cost drivers of the business.
After identifying these key cost drivers, we used Microsoft BI tools to allocate each cost activity at a granular level.
This formed the basis of a data model used by the business to analyse the profitability of each customer, product and segment.
The model has allowed the client to better understand the total contribution, or detraction, by each customer and product to the overall profit of the company. The model facilitates this though a cube-type functionality that allows data to be sliced and diced for both standardized reporting and ad hoc analysis.
Through the insights gathered from the model, the business has implemented a number of other initiatives, including development of a logistics costing tool, and redesigning their quoting process to reduce inefficient pricing.