Our analysis showed up our client’s inventory had blown out whereby they were carrying 7 months of stock.  Once we knew how over-stocked they were, we changed the purchasing policy away from bulk buys because their profit was all tied up in the last 50% of the stock that wasn’t selling through.  We then started tracking average spend per customer and found the departments that made the most money.  We then stocked that department with higher margin items with more premium lines and ended up adding $300K to the bottom line. 

We listed out all their accounts and divided the number of hours into the total revenue for the account.  This produced an “hourly rate”.  What was surprising to the client was the mid-sized accounts were highly profitable and the large accounts were all at break-even (due to write-downs, miss quotes and unfavourable trading terms).  We re-quoted the large-size account at pricing review, lost three accounts and retained the rest.  This alone doubled their annual profit.  We also tracked work in progress and its effect on cash flow that led to a changing in trading terms.  The advertising budget was non-existent but thanks to more cash in the bank from WIP, we were able to invest in targeting more of the mid-sized accounts that were most profitable.