How a manufacturing company regained profitability through enhanced data visibility

The Challenge: Struggling to Return to Profitability

After years of steady growth, a North American manufacturer with multiple locations found itself at a crossroads. One of its facilities, which was once a reliable contributor to the bottom line, was now struggling to regain profitability following a prolonged dip in demand. Leadership knew something had to change, but the path forward wasn’t clear.

They weren’t sure where the problem originated. Was it pricing? Operational inefficiencies? Product mix? What they did know was that they needed a deeper understanding of product-level costs to inform a strategy that could restore profitability.

Inefficient production and outdated pricing were hurting performance. On top of everything, the recent departure of the General Manager led to a lack of oversight and accountability. The company needed better support for decisions around pricing and product mix. They were ready to dig in, find the root causes, and explore a path to recovery.

The Turning Point: Developing a Dynamic Product Costing Model

The company engaged Elliott Davis to help consolidate its financial and operational data, including overhead, bill of materials, and direct production costs. When gaps and inconsistencies emerged, we collaborated with their team to develop a strategy that addressed those issues and established a forward-looking roadmap for ongoing data refinement and reporting.

Working closely with both the finance and operations departments, we built a dynamic product costing model that integrated recorded data, time study inputs, and informed estimates. This model provided a clear view of product-level profitability across more than 400 products.

The final deliverables included:

• A robust cost model with detailed profitability insights for each product.
• A roadmap for improving data collection procedures to enhance model accuracy over time.
• A set of operational recommendations aimed at reducing inefficiencies and expanding margins.

This foundation positioned the company for smarter, data-driven decision-making.

The Resolution: Gaining Insights and Reducing Production Costs

The company gained valuable product-level cost insights that revealed the story behind the numbers. With this deeper visibility, they were able to identify which products were driving up costs, which ones were hurting profit margins, and where operations could be more efficient. These findings empowered leadership to make informed decisions about adjusting pricing and discontinuing unprofitable products.

Building on this foundation, the company was well-positioned for smarter, data-driven decision-making. They also implemented targeted operational recommendations, including process improvements and resource optimization strategies, aimed at reducing production costs. This structured approach allowed the company to address their profitability challenges effectively and set a clear path for future growth. Rather than relying on broad assumptions or reactive measures, they now had a well-informed roadmap for sustainable success.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.