When to Use a Bar Mekko Chart When to Use a Bar Mekko Chart Use a Bar Mekko chart when you want to display profit or contribution margin by industry. The wider the bar, the bigger the industry and the taller the bar the greater the margin. Some examples of when you would use a Marimekko Chart are: • Profit by Business Unit • Supply Chain Profitability • Industry Profit Pool • Channel Profitability • Plant Cost Review • Future Growth By Region Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Profit by Business Unit 80% Contribution Margin (%) 70 Total Company Profitability: 65% 60 50 S & po R rt i ec n g re G at o i o od na s l E ,T qu o y ip s m en t e A ut o m ot iv s l ed ic a M R M ub is be c Pl r , P as a tic p e Ap Pr r & pl od ia nc uc es ts an d H ou se w ar e Tr an sp o rt a ti on 40 Use a Bar Mekko chart to analyze profitability for different business units. The height of the bar represents profit margin and the width business unit revenue. You might want to focus on growing the medical unit and not automotive. Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Supply Chain Profitability Contribution Margin (%) 13% 12% 12% 10 8% 8 6% 5 4% 3 0 Total Revenue 2% Raw Material Tier 3/4/5 Manufacturer Supplier $3B $2B Tier 1 Supplier Manufacturer $5B $10B National Distributor Dealer $2B $2B You can also illustrate the contribution and revenue from different segments of the supply chain. Distributors and Tier 3/4/5 suppliers have the highest contribution, while manufacturers have the highest revenue. Add a data row to highlight revenue. Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Industry Profit Pool Profit Margin 30% 25% 20% 20 12% 10 9% 6% 4% 0 Microprocessors Servers Storage Peripherals Software Services Industry profit pools help you identify the most profitable industry segments, which are often not the largest segments. In this example, software and services are the segments with the highest profit margins. Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Channel Profitability 20% 20% 16% 15 14% 10% 10 5 0 Revenue Direct Value-added Resellers $450M $1,050M Global Systems Regional Systems Integrators Integrators $900M $600M If you sell through several channels, you can use a Bar Mekko to look at the profit made through each channel compared to the amount of sales through the channel. Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Plant Cost Review Cost per Unit $3.00 $2.40 $2.10 2.00 $1.90 $1.60 Average $1.41 $1.30 1.00 $0.90 $0.70 $0.40 ha i Sh a ng si a al ay M an ia m Ro y un H er m G ga r an y a on Po m rl a nd O At l an t a o 0.00 Use a Bar Mekko to present cost and production for your plants. The Y axis represents cost per unit for each plant and the X axis represents number of units produced by the plant. You can identify your low cost plants. Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Future Growth by Region Estimated Increase in Defense Spending by Region 2010-2020 175% 165% 150 100 94% 49% 50 30% 28% Eu ro pe er ic a No rt h Am er ic a ri c a Am Af La tin an d M id d le Ea st As ia -P ac ifi c 0 You can also use a Bar Mekko to compare growth in a key variable, in this case defense spending, to the current spending level. You can see that the growth in defense spending will come from the Asia-Pacific region over the next 10 years. Source: THE GREAT EIGHT Trillion-Dollar Growth Trends to 2020 Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved. Choosing the Right Chart for the Job A successful business chart should help you as well as your audience make sense of what would otherwise be complex numbers and ideas. When designed poorly, charts just confuse. But choosing the right chart and utilizing good chart design will convey your message clearly and effectively. For more information on other charts available in Mekko Graphics and the right way to use them please explore the following resources: Mekko Graphics charts not available in PowerPoint: Marimekko Chart Cascade (Waterfall) Chart Our Chart Finder and Sample Presentations can help you learn about other charts enhanced by Mekko Graphics Copyright 2012 © Knowledge Management Associates, LLC. All rights reserved.