Manage your customers…don’t let them manage you.

Situation
A tier-one supplier was struggling to meet the needs of a major automotive customer while accepting annual price reductions averaging 5%. Capacity devoted to this account was not available to sell to growing customers with higher price and profit potential. Company management was unable to deal with the issue out of fear of losing a long-time account.

Our Approach
We worked with the leadership team to calculate the relative profitability of each product and customer. It became clear that the company was losing money on the existing account, and it made sense to substitute new, more profitable opportunities. A strategy was devised to support re-sourcing of the least profitable products to another supplier while maintaining strategically important business with that customer.

Results
The troublesome volume was replaced with higher priced sales to one of the fastest growing automakers in North America. The company set annual sales records for two consecutive years.