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elctrnx_lyf
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Supply Network Guru
Re: Re : Financial Execs: High Prices Squeeze Profit Margins
elctrnx_lyf   5/23/2011 2:04:11 PM
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Customer importance is given an highest priority by all the companies. So the manufacturers trying to get get closer to the OEM's and the product makers trying to understand more about the customer needs. Since the competetion is vey high in the electronic products the companies are pushed more n more to attract the customers.

anandvy
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Re : Financial Execs: High Prices Squeeze Profit Margins
anandvy   5/14/2011 11:44:13 PM
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"Sixty-four percent reported little or no impact on their business operations"

Barbara,

 Thanks for the update. Nice to know that most of the businesses had little or no impact on their business operations in the first quarter. Do you think this percentage will go up next quarter because its been predicted that impact of Japan crisis will affect the OEM's in the coming quarters ?

Barbara Jorgensen
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High prices and profit margins
Barbara Jorgensen   5/13/2011 10:43:22 AM
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Hi all, thanks for your comments and perspectives. I think focusing on service is a great way to improve profit margins, particularly if the service is conducted through a relatively low-cost way, such as online sales. While there are always costs for transactions, it is still less expensive than hiring and paying a salesperson.

I have an example from an electronics distributor that sticks with me in terms of increasing efficiencies and saving money on the front end. Something as simple as a process change can go a long way. There's a lot of paperwork attached to processing an order--RoHS compliance, etc. At Avnet, a worker in a warehouse realized that that the paperwork attached to an order was always processed after the order was picked, and if the order was wrong or if an item was out of stock, the process had to begin all over again. Now, the paperwork is checked against stock before the order is picked and resolved at the end, eliminating a lot of rework. It didn't cost a cent to implement the change and saved both time and money. It sounds similar to Ariella's GAP experience--good work all around.

Ariella
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Re: Profit Margins Squeezed
Ariella   5/13/2011 8:24:11 AM
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Absolutely, TaimoorZ, in fact it pays to deliver customer service for that reason even if it does involve some cost because that cost is an investment in keeping the customer, which over time is cheaper than having to win over another one to take his/her place. Here's an example from the retail world: I had ordered 2 shirts in the same size in 2 colors. Some time after they arrived, my daughter pointed out that one was 2 sizes smaller than the other, according to the label on the package. She thought I had ordered the wrong size, but the online record of the order proved that I had not. I called Gap and the customer service made sure that I would get the shirt I had ordered with a 15% discount to make up for the error. Also I got a paid UPS label emailed to me to facilitate the return of the wrong shirt. BTW this was all for an item that cost under $6, but Gap knows that if it wants to retain its good name, it has to spend whatever it takes to make up for its mistake.

TaimoorZ
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Re: Profit Margins Squeezed
TaimoorZ   5/13/2011 8:07:40 AM
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@eemom: I agree that improving customer service is one of the non-financial measures retailers can take to improve their profitability. One of the key aspects here is to win over customer's trust and loyalty so that the customer repeats visits on the retail outlet. Given the constraints with implementing financial measures such as discounts and advertisement, this is an important step.

eemom
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re:
eemom   5/13/2011 8:03:22 AM
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I agree with you to a certain extent.  Look at the Apple products.  The Ipod costs a lot more than regular MP3 player yet it set the standard and is the number one player.  Reason for it is that Apple is providing quality coupled with a product that is integrated with software that makes the customer experience worth paying for.  Customer Service can be exhibited at more than just the service you get in a store, it could be in the services the company provides to make paying more for a product, worth it to the consumer.

Toms
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Blogger
Re: Profit Margins Squeezed
Toms   5/13/2011 7:26:23 AM
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1 saves

    Barbara, in supply chain always the 2 common factors, Supply and demand have the trend to walk in opposite directions. Supply vs Demand is always a common topic in business world, where they are meeting very rarely. In a competitive market, prices for products will vary until it settles at a point, where the demanded meets the supply and hence the equilibrium is maintaining. Otherwise if demand is more and supply is less, there may always an uncertainty of price which leads to higher pricing. At the same time if demand is less and supply is more, we can have it for lower price bands and hence profit may be very less.

    So in competitive market, companies or distributors can have better return in two ways. First is always maintain the production level lower than the market demand and second is increase the sales volume.

jbond
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re:
jbond   5/13/2011 7:15:45 AM
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Eventually as the costs go up, the only way to continue to make a profit is to increase the price. The only other way to cut costs to increase profit margin is to make cuts to your expenses, which usually means a cut to the work force. Many companies are trying to avoid that route. I agree that customer service goes a long way, and I am more than willing to spend more money for a better experience but most people right now are looking a bottom line savings. The sales with little profit going to the people willing to pay more will get outweighed by the large amount of sales to the people looking for the cheap goods.

eemom
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Supply Network Guru
Profit Margins Squeezed
eemom   5/12/2011 1:45:14 PM
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If costs go up and prices stay flat then the Profit margin decreases.  However, there is more to cost than the cost of merchandise.  Retailers will have to take a hard look at their operations and try to minimize cost where possible.  Another way retailers can help their profit margin is by offering good customer service.  It seems that good or superior customer service is a thing of the past.  I will pay more to a retailer that provides me with excellent customer service rather than save money with another who does not.  Its really not all about cost, retailers have to find the value add to attract new customers and sustain the ones they have.





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