Using real use cases, this presentation addresses the five elements that affect overall customer profitability: Volume, Price, Cost, Cost to Serve and Mix Impact. Understand who are the most profitable customers and maximize overall profitability, revenue, and retention - Analyze channel performance and take action in real-time - Gain visibility into customer buying trends to know where to focus resources and re-align sales strategies. Brought to you by Halo and Supply Chain Insights

1. The Supply Chain Intelligence Company
Brent Glendening
VP, Supply Chain Solutions - Halo
Halo Cost-to-Serve
Improving Cost-to-Serve and Maximizing Sales and Margins
Lora Cecere
Founder - Supply Chain Insights
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2. Supply Chain Insights LLC Copyright © 2016, p. 2
Study Overview

3. Supply Chain Insights LLC Copyright © 2016, p. 3
Summary of Groups, Processes, & Programs

4. Supply Chain Insights LLC Copyright © 2016, p. 4
Half of Respondents Report It Is Difficult to Get Total Supply Chain Costs for
Operations

5. Supply Chain Insights LLC Copyright © 2016, p. 5
The Finance Tactics with Greatest Opportunity Are Risk Management, S&OP, and
Cost-to-Serve

6. Supply Chain Insights LLC Copyright © 2016, p. 6
The Finance Tactics with Greatest Opportunity Are Risk Management, S&OP, and
Cost-to-Serve

7. Supply Chain Insights LLC Copyright © 2016, p. 7
About Half Have a Cost-to-Serve Program

8. Supply Chain Insights LLC Copyright © 2016, p. 8
A/R Processing and Returns Are the Lowest Causes of Cost-to-Serve Variability

9. Supply Chain Insights LLC Copyright © 2016, p. 9
Easy to Start. Hard to sustain
Companies with Cost-to-Serve applications improve profitability
High correlation of Cost-to-Serve and companies that out perform their peer group in managing cost
Cost-to-Serve Programs

10. Supply Chain Insights LLC Copyright © 2016, p. 10
A better approach to Cost-to-Serve Analytics
Brent Glendening
VP, Supply Chain Solutions
Halo

11. Traditional Profitability Management
Data from disparate systems hard to get
Not viewed as part of S&OP process
Measurement is costly, manual process
Sales comped on revenue or gross margin,
not true profitability
Fear of losing customers, even if unprofitable
Existing approaches lack the flexibility to respond fast enough

12. And traditional systems are disintegrated
Profit management is often crippled by lack of data insight
Cost Management
Visibility
Resiliency

13. Analytics for Enterprise and Supply Chain Planning
Proudly Serving 10,000+ Users
Halo DW - Data Warehouse Automation
Halo Data Discovery and Reporting for LOB
Halo Forecasting – Standard and Custom Algorithms
 Data Quality Solutions
 Dashboards & Visualization
 Pre-built Vertical Solutions
 S&OP Optimization
 Forecasting & Demand Planning
 Customer & Supplier Portal
 Data Science Managed Services

14. Cost-to-Serve
Product
Profitability
Customer
Profitability
A Three-Pronged Approach Starts with Customer Profitability
 What is my customer
order and demand
history?
 What is my customer
profitability?
 How am I doing with
respect to my major
customers?
 Am I putting any of my
customer relationships at
risk because of poor
performance?
 What is my true product
profitability?
 How can I rationalize my
product portfolio?
 Which products should I
remove? Which should I
emphasize?
 What is my true Costs-to-Serve
– by major customer, region?
 Can I segment my customer
base with differentiated service
offerings?
 What can I afford to provide to
my customers?
Data
“One Source”
Heterogeneous
Analytics
Mobility
Cloud

15. Halo Cost-to-Serve
Pre-built dashboards for complete
visibility
into buying trends,
demand and profitability
Understand who are the most profitable customers and maximize overall
profitability, revenue, and retention.
Analyze channel performance and take action in real-time.
Know where to focus resources and re-align sales strategies.
Address the five elements that affect overall customer profitability:
 Volume
 Price
 Cost
 Cost to Serve
 Mix Impact

16. Profit Profile
Consumer Goods Manufacturer
Impact
Gross
Sales
Net
Sales
Gross
Profit
Net
Profit
1. Selling Costs 2. Cost of Goods Sold 3. Cost to Serve
Sales
Discounts
Trade
Production
Costs
Material
Costs
Warehouse
Logistics
Sales and
Marketing
Customer
Service

17. The Cost-to-Serve Ladder
Combining CTS will dramatically shift how you see the profitability of a customer, channel or product
Standard Costs
• Standard costs, freight costs
costs and credits
Selling Costs
• Also selling costs and
samples
Deeper Costs
• With more work, include
rework, returned material or
material or scrap
Service Costs
• Finally, add customer service
service costs, quality
 Net Delivery Costs (and recovery)
 Distribution Allowances
 Unplanned Expediting Costs
 Supply expedited costs
 Supplier penalties
 Terms of Sale
 Discounts and Trade Spend
 Merchandising Allowances
 Performance Spending
 Listing Fees, Claims & Bonus Costs
 Special packaging
 Processing Costs/Order and Cancellations
 Contracted Inventory and VMI
 Costs of Returns
 Warehousing & Re-Stocking
 Discounts and Trade Spend
 Merchandising Allowances
 Performance Spending
 Listing Fees, Claims & Bonus Costs
 Special packaging
 Processing Costs/Order and Cancellations
 Costs of non-quality returns, including unsold by
contract
 Re-Inspection, Testing and Re-packaging
 Re-Invoicing/claims costs

18. Let’s see how it works!

19. Scheduled and Alert Based Reports
Anticipate disruptions and take immediate action

20. Start Process with Customer Scorecard

21. Then Investigate Margins by Unit, Product, Channel

22. Drill Down to Customer Level Detail

23. Understand the Impact

24. Root Cause Analysis with Sales Detail

25. Understanding Service Problems

26. Finally, Examine Customer Service Detail

27. The Supply Chain Intelligence Company
Join Halo at the Supply Chain Insights Global Summit!
September 5-8 | Atlanta, GA
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halobi.com | info@halobi.com