Operations · Manufacturing · Europe
Margin recovery for a mid-market industrial manufacturer
A profitable business losing gross margin every quarter, without agreement inside the leadership team on why. Six weeks of order-line analysis ended the debate and recovered 3.1 margin points.
European industrial manufacturer, roughly €180m revenue, two production sites, 140+ active product lines.
- Gross margin recovered
- 3.1 pts
- Diagnostic to decision
- 6 weeks
- Product lines reviewed
- 140+
The situation
Volumes were stable but gross margin had declined for six consecutive quarters. Commercial leadership attributed it to input costs; operations attributed it to discounting.
No single view of profitability by product line existed, so each explanation was defensible and neither was testable.
Our approach
We rebuilt margin at the order line, isolating price, mix, input cost, and production yield as separate effects.
Two production sites were reviewed against the same standard so that yield differences could be attributed to process rather than product.
Findings were tested with the leadership team weekly rather than presented once at the end.
The outcome
Roughly two thirds of the decline traced to unmanaged discount authority, not input costs.
A revised pricing governance model and a yield programme at the weaker site were adopted, with owners and a measurement baseline attached.
The client is not named and details are anonymised. Figures are representative of the type of business consultation First Osman performs.