Companies are burdened with an ever-growing portfolio of products and services, while customers struggle with overchoice. But portfolio optimization is rife with pitfalls. We can guide you.
Whale Curve: 20%-30% of products typically generate 300% of a company’s profits
After years of line extensions, unfocused product and service expansion, and poor product lifecycle management practices, businesses are drowning in too many products and services. The result: inflated costs, high levels of working capital, poor execution, and lack of focus. Customers suffer too—they’re on the receiving end of poor service levels and left to navigate an overwhelming portfolio. Many give up and go elsewhere. Getting your portfolio right is as much about keeping and growing your customers as it is about becoming a more profitable business.
We typically see 20%-35% of a company’s products or services generate 300% of profitability, while the rest are a drag on the business, shown on the so-called 'Whale Curve'. It is not surprising that portfolio optimization is at the top of many companies’ to-do lists.
Unfortunately, these exercises frequently fall short—languishing in a never-ending debate between supply chain and marketing or being reduced to a ’chop the tail’ exercise with no clear benefits. While leaders can see the opportunity that would come from simplification, how to address the situation seems elusive:
Wilson Perumal & Company is the leader in portfolio optimization, with unique methodology and deep insights, honed through many years of experience. Our difference includes:
Executives recognize the value of portfolio optimization, but many efforts merely trim the tail. Go deeper to achieve a 20%–40% improvement in EBITDA. Read our latest issue of Vantage Point to learn how using our 5 Facet Approach.
Read the Vantage Point
Portfolio optimization remains an under-utilized lever for value creation in most companies, despite many leaders recognizing the growing complexity in their organizations. Learn how CPG companies can increase EBITDA 10–30% and reduce working capital 10–25%.
Traditionally, businesses used standard costs based on fixed and variable costs to make decisions regarding product rationalization, pricing, and new product development. Today, however, complexity has changed the game. Armed with the knowledge from WP&C's Square Root Costing, companies can build better strategies around business problems such as product mix, innovation, and international expansion—enabling them to better compete in our complex world.
Your standard costs are wrong! Read our latest research published by Cost Management to uncover how traditional costing methods undercost low-volume products, and learn about the alternative method: Square Root Costing.
As companies seek to drive growth, they are often overwhelmed by complexity resulting from product proliferation. Portfolio complexity can quickly lead to decreased margins while also typing up valuable capital. When done right, portfolio optimization can bring immediate benefits to support resiliency.
Learn how we helped a leading cosmetics company tackle complexity to regain profitability
“WP&C is helping us transform our business. Their insights are phenomenal!”
“Wilson Perumal & Company's approach treats complexity as the enemy. Declaring war is the most direct route to an efficient, profitable enterprise. We declared war on the complexity in our portfolio, resulting in streamlined customer offerings and a more nimble business.”
“This was a quick and painless way to understand our true product profitability, and it challenges how we think about our business. I am extremely pleased with the results.”
“WP&C’s insights into our portfolio, cost structure and growth drivers have changed the way we think about our business. The brand management playbooks they developed for the business will be critical to how we make decisions going forward.”
“I have been more than pleased with what you have been able to accomplish in this time. Beyond my expectations...Spectacular!”
“Fantastic piece of work! You’ve really shed a lot of light on our business. Inmarsat will benefit enormously from your contribution and we will be using your structured thinking to guide us through the decision-making to come.”
“If you take all six times [past projects] where we looked at this, over the past ten years, and rolled them all up together, and multiplied by ten, it would still not be as good as this work.”
“Army personnel credit the collaboration between Joint Munitions Command, CAAA's higher headquarters, and consulting firm Wilson Perumal & Company for identifying areas to improve the munitions distribution process.”