Rapid Profit Improvement (Series Post no. 6)
As previously mentioned in this series of posts, many Business Owners and Managers are facing challenges when trying to identify specific areas where additional business profit may be waiting to be unlocked. This is an area in which a fresh set of professional eyes – like ours – can often rapidly uncover previously hard-to-see profit opportunities as we will be looking at your Business from a fresh perspective.
Case Study No. 6 – The Supply Chain contains the single Biggest Opportunity for Profit Savings
A large retailer was struggling to find ways to increase its profit. It didn’t want to put through a price increase as this would have made it uncompetitive in what was a very competitive market.
Based on that premise, we ran our Rapid Profit Radar Process over the business’s overheads.
The first item we flagged as questionable was what looked to be the rather excessive printing costs, which were running at around $200k p.a. One of the Directors, however, advised there was no need to investigate this area as the existing printer was his uncle who provided the service at a discounted rate.
Having regularly heard similar stories from other clients, we nevertheless went ahead and obtained 3 quotes from different printing suppliers. All 3 quotes came back at a $60k p.a. saving. On agreeing to a year’s contract, 1 of the 3 potential suppliers agreed to a $75k p.a. saving. That same supplier was also notified that the retailer would be going back to the market each year to ensure that they continued to receive the required levels of service at the best price.
A $75k p.a. profit saving was achieved from the first supplier that we reviewed. The net saving from a review of all suppliers – both overheads and purchases – was approximately $1.0m p.a.
For more information on Rapid Profit Opportunities simply email us at profit@intotheblue.co.nz.
We always run a Zero-Risk policy with our customers… No Profit Improvement – No Fees.
For more information on creating or improving a business model please call John on (021) 625-871, and further more information please visit Into the Blue.
