BBO Consulting

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IT Distributor in JHB

Challenge faced

  • Lack of visibility regarding GP% – could only see GP% 3 weeks after month end
  • Average GP% sitting on 9.1% on sales of R5 billion
  • Inability to rank product categories and customers based on a combination of profitability (GP%) and cash flow use (net working capital days)
  • Too much inventory and debtors sucking up cash flow
  • Extremely high freight costs

Results

  • Within 9 months:

    • Ran a GP visibility project together with the data analyst
    • Gained insight into margins on a weekly basis
    • Increased pricing on unprofitable customers and eliminated unprofitable product categories
    • Average GP% increased to 9.3% on R5 billion – translates to R10m annual improvement
    • Improvement of R200m in working capital
    • Reduction of R20m per annum in freight costs