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Measuring logistics costs and performanc... > Direct product profitability - Pg. 78

Danger zone These customers should be looked at very carefully. Is there any medium- to long-term prospect either of improving net sales value or of reducing the costs of service? Is there a strategic reason for keeping them? Do we need them for their volume even if their profit contribution is low? Cost engineer These customers could be more profitable if the costs of servicing them could be reduced. Is there any scope for increasing drop sizes? Can deliveries be con- solidated? If new accounts in the same geographic area were developed would it make delivery more economic? Is there a cheaper way of gathering orders from these customers, e.g. the Internet? Protect The high net sales value customers who are relatively cheap to service are worth their weight in gold. The strategy for these customers should be to seek relation- ships which make the customer less likely to want to look for alternative suppliers. At the same time we should constantly seek opportunities to develop the volume of business that we do with them whilst keeping strict control of costs. Ideally the organisation should seek to develop an accounting system that would routinely collect and analyse data on customer profitability. Unfortunately most