The Two Commercial Growth Drivers
This month's edition of Saphran Analytics University focuses on a single impactful analytic portraying two commercial growth drivers. Any manufacturer in a supply chain seeks to grow its business in two critical ways:
- Increase its share of an end OEM customer's product volume into which it supplies content
- Maximize the monetary amount of content supplied per OEM product/unit
Example - Using an automotive example for the first growth driver, a supplier may provide content to 15% of an automaker's total annual vehicle volume but targets growth by increasing that share of vehicle volume to which it supplies content to 25% by 2020. An example of the second growth driver – increasing the $ amount of content a manufacturer supplies per OEM product/unit – is selling a second or third application onto each of that OEM's product/unit. This increases revenue by adding $ content.
Many of our clients have broad product portfolios and several sales teams. Before working with them, each had difficulty rolling up all of the current business, booked business and high-probability opportunities across its many products and various sales teams to know if and how its achieving growth targets. Unlocking the analytic below for our clients helps them understand how effective their commercial efforts are at achieving these two primary drivers of growth for its major accounts.
The Analytic - In this automotive example, the blue bars show the expected total global vehicle volumes of an OEM customer over the next 5 years. The orange bars represent the share of the OEM customer's total vehicle volume onto which this supplier has sold content (growth driver #1). The gray line details the average $ amount of all content sold per OEM customer's vehicle upon which the supplier has content (growth driver #2).
The story here is that this supplier is doing a good job at growing its share of this automaker's total volume to which it supplies content. By 2020, this supplier has grown by 75% the number of this OEM customer's vehicles to which it supplies content, up to 40% of this OEM's vehicle volume. The real growth challenge with this supplier going forward appears to be selling additional content applications into this OEM customer. The amount of content per OEM customer's vehicle drops off significantly by 2020. From a peak of $3 per vehicle, this supplier drops to $1.87 by 2020 in this current forecast.
Impact and Action - With an analytic like this it is easy to point out the commercial priority for the sales team responsible for this OEM...work to sell additional product applications into this OEM for vehicles launching in 2020 and beyond. Logically, product managers also enjoy this "commercial growth drivers" analytic. Product managers can filter the analysis to see the uptake trajectory of their specific new products and technologies. This helps them effectively work with sales teams to "seed" new product business. In this example, this supplier's product managers should spend time with this OEM customer's account team to create strategies around winning business to supply additional product applications into this OEM's future vehicles.
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Saphran also re-launched its web site at the beginning of the year. Our site communicates the problems we solve for manufacturers, details the Big Data challenge that keeps manufacturers from seeing the future of their businesses, and shares client success stories plus ideas for impactful forecast analytics. This should make it easier to communicate best practices among your team.