7 Steps to Unlocking Millions in Gross Profit Table of Contents Share The 2025 Action Plan: Eliminate Recurring Problems Companies lose gross margin when inefficiencies in planning, execution, and cross-functional workflows create blind spots that result in problems that no one understands how they start or how to eliminate them. Companies that identify and resolve the root causes of recurring operational challenges see significant gross margin improvement. For companies generating $100 million in gross profit, even a 1% improvement can unlock $1 million in additional profit. If you had better planning and execution, how far do you think could you move the gross margin needle? What’s Your Gross Margin Opportunity? The potential impact is real and measurable—the only questions are how much gross profit you are leaving on the table and how much of it can be captured and at what cost. At Ascent Innovations, we help companies initiate low-cost, high-value Agile ROI strategies—delivering measurable improvements within a month. This rapid business impact model helps build executive support for additional efforts. 7 Steps to Unlocking Millions in Gross Margin Step 1: Identify the Problems Costing You Money What Are the Indicators of Opportunity? What kind of problems are we talking about? It varies for every client—but to get your wheels turning, here are some common issues I’ve been helping organizations resolve: High Working Capital – Often a sign of inefficiencies in forecasting, demand planning, inventory management, receivables, or procurement. Margin Compression Despite Strong Sales – May indicate poor pricing governance, uncontrolled discounting, or breakdowns in cost pass-through processes. Frequent Budget Variances and Forecast Misses – Suggest weaknesses in forecast accuracy and cost management, leading to misaligned operational planning. Long Order-to-Delivery Lead Times – A signal of potential workflow misalignment or blind spots between sales, production, and fulfillment. Rising Cost of Goods Sold (COGS) – Points to opportunities in labor, material, and supplier management to better control variable costs. High Labor Costs and Excessive Overtime – Typically reflect upstream planning gaps, such as raw material availability or poor scheduling, limiting production efficiency and capacity. Each of these challenges represents a high-impact opportunity. With focused discovery, we can uncover the root causes behind recurring issues. And here’s the key insight: a single root cause often manifests in different ways across multiple departments. When we address the source, we not only eliminate recurring problems—we unlock broad, measurable performance gains across the organization. Step 2: Quantify the Opportunity Cost of Your Problems How much are recurring problems costing you? Many organizations underestimate the financial impact of daily firefighting—leaving significant value on the table. Through a few focused discovery sessions, we help quantify that opportunity by identifying the business impact of fixing root causes that often manifest as repeated challenges across departments. Start with strategic goals – Align leadership around core priorities to ensure the focus stays on what drives the most value. Engage at the executive level – Review what’s working, what’s not, and where improvements are most needed. Discuss how these challenges are affecting performance today—and what the organization could achieve if they were resolved. Explore at the departmental level – Assess both functional and cross-functional workflows to identify execution and reporting gaps that hinder strategic goals. Capture how these issues impact daily operations and decision-making. Develop a comprehensive issue list – Document pain points across the organization to uncover root causes and prioritize high-impact opportunities. Identify quick wins with high value – Identify low-cost, high-impact improvements that can be implemented in 3–5 weeks to deliver immediate business results and build momentum. By structuring discovery this way, we create a clear connection between strategic objectives and operational improvements—with a focus on quick wins that deliver measurable results. These early successes not only improve performance but also build executive and board-level support for further modernization and long-term transformation. Step 3: Fix the Process Gaps Are Cross-functional Hand-offs a Challenge? Businesses are structured vertically—in departments—but value is delivered horizontally, across functions. Customers don’t care about departmental boundaries; they’re impacted by how well the organization executes end-to-end. Functional silos persist within companies when systems and workflows are fragmented, making it difficult to coordinate planning and execution across the value chain. It’s like a relay race—no matter how fast each runner is, if the baton is dropped between exchanges, the race is lost. What type of problems are rooted in a siloed organization? Here are a few common symptoms of cross-functional challenges: Demand & Order Management: Misalignment Creates Delays Inaccurate demand forecasting leads to stockouts or excess inventory, tying up working capital. Manual order processing increases errors, rework, and fulfillment delays. Approval bottlenecks slow down order confirmations, delaying production start times. Impact: Orders take longer to process, increasing lead times, frustrating customers, and reducing sales velocity. Production & Inventory: Inefficiencies Drive Higher Costs Siloed production planning leads to last-minute scheduling changes, increasing labor overtime and machine downtime. Disconnected inventory management causes materials shortages, stalling production and missing customer deadlines. Rigid capacity planning prevents flexibility, making it harder to respond to demand fluctuations. Impact: Production bottlenecks increase operating costs, reduce order fill rates, and weaken gross margin. Logistics & Fulfillment: Shipping Disruptions and Customer Dissatisfaction Poor warehouse coordination leads to delays in picking, packing, and staging shipments. Lack of real-time tracking prevents proactive issue resolution, increasing OTIF failures. Inefficient routing and carrier selection result in higher freight costs and slower deliveries. Impact: Late shipments increase customer penalties, lost contracts, and damaged brand reputation. Inefficiencies in the order-to-delivery process erode profitability, strain cash flow, and damage customer satisfaction. Ascent helps our clients understand what can be fixed in the current environment and what would be best addressed in a future ERP upgrade. Step 4: Make Smart, Targeted System Enhancements Leverage your existing ERP for quick, high-impact wins. Rather than waiting a year or longer for the payoff of an ERP upgrade, companies can drive immediate ROI by optimizing what they already have: Fix broken or incomplete ERP processes that complicate daily execution. Improve … Read more
