3. Summarize Current & Potential Business
Currently, the company is generating $2,500.00 (500 units x $5.00) of gross profit on product X sales to the OEM’s “A" equipment line. However, there are 500 more additional units that could be sold, making the remaining opportunity an additional $2,500.00 in gross profit. In terms of the sales of product Y, they are generating $3,600.00 (600 units x $6.00) of gross profit for the OEM’s “B" equipment line. However, there are 400 more units that could be sold, making the remaining opportunity $2,400.00 of gross profit.
In this case, the company still has the potential to secure additional sales within the OEM’s first two product lines. They don’t have all the business and can generate an additional $4,900.00 of gross profit if they managed to become the sole vendor. While this isn’t always possible, it does give the company incentive on pursuing and growing the business. However, there’s one question left unanswered.
How many X & Y products could be sold to the remaining 3 OEM lines that the company isn’t pursuing? What is the potential for gross profit for each line?