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Case study

Implementation of a customer / item contribution margin accounting system for the profitable management of a medium-sized production company (approx. 10 million sales)

Task

In the past, target figures were defined independently of a contribution margin for the target-oriented sales management of a medium-sized company. Through constant growth over the years, the customer portfolio was continually expanded and spread across various sales channels.

In order to align the customer portfolio across the different sales channels in a future-oriented manner, there was a lack of consistent transparency in individual contribution margin levels. A contribution margin calculation was to be used to control sales by means of value contributions and also to provide the management with transparency as to which customers or articles were only generating low margins. This should ensure future-oriented growth.

Solution

In order to display all the articles traded by the company and those produced in-house in a contribution margin calculation, it was necessary to set up a consistent costing scheme. Article parts lists had to be entered for each article in the existing ERP system. At the same time, it had to be ensured that the purchase prices of all components used were up-to-date and regularly revised by means of an implemented process.

Times of operations in in-house production had to be recorded and added to the bills of materials. In order to distribute overhead costs to all products according to a realistic key, cost center accounting including machine hour rate accounting had to be implemented. The monthly invoices now had to be broken down on the basis of the resulting item costing in order to display a contribution margin scheme at customer/item level.

After successful reconciliation with the profit and loss statement, a standard reporting was defined and implemented in the BI tool. Finally, all process steps were documented to ensure a sustainable run.

Service areas
Management Consulting
Flowchart
  1. Establishment of a consistent calculation scheme
  2. Recording of times of the different operations
  3. Implementation of a cost center accounting and derivation of machine hourly rate calculation
  4. Maintenance of article parts lists and work schedules
  5. Calculation of the main sales drivers and review of the systematics
  6. Rollout of the costing system across all products
  7. Establishment of a contribution margin scheme for merchandise and in-house production
  8. Implementation of the contribution margin calculation in the BI tool used
  9. Definition and creation of a standard reporting for the control of the sales department
  10. Documentation of the individual processes

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F. 02373 39240 20
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