Manufacturing

Typical business challenges

• Input-cost inflation that is not fully passed through to customers
• Rising conversion cost per unit as volumes or product mix change
• Working capital locked in raw material and finished-goods inventory
• Capacity added ahead of demand, lowering asset turnover

Relevant financial indicators

• Gross margin and material cost as % of revenue
• Conversion cost per unit
• Inventory days by category
• Capacity utilisation and asset turnover
• Power and fuel as % of revenue

Common operational bottlenecks

• Yield loss, scrap and rework
• Unplanned downtime on constraint equipment
• Procurement concentrated on a few suppliers
• Slow-moving and obsolete stock

Example improvement opportunities

• Material yield improvement project
• Should-cost based renegotiation of key inputs
• Inventory norms by category with replenishment triggers
• Energy cost reduction per unit of output

Examples only. Whether they apply to your business depends on your data.