Infographic: The Supply Chain’s Billion-Dollar Revenue Problem

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pocharle
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Supply Network Guru
Re: WoW
pocharle   3/11/2013 11:19:39 AM
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I know. There is no sense in praising a billion in revenue if you have a billion in expenses.

The commission structure is a big issue. But I feel like these organizations have to bait the big guns in the industry with these incentives.

Mr. Roques
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Supply Network Guru
Re: Nice infography
Mr. Roques   2/28/2013 7:34:34 PM
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I read that Apple and Google spent more on IP than R&D in 2012. Is that part of the money that is slipping away?

Michael Kerman
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Re: WoW
Michael Kerman   2/28/2013 4:17:19 PM
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pocharle, I hear you.  However, consider these two scenarios:

1)  What is the Billion dollars in revenue really should have been 2x more?

2)  It's not just about how much Revenue you MAKE, but how much you KEEP. 

This is a real issue re: sales commissions.  Many times, companies comp sales people based on revenue but do not take into account all of the incentives and promotions, etc.  So, it is easy for them to over-commission sales people because of expenses not accurately accrued.

pocharle
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Supply Network Guru
WoW
pocharle   2/28/2013 3:46:25 PM
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Who would ever think that the words "Billion dollar revenue" and "problem" would be in the same sentence?!?!

Michael Kerman
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Re: The cost of the tools
Michael Kerman   2/28/2013 1:46:46 PM
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@prabhakar_deosthali, That's an excellent point. In fact, most companies aren't aware of the revenue they're leaking from ineffective contracts, over-paying on incentives, and more. Once they do, they are often quite surprised, especially when they consider how long it's probably been going on. In terms of solving the problem, a cost-effective solution is always a critical element -- I agree, nobody wants to solve a $100K problem with a $500K solution. But if it's a $10M problem, it can really be a no-brainer in terms of NPV, IRR, ROI, or some other payback metric.

Michael Kerman
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Re: Nice infography
Michael Kerman   2/28/2013 12:51:11 PM
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Hospice_Houngbo, I'm glad you found the infographic interesting. You bring up yet another "cost", the costs and risks relating to supplier and channel partner relationships.  Revenue management gaps can strain critical relationships or even cause partnerships to collapse.  This can cripple a manufacturer and at the same time, give their rivals a huge competitive advantage.  In the end, it is the shareholders or investors that shoulder this potential financial burden.

Hospice_Houngbo
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Supply Network Guru
Re: The cost of the tools
Hospice_Houngbo   2/28/2013 11:42:43 AM
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@prabhakar_deosthali 

"we have to carefully weigh the cost of tools to save that billion dollar leakage "

If there is any tool that can help a company to prevent a billion dollars loss, I think it is well worth tryng. 

"the costs to efficient manage the revenue may be more than the revenue saved"

How that? Can you elaborate?

Hospice_Houngbo
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Supply Network Guru
Nice infography
Hospice_Houngbo   2/28/2013 11:25:36 AM
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Interesting and neat visuals. I wish that money tap in the infography were in my backyard. :D How does the money lost by companies affect their commercial relationship with customers? Who pays for that loss?

prabhakar_deosthali
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Supply Network Guru
The cost of the tools
prabhakar_deosthali   2/28/2013 1:14:24 AM
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Thta is true. A cent lost in a dollar in your pocket is many times not noticeable but when we talk of a 50+ biliion dollar business per quarter, that cent becomes equivalant of a billion dollar and that really pinches the business. 

 

However we have to carefully weigh the cost of tools to save that billion dollar leakage otherwise the costs to efficient manage the revenue may be more than the revenue saved



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