We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • Upload your video
  • BLOGS & MORE
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • SCQ Forum
      • Reflections
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • Upload your video
  • BLOGS & MORE
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • SCQ Forum
      • Reflections
    • Mobile Apps
Home » Study: Middle-market companies need more sophisticated financial measurements
Forward Thinking

Study: Middle-market companies need more sophisticated financial measurements

November 19, 2013
Supply Chain Quarterly Staff
No Comments

Despite the existence of sophisticated tools for evaluating financial performance, middle-market companies tend to stick to basic financial measurements, especially profit margins. That was one of the key findings in research conducted by the Council of Supply Chain Management Professionals (CSCMP) and the National Center for the Middle Market, a research center at The Ohio State University's Fisher College of Business. Middle market companies were defined as businesses with annual revenues between $10 million and $1 billion.

The survey canvassed 200 respondents about their use of margin management metrics and analytics, the value of those tools, and the impediments to managing margins. Survey participants were strategic and financial decision makers along the length of the middle market supply chain—raw-material suppliers, manufacturers, wholesalers/distributors, retailers, and service providers.

The study found that most firms continue to rely on basic measures to gain insight into the revenues generated by demand for their products and services and the costs associated with providing them. The most commonly used metric, cited by 96 percent of respondents, was the profit margin. The second most common metric was operating margin or return on sales, named by 82 percent of survey respondents. Last on most respondents' lists was cost to serve, cited by only 14 percent.

Given the complexity of today's supply chains, the report said, companies should consider using additional metrics to identify where money is earned and lost over the course of conducting business with diverse customers, products, and services. "Using cost-to-serve models, activity-based costing, and balanced scorecards are all very helpful in understanding where money is being spent and what the implications are on margins," the report concluded. "We encourage managers to look into using these more sophisticated tools—we believe they will make a significant difference in how effectively they manage margins."

What financial metrics are mid-size companies using?
Profit margin 96%
Operating margin 82%
Cost per unit 65%
Profit by product 64%
Profit by customer 61%
Contribution margin 57%
Market segmentation 48%
Functional cost per unit 48%
Cash-to-cash cycle 42%
Profit by product and customer 41%
Balanced scorecard 31%
Activity-based costing 20%
Economic value-added 14%
Cost to serve 14%
Source: Council of Supply Chain Management Professionals (CSCMP) and National Center for the Middle Market
  • Related Articles

    Companies need to do more to incorporate financial controls into their planning process

    Study: Global manufacturers need more flexibility

    Help wanted: Supply chains desperately need employees with sophisticated technology skills

Recent Articles by Supply Chain Quarterly Staff

Report: Global TMS revenues to nearly double by 2025

IBM survey says digitalization trends will sweep trucking industry by 2030

Report tracks rise in cargo theft from storage facilities

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • The 3PL industry: time to reset

  • Resiliency starts with supplier mapping

  • Freight market growth expected to slow in 2021

  • COVID-19 and the health care supply chain: impacts and lessons learned

  • Retailers designing stores to support inventory and logistics work, not just shopping

Featured Video

6cabd6ef 64df 4460 bb11 e90c2bdea0a5

Identifying Intralogistics Solutions to Fit Your Operation: LinkedIn Live Ep. 4

Viewer Contributed
As technology evolves, the advantages of using semi- and fully automated solutions to increase productivity and address labor shortages are clear. However, before an organization jumps fully into automation, optimization is a key step that must happen first. Intralogistics solutions, such as Raymond’s iWAREHOUSE and...

FEATURED WHITE PAPERS

  • Using innovation to manage peak seasonal demand

  • Warehouse Management System Project Toolkit

  • Solving Talent Management Challenges Now and In the Future

  • Shaping Up Last Mile Delivery to Surpass Customer Expectations

View More

Subscribe to Supply Chain Quarterly

Get Your Subscription
  • SUBSCRIBE
  • E-NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing