80/20 Principle: Application in Manufacturing Companies

Responding to the request of a company in pushing the income statement in profit, the authors of this article propose to apply to the products contribution margin the 80/20 principle. We have gone from an ABC analysis of all the contribution margins of products valued at standard cost, and we proceeded to classify in families of group of finished products, the contribution margin from the lowest to the highest. It was then applied to a cycle "loop" the rationalization of products starting from group 1 and so forth, until you reach the desired result on the income statement. After this analysis was developed the new total cost of the company according to the budget forecast of sales, removing the revenue and costs in excess and defining the resulting operational plan. The result is an improved company where its income statement for the exclusive effect of the contribution of margin of product according to the 80/20 principle, and accordingly, downsize in its business activities. Considering the result above mentioned the development of this methodology can become a standard for the corporate restructuring in a state of crisis.