EDF Expert Shares 4 Ways to Increase Profitability and Sustainability in 2014

Elizabeth SturckenRecently, EDF expert Elizabeth Sturcken wrote a post featured on Retailing Today about 4 ways to increase profitability in 2014. She highlights that “as the holiday dust clears and we settle into a new year, it’s only fitting that retailers take a moment to reflect on successes of 2013 and identify opportunities for 2014.”
Sturcken and her team put their heads together to identify the following opportunities to maximize efficiency and benefit the bottom line:

  1. Look at your waste
  2. Look at how you are transporting goods and products
  3. Look to source and sell better products
  4. Look at your buildings

These four areas are ripe with opportunity not only for retailers, but also for organizations across the board. If your business could use some advice in benefitting the bottom line though environmental wins, read her full post, which is full of smart ideas, on Retailing Today.

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Great piece Kelly - Definitely there are dollars in waste the most surprising thing how underestimated the value of those dollars are. It could really be argued that those cost reduction specialists laser focused on enhancing profitability in every business are the most valuable asset that every company have. The argument would begin something like this...........

Every dollar you save through cost reduction—one of the primary purposes of your business systems—is far more valuable than the dollars that come from sales. In tough times, cost cutting can preserve your bottom-line profit when your top-line sales are struggling. Let me explain.
A sales dollar is reduced by commissions and other sales costs, the actual expense of the product or service you are selling, and even administrative or overhead costs. In fact, a net profit is all that remains. For example, if you sell a $100 product, and you have an 8% net profit margin, that $100 sale will eventually put eight dollars in your pocket.  

On the other hand, if you save $100, THE ENTIRE AMOUNT GOES STRAIGHT TO YOUR BOTTOM LINE. YOU GET TO KEEP IT ALL!

Sales Equivalent

Another way to look at this is to calculate the “sales equivalent” of your dollars saved. If your company has an 8% net profit, and you save $100, it has the same effect on earnings as $1250 in sales.

The formula for calculating sales equivalent is as follows:

Amount of Savings ÷ Profit Margin = Sales Equivalent
($100 ÷ .08 = $1250)

The smaller your net profit margin, the greater the impact your cost reduction becomes. In the example above, if your profit margin is 5%, the $100 of savings has a sales equivalent of $2000; with a 3% margin the sales equivalent is $3,333. What is the sales equivalent of a $100 saved in your company?

Hats off to all the Facility Specialists and Sustainability Directors who are driving these agendas

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