Start with these five checks.
- Confirm revenue and cost-of-goods definitions.
- Bridge price, volume, mix and unit cost.
- Segment product, customer, channel and region.
- Include discount, returns, freight and production variance.
- Check standard-cost and classification changes.
Ask for only what can change the answer.
- RevenueUnits, price, discount and channel
- COGSMaterial, labor, freight and variance
- MixProduct, customer and geography
- ReturnsRefund, disposition and write-down
- CommercialsContracts, rebates and promotions
- LedgerAccounts, standards and period cutoffs
Test one reversible move.
Select one supported margin leak, such as a discount exception or freight rule, and one bounded segment. Replay the corrected rule on history, then pilot it with an approval ceiling. Compare gross profit dollars, revenue, win rate and service; stop if the apparent margin gain comes from lost profitable demand.
A decision your team can use.
- 01A reconciled margin bridge
- 02Margin leakage by segment
- 03Supported commercial causes
- 04A guarded intervention
Common questions.
Should margin percentage or dollars lead?
Use both. Mix changes can improve percentage while reducing total gross profit, or the reverse.
Can price increases fix the problem?
Only after elasticity, contracts, competition and retention risk are assessed.
Why reconcile to the ledger?
Operational records explain causes, but ledger reconciliation establishes that the total movement is real.