Volatile commodity markets can cause tremendous pressure on competitors throughout the industrial sector, making robust strategic planning critical for building a competitive advantage. Not only are commodities traditionally a major input cost for industrial participants, but customer demand growth is also often driven by commodity prices. For instance, high demand growth drove record revenue and economic profits for the global Ag equipment segment until 2013, but has slumped since the peak, leaving competitors with a tough road ahead. Metals prices are rebounding, economies are growing and public works projects are in the pipeline, creating a potential tailwind for other equipment manufacturers.
Given these cyclical changes, competitors must capture maximum value during positive cycles and mitigate losses during downturns. Achieving this requires a detailed understanding of which products, parts, customers, and markets drive economic value added (EVA) and which ones destroy value. DPO & Co has deep experience helping clients understand where and why EVA exists and driving strategies that allocate resources optimally.
12-Week Project: Identified $350M accretive revenue ($50-$80M profit) potential for heavy industrial client by assessing profitable adjacent markets, also advising against pursuing six shortlisted products
Impact and Results
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