CEO7

The Objective
• To improve the RFT win ratio and increase margins and revenues

The Background
• Manufacturing & construction company priced their products on a cost plus basis
and were finding major competition when bidding for major projects resulting in a poor
win to loss ratio on RFTs

What we did
• We reviewed contract pricing within the industry which revealed that all companies used a cost plus method (8-10%) to create project value this did not compute with ROI which was averaging less than 8%
• We recommended and implemented a change in pricing strategy involving Deshel’s ROI pricing methodology which took into consideration capacity and asset usage in each project and introduced through life concepts and contract exiting procedures.
• The pricing strategy became integral to managing ROI within the company measured by balanced scorecards and provided a means for incentives to employees.

The Result
• Dramatically improved returns on investment (ROI 25%) and delivered more profitable projects (90%)
• Other improvement in revenue came with the introduction of through life concepts (more revenue and less time to final completion)
– ROI improvement 8% to 25%
– Targeted quotations won previously 35% to 90%
– Revenue increased by 200%

MARGIN IMPROVEMENT BY RETURN ON INVESTMENT (ROI) PRICING

Case Study - Margin Improvement

SUPPLY CHAIN VISIBILITY RETAINS CUSTOMERS IMPROVES MARGINS & REVENUES

The Objective
• To improve customer satisfaction and reduce lost sales.

The Background
• A global petro-chemical company was losing customers and sales through late tanker deliveries. When the tanker was late the customer bought on spot market with resultant lost sale.

What we did
• Detailed diagnostics, analysis of shipments and customer surveys revealed a need to upgrade tanker fleet involving considerable asset costs out side the companies foreseeable budget. increasing the fleet would have incurred considerable capital costs which the client did not want.
• We reviewed the root causes of tanker delay. Customer satisfaction could be maintained and enhanced by ensuring that the shipment arrival time was readily available to the customer giving him the comfort he required.
• A technology strategy delivered a solution. The development and deployment of a secure e-business solution with GPS location devices, providing customers 24/7 visibility of shipments and avoided the customer decision to make costly spot market purchases.

The Result
• This solution maintained 90% of customer orders and allowed our client to further penetrate its market, with its technology differentiation. Margins increased as well as new revenue.