Product Portfolio Optimization

Challenge: A global construction products client faced a 2-3% year-over-year increased cost of goods sold in a highly competitive and price-sensitive marketplace. The client challenged Audere Partners to eliminate systemic cost drivers in its Supply Chain decision-making to simplify and optimize the business portfolio.

OUR ANALYSIS FOUND

There was no visibility to contribution margins at the SKU and customer level

Product Management spent most of its time in tactical fire-fighting with product issues

Minimal effort to manage margins

There was no customer segmentation and pricing decisions were decentralized

Implementation

Modeled the contribution margin by SKU and customer

Business Process Reengineering and Supply Chain Management

Designed a Product Management Review by Product Family to make portfolio decisions in a highly dynamic market

Management Operating System

Created a cross-functional process to allow purging of SKUs from the system

Business Process Reengineering and Supply Chain Management

Conducted a customer segmentation to decide how to service each customer

Business Process Reengineering and Supply Chain Management

Established a pricing desk to create consistency and eliminate margin leakage

Management Operating System

Established a sustainable automated profitability report for each product line

Management Operating System

CLIENT SUCCESS

Results of our engagement include:

Impacted 30% of the 5,500 Portfolio SKUs: 17% of SKUs improved their profitability through price changes, customer actions or raw material substation 13% of SKUs removed through withdrawal or substitution

$3M in annualized global benefits due to price increases, product substitutions, product eliminations, and customer profitability actions

Realized a 5:1 payback for the client

Fundamentally changed how the Product and Customer Portfolio is managed to improve the bottom line

Audere Partners was instrumental in putting together the building blocks to better manage our portfolio, up to the point that they knew our data better than we did. We appreciate getting a sustainable solution with the invaluable knowledge-transfer and coaching”

VP of Business Transformation

Let's talk about how we can Turn Your Potential Into Reality

Get In Touch