Production Plant impact on Gross Margin

Gross Margin is decreasing? The customer isn′t accepting the modification of product price?

Let′s have a look on COGS

What should company to consider and put the questions why the GM is going down

• is the lean program released properly? Lean standard is keeping according introductory standards?
• is the price and consuption of raw material&components in accordance RFQ
• is the performance and productivity in accordance R&R - PSW?
• is the the quality of product in accordance PSW. The cost beyond the scope due to opened points to improve quality outputs, containment or aditional customer quality demand.

Below the line

The energy costs during RFQ were estimated and wouldn′t be in line after PSW time.

This example is from automotive industry but the principles are very similar

If you are looking for experienced Individually or as Team to take a look all this points and go deeper please let me message and let′s open negotiation how we would make your GM back.

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Short cuts:

GM - Gross Margine

COGS - Cost of Sold Goods

RFQ - A Request of Quotation

R&R - Run&Rate study

PSW - Part Submission Warrant

#gross margine #profit #variable costs #business analysis #improvment #relocation #P&L

Team members

Ján Králik

Jozef Balát, MBA

Pavol Danis, MBA