Monday, April 22, 2013

Five pillars of Gross Margin Improvement


When growth comes to standstill or products start to become commodity …nothing else matters as much as maintaining your Gross Margin.

A company can have stagnant revenue but Wall Street will still reward it's shares if it show profitability growth and how do you do it? Look no further than Gross Margin.




Essentially the five pillars of Gross Margin improvement are:

  1. Financial Planning
  2. Operational Effectiveness
  3. Pricing Optimization
  4. Product Management
  5. Sales Effectiveness
Want to know more? I am working on a Gross Margin play book. Drop me a note and will be glad to share.

Operational effectiveness as a Gross Margin tool

Effective Operations can help your company move in the right direction w.r.t. Gross Margin.

The 8 top most things that come to my mind when we look at GM in high-tech industry from an operations perspective are (in no order of importance).

Operational Effectiveness
NMS - (Fixed + variable) Others
Portfolio Alignment
NMS - Freight Savings
Over Head
Transformation Savings
Supplier Savings
Product and Theater Mix
Royalty Management


We will drill down into each some other day in a white paper.