FMCG Profit Leakage Analysis

Seven common leakage sources

Leakage rarely comes from one dramatic error. It usually accumulates through repeated commercial exceptions and operational patterns that separate ERP reports do not connect.

• Customer × SKU combinations below intended margin
• Purchase-cost increases not reflected in selling price
• Discount exceptions and price dispersion
• Credit notes and repeated return patterns
• Supplier rebates or claims not captured economically
• Ageing, excess and expiry-prone inventory
• Long credit and high cost-to-serve

Measured facts versus scenarios

A credible analysis separates reconciled financial facts from directional indicators and modelled opportunity. Expected savings are not realized profit. Every opportunity should show its formula, assumptions, confidence, validation required and the risk of acting.

A useful management output

The final output should prioritize a small number of decisions rather than produce hundreds of anomalies. Each decision needs an owner, deadline, baseline, KPI and benefits tracker so management can compare expected value with what was actually realized.