Maintaining profitability under pressure with advanced costing

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Maintaining profitability under pressure with advanced costing

With uncertainty in the economy, some parts of the glass industry are experiencing a dip in demand. As your competitors respond by cutting prices, there is more pressure to reduce your prices and deepen discounts.

But the big problem with price discounting is that you can quickly slip into loss-making. So as you experience more price competition, it is essential that you understand your costs properly.

Smarter cost control with Gtrak

Gtrak includes easy-to-use costing functionality as standard, so you can create price lists and authorise discounts that strike the perfect balance between profitability and competitiveness:

  • Evaluate the costs of materials, including how much you expect prices to vary in the coming months.
  • Estimate wastage factors for each of your product lines, including losses from cutting and also from the risk of breakages. Over time, Gtrak will show you how the reality of your wastage is matching up to your estimates, so you can adjust them as necessary.
  • Model your biggest indirect costs, energy and labour, and factor them realistically into product prices.

Cost reporting by product and customer

Tracking your actual costs and sales figures, Gtrak helps you to monitor your profitability week in, week out:

  • You can report on your main product groups and see which of them are making good profits and where you may be only breaking even or even losing money on sales.
  • Gtrak also allows you to review the profitability of individual customers, so you can see where sales people have some room to manoeuvre and where there is already too much discounting.

Gaining deeper insights

If you are really serious about costing, you will want to drill down into the figures to understand why some products and some customers are more profitable than others.

With Gtrak’s advanced costing module, you cut the data in a number of different ways to perform highly sophisticated analysis of your costs.

  • With costing groups you can create more granular reporting, pulling together similar products for analysis together. This may be at a high level, such as order type (processing, insulated glass, supply only, supply & fit) or grouping together accessories such as ancillary stock, glass, spacers, interlayer.
  • Gtrak is also invaluable for understanding different types of costs. For example, how much you are losing to internal rejects or customer returns.
  • Gtrak can also be used to better manage transportation costs, including the impact of excess distance and specialist shipping.
  • Some customers are using Gtrak to create innovative cost groupings which allow them to drill down and analyse costs related to individual contracts and even specific periods of time.

However your business operates, Gtrak will allow you to create costing groups that allow you to look at your business and gain insights in completely different ways.

Real world outcomes

Using Gtrak to manage costs, glass manufacturers are working out exactly how profitable each of their customers and product lines is. More importantly, they are digging down into the details to see why some lines are less profitable than others and where they can make improvements to reduce costs. With these insights they are working out where sales people need to be targeting their efforts and where it is worth offering discounts to win more work.

If you are concerned that your understanding of your costs isn’t as complete as you need it to be, talk to us about making the best use of your Gtrak system, or how you might be better off with a new glass system.