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2016 | OriginalPaper | Chapter

10. Gross Margin (GM)

Authors : Gilad Issar, Liat Ramati Navon

Published in: Operational Excellence

Publisher: Springer International Publishing

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Abstract

In order to reach a high Gross Margin, which supports the company’s financial health, operations always need to keep an assurance of the product’s supply to the customer and a control over the product’s cost of goods (COGs) together with all of the other operations cost parameters. This can be achieved by translating the operations KPI to the P&L GM improvement goals. Since the operation’s KPI, such as cycle time and yield, are not expressed in financial terms or directly in the amount of money saved, we need to convert the operation’s KPI to a percentage of the gross margin. Every department in the operation needs to translate its operational metrics and numbers into Gross Margin saving goals, in percentages. Besides reaching the goal of cost saving and P&L strengthening, gross margin improvement projects are an excellent opportunity to encourage people to express their innovation in projects, such as cycle time, COG and yield improvements.

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Metadata
Title
Gross Margin (GM)
Authors
Gilad Issar
Liat Ramati Navon
Copyright Year
2016
DOI
https://doi.org/10.1007/978-3-319-20699-8_10