Sales Profitability & Margin Guardian · Brief 01
Contribution margin fell 2.8 points on SKU-4417 while its volume grew
A margin problem, not a demand problem — and the cause is on the line that made it
The one line you configure
Which SKUs and customer tiers are losing contribution margin against their own seasonal baseline this week — and is it price, cost or mix? Read it across the order book, the yield of the line that made the units, and what the material actually cost.
In a nutshell
It is cost, and it starts on the line. Contribution margin on SKU-4417 in the export distribution segment is 14.2% against a 17.0% seasonal baseline — down 2.8 points — while revenue volume in the same segment is up 4.1%. The segment is growing and getting less profitable at the same time. Three things carry it: yield on Lines 1 and 2 at 94.1% against a 97.3% baseline, which on its own adds $0.009 per unit to conversion cost; material lot L-211 bought 6.2% above contract on a Q1 spot purchase; and Tier-B export contracts whose prices are locked, so neither overrun can be passed through. At this trajectory the segment contributes $1.4M less than plan.
At a glance
What moved
Three systems, one week · every signal against its own baseline
| Signal | This week | Its own baseline | What it says |
|---|---|---|---|
| Contribution margin % · SKU-4417 export (ERP) | 14.2% | 17.0% seasonal | The finding — 2.8 points of margin |
| Revenue volume · same segment (ERP) | +4.1% | on trajectory | Growing, so demand is not the problem |
| Yield rate · Lines 1–2 (MES) | 94.1% | 97.3% seasonal | Adds $0.009 per unit to conversion cost |
| Material lot L-211 · purchase price (DMS) | +6.2% | contract rate | A Q1 spot buy, not the contract |
| Tier-B export contract price (ERP) | locked | for the term | Nothing above can be recovered in price |
Read one at a time each row is unremarkable: a good volume week, a slightly soft line, one lot bought on the spot market, a contract behaving exactly as written. The margin line is the only place all four meet.
How the line reached the margin line · what moved, and where it landed
The three sources stay at their own granularity and join on date, line, lot and shift — no ETL, no fact-to-fact join. Every figure on this trace is quoted from the row it sits on; the widths carry no quantity, only the path.
What is at stake, and what is still open
The volume tile is the one that makes this urgent rather than academic: the segment is winning more orders every week at 2.8 points less margin on each of them, and the contract prevents the price from catching up.
So what
Growth on a locked-price contract is only good news while the cost side holds, and it has not. The segment is up 4.1% in volume and down 2.8 points in contribution margin, and neither cause can be recovered where the units are going — Tier-B prices are fixed for the term. That makes this an allocation decision this week and a contract decision at renewal, not a pricing decision at all. At the current trajectory the segment lands $1.4M under plan.
The points that matter
Volume rising is what makes it urgent
Revenue volume in the segment is up 4.1% while contribution margin fell 2.8 points. Every additional order is booked at the worse economics, so waiting costs more than it did last week.
+4.1%volume, same segmentThe cause is upstream of the order book
Yield at 94.1% against a 97.3% baseline puts $0.009 per unit into conversion cost before the commercial team touches anything. The margin line is where it shows; the line is where it happens.
94.1%vs 97.3% baselineThe contract closes the obvious exit
Tier-B export prices are locked for the term, so neither the yield cost nor the 6.2% spot-buy overrun can be passed through. The lever is where the units go, not what they are priced at.
6.2%above contract rateRecommendation
Shift lot L-211 allocation away from the Tier-B export segment and toward customers whose contracts allow a cost overrun to be recovered, open a yield review on Lines 1 and 2 against the 97.3% baseline, and take the 2.8-point gap into the next export contract renegotiation with the yield and lot evidence attached.
Questions it already answers
Is this demand or cost?
Cost. Volume in the segment is up 4.1% and the order book is healthy; contribution margin fell because yield on the lines that made the units ran 3.2 points under baseline and one material lot was bought 6.2% above contract on the spot market.
Can we price our way out of it?
Not in this segment. Tier-B export contracts are locked for the term, which is precisely why the erosion concentrates here rather than spreading across the book — the same cost hits customers on open pricing and gets recovered.
What does the data not settle?
Whether the spot purchase was avoidable. The ledger shows lot L-211 was bought 6.2% above contract in Q1 and what that cost downstream; it does not show whether contract volume was available at the time. That is a procurement conversation, and this brief is the evidence for it.