Focus 8020 Analysis
Focus 8020™ is Bestrane's specialised profitability analysis providing clients with strategic and operational insights into their customer profitability and product profitability.
Typically most businesses understand and report Net Margin (EBIT) from a top down perspective i.e. In a Company, Division & State context. This top down view is useful for accounting and reporting purposes but lacks the depth and visibility required to make insightful management decisions.
Focus 8020™ is a bottom up approach which calculates Net Margin at the transactional level and identifies where the Net Margin is being generated.
Focus 8020™ identifies Net Margin (EBIT) contribution by:
- Customer & Customer Segment
- Product & Product Group
- Brand & Supplier
- Sales Rep & Sales Branch
- Market & Region
Understanding where Net Margin is being generated gives management the visibility required to make strategic decisions.
Once the Management team has a clear picture of where profit is being generated, a program of strategic initiatives is developed and implemented. These initiatives are designed to increase overall Net Margin.
The significance of Pareto’s 8020 rule
In most businesses 80% of Net Margin is generated by 20% of products & 20% of customers. Many of the strategic initiatives are aimed at focusing the business on the 20% of highly profitable products & customers.
What Industries does Focus 8020™ suit..?
Since Focus 8020™ is based on a few universal concepts, it can be applied to most industries including Manufacturing, Distribution, Retail or Service Industries. The focus of theanalysis can be customised to reveal where the majority of costs are consumed and where the majority of profit is generated.
Return on Investment ..?
Focus 8020™ is a detailed analysis and generally identifies many performance improving initiatives. Most businesses will see 3 – 10 times return on investment within 6-18 monthswith the ability to track the value derived from each initiative on a monthly or quarterly basis. The improved visibility combined with targeted actions guide the business along the path ofcontinuous profit improvement and competitive growth.
