Case Study

Automotive Parts Recycler MarginMaxTM Program

  • Executive Summary
    • A division of a New York stock exchange company.
    • One of the largest suppliers of recycled, remanufactured, and reconditioned OEM auto parts for the collision, mechanical repair and insurance industries, at a fraction at what new parts cost.
  • Challenges
    • Division revenue was growing with no improvement in profitability rate.
    • Gross margins were not sufficient to drive consistent profitability.
    • Limited progress at the division level in achieving required ROI threshold.
    • Strategic decision required regarding the future of the division.
    • Critical evaluation of strategic options and related implementation plan required.
  • Results
    • MarginMax methodology used to design and implement a strategic plan.
    • ROI threshold achieved, resulting in a 25% increase in the gross margin rate.
    • Pricing optimization accounted for a 2.1% gross margin improvement.
    • Sale effectiveness targeted a 9.5% increase in gross margin dollars.
    • Operational performance identified a 3.7% gross margin improvement.

The Thomas Group's Integrated Gross Margin Management process introduced a new strategic approach of focusing on gross margin as the leverage point and incorporating all the key drivers of gross margin into an integrated improvement program.CFO Auto Parts Group