While it might seem logical that acquiring more and more customers to your existing customer base is the only path to growth and expansion. However, there is another even more critical path to business growth, profitability and sustainability. It is a systematic undertaking of cost to serve analysis (C2S). Supply chain experts will tell you that the importance of C2S analysis cannot be over emphasized. This is because C2S provides complete visibility on the returns that each individual customer you have generates for your business. Having this visibility empowers you to identify just which customer to focus on enhancing relationships with and which customer you will not be sad to kiss goodbye to.

C2S also help identify cost drivers, identifying cost drivers will help you explore various ways to minimize or eliminate them. It also helps in developing the most effective product channels for your customers. The 3 main models of C2S: Traditional, Transaction, and Timing have 3 basic components: customer, channel, and product. Undertaking an accurate C2S require that high integrity of data analysis be maintained. It also requires transparency of resource allocations to various activities across the chain and the transparency of rules of data modelling employed. When this is done, the accuracy of C2S is enhanced. Implementing C2S takes time and effort but the good results of doing so far outweigh the efforts employed.

 

If you are serious about becoming profitable, reducing cost in your supply chain and remaining competitive then implementing C2S is for you. We will be glad to help you implement a robust C2S analysis using our cost to serve calculation template and engine, feel free to call on us today.  

Smyna
Supply Chain Consulting

 

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