Bottom Line Focus

Shifting Focus to the Bottom Line: Addressing Profitability at a Granular Level Can Improve Margins by 2 to 5 Percent

Following a multi-year honeymoon phase, the CPG market stalled during the first half of 2017. For the first time in recent memory, inflation-adjusted earnings fell to zero in 2017, and prices are expected to see continued downward pressure. Consequently for manufacturers, meeting financial goals now will require a renewed focus on the bottom line.

Fortunately, the immediate financial returns are substantial. Companies can improve their margins by up to 5 percent, provided they followed a proven, comprehensive three-phase approach. This includes relying on a price-cost waterfall model, even with data gaps, to measure the true drivers of profitability business-wide; identifying opportunities for improvement, such as with cost, customer/product mix and price; and prioritizing opportunities by value and executing them with clearly defined owners and timelines.

IRI’s latest Point of View, “Shifting Focus to the Bottom Line: Addressing Profitability at a Granular Level Can Improve Margins by 2 to 5 Percent,” offers insights on refocusing efforts to improve the bottom line, including how to drive efficiencies, overcome barriers and capitalize on the next inevitable upturn in the market.

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