Biggest Losers

The biggest losers report shows the worst jobs and the best jobs in the company.  It is usually distributed to Management and those on cost reduction and improvement teams.

To create the report:

  • Your system should allow you to run a cost of goods sold report.

    • The COGS report will give sales for the period by part
    • Along with a COGS amount for each part

  • The COGS report can be sorted to reveal the top 10 losers and the 10 ten best parts.
  • Sorting the COGS report:

    • Download the COGS report to Excel.

    • Remove any parts that have very low sales, such as service parts.

    • Then sort the report by the contribution margin amount.

    • Remove all but the best and worst contribution margins.

    What to do with the report:

    • Look at the worst parts and find out why they are the worst

    • The Cost Accountant needs to do some legwork.  Talk to the people that run the parts and find out what the problems are.

    • Also find out why the best parts are the best parts.

    • Make notes on the report and give to Management.

    What Management should do with it:

    • Management needs to review the report and form a team of people to go after the worst parts to make them better.

    • The best parts should be reviewed to see if they can get any better.

    • Can the parts that produce the most revenue be made better?

    • The company should focus its efforts on the parts that generate the most revenue.

    Things to watch out for:

    • Be sure the costs in the COGS report are accurate.

    • Is the burden allocation fair and reasonable?