Profitability Increase of 12.4% in 5 Months for a Wholesaler
A food wholesaler had a problem with escaping margin. We rebuilt the discount model and eliminated 3 unprofitable delivery routes. The result was visible in the balance sheet after 150 days.
Euro-Hurt Częstochowa was losing money on logistics and poorly calculated discounts. We conducted a hard analysis of 14,382 invoices and changed the rules of the game. The result is a real increase in net margin of 12.4% in less than half a year.
The challenge
The owners noticed that turnover was growing, but less remained in their pocket. In March 2024, the margin fell to 3.7%, which, with rising fuel costs, was becoming risky for liquidity. The main problem was 47 key customers who received discounts reaching 18%. They did this despite ordering goods with a very low individual margin. Additionally, three delivery routes near Częstochowa were generating losses of 1,430 PLN per week each. The reporting system didn't show these gaps because no one was counting the cost of a single vehicle stop.
Our approach
The Efficiency Architects team entered the company in April 2024. We started with a profitability audit of each of the 2,134 inventory items and every driver's route. For the first 14 business days, we checked whether the ERP system correctly calculated storage costs. We focused on facts, not on what seemed apparent to the sales department. Concrete facts on the table: we had to find 150,000 PLN in monthly savings to return to safe profit levels. We checked this on 427 examples from the past and knew where to look.
The solution
We implemented a new, rigid pricing policy model. The system now blocks discounts over 6.2% for products in the lowest margin group. We eliminated unprofitable deliveries to the Kłobuck and Mykanów municipalities. Customers from these areas were moved to a self-pickup system or courier shipments, which eliminated the cost of maintaining two cars. We trained 9 salespeople on the new arguments. Instead of fighting on price, they started offering a 3.5-hour delivery guarantee within the city. The entire process took us exactly 152 days from the first analysis to the final report.
Results
The company regained control over the margin without losing key recipients. Only 3 of the least profitable customers left, which paradoxically improved the financial result by another 0.8%. Numbers don't lie: the order book is healthier now, and logistics costs fell by 19.3%. We cut unnecessary costs where others see only 'costs of doing business'.
Timeline
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April 2024Audit of 14,382 invoices and full analysis of logistics costs.
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May 2024Implementation of discount blocks in the ERP system.
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June 2024Elimination of 3 unprofitable routes and change of logistics model.
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August 2024Verification of financial results and stabilization of the new margin.
"We were skeptical because the salespeople threatened that customers would leave. However, Efficiency Architects showed us data that couldn't be ignored. It turned out we were paying an extra 1,200 PLN for every trip toward Kłobuck."