Enhance profitability with end-to-end thinking

Our Approach

Think End-to-End

Retailers should avoid siloed cost-saving initiatives and instead adopt an end-to-end approach. By connecting data and teams across the value chain, significant cost-saving opportunities can be identified. For example, a leading grocer used a business intelligence dashboard to integrate operational cost data, revealing the full picture of costs from depots to customers. This approach fosters shared awareness and appreciation of decisions’ impacts on product profitability. Starting with simpler activities and scaling up complexity later can uncover deep pockets of opportunity.

Align on a Margin Measure

Organisations often focus on gross profit rather than net profit, missing the full story. Successful Cost-to-Serve initiatives apportion operational cost data down to individual products and fulfilment locations, creating a new operational margin measure. This provides actionable insights into profitability differences across locations and product routing. Implementing a business-wide operational profitability margin KPI ensures consistent reporting and guides decision-making, prioritising initiatives that drive effective cost savings.

Get Granular

Retailers need to analyse costs at a granular level, identifying key cost drivers such as problem categories, SKUs, and fulfilment routes. Accurate and reliable data is crucial for making targeted changes. Integrating and synchronising disparate data sources enables precise understanding of cost-to-serve and product profitability. Collaborating with experts to build cost models can provide richer insights than static calculations. Investing in data infrastructure maturity supports strategic goals and enhances decision-making.

Understand the True ‘Why?’

Interrogating data and modelling scenarios reveal hidden opportunities to optimise costs and improve operational margins. Challenging assumptions and conventional wisdom uncover areas for innovation. For example, modelling the impact of shelf allocation on product profitability can identify unprofitable categories and trigger investigations into store layout changes. Asking questions like “What is the true cost of running a promotional period?” helps uncover actionable insights.

Adopt a Mindset Shift

Data must be acted upon to drive change. Engaging the entire business in the change journey is crucial. End-to-end decisions should consider cost alongside customer impact. Modelling different scenarios and using shared KPIs can remove emotion from decision-making. For example, a general merchandise retailer used a model to illustrate the cross-functional impact of strategic decisions, fostering effective leadership and end-to-end implications. Engaging teams in KPI creation and rollout drives fundamental shifts in ways of working and business operations.

How Capgemini Can Help

Capgemini offers a ‘Product Profitability Accelerator’ to help clients start small and scale fast, delivering tangible benefits. With extensive expertise in retail and advanced data analytics, Capgemini can support your business transformation and help you achieve your goals.