Answer these questions to get started.
Collecting data scattered around your company can be tedious. But unless you know where profits are coming from, you can't develop a strategy to make them grow. To get started on the path to growth, manufacturing management consultant Michael Collins suggests answering the following questions.
1. Can you identify your best customers now and in the future?
Gather information about each customer, including company name, location, size, products produced, industry, products purchased from you, total sales dollars, estimated and actual margin and order date. Create tables showing sales trends (in dollars and units) of each product by year. View your data by industry, customer and size of company. Find your best customers so you can look for more customers like them.
2. Do you know which market niches (customer groups) to focus on now and in the future?
In markets where you do well now, do more research to find the percentage of companies you do business with. Can you increase your penetration? Look for other markets where you see opportunities for development.
3. Do you know what products and services the best customers want?
Ask customers to complete a survey about you as a supplier. Compile the scores to see where you are succeeding or need to improve. Ask what else customers need that they don't get from you.
4. Can you compare your products to the competitor's on price, delivery and features?
What products compete with yours, and how do yours stack up against them? What could you change to beat the competition?
5. Do you know the specific reasons you lose orders for every lost order in the last year?
This analysis helps you identify which customers to try to win back, based on the margin you could be earning. Sales reps should go back to the customer whenever you lose business to find out why.
6. Do you know if you make adequate margins on each product line, model or job?
If you are not tracking actual material and direct labor costs, you don't know where profits are coming from. Start tracking cost details, separate variable and fixed costs and know your breakeven point. Determine a pricing policy that ensures that each sale contributes to your total margin and, once you cover fixed costs, to your total profitability.
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