Bill Canady explains Quad 4: 4% of customers consuming 20-40% of your operational capacity. These accounts demand expedites, engineering changes, and collection calls at five to ten times their revenue share, silently draining profit margins.
Quad 4 is where profit goes to die. And here's the number that makes people sit up. In most middle market industrials, Quad 4 is around 4% of revenue. That's right. Which sounds like a rounding error. And that's exactly the trap. It may be 4% of revenue, but it's somewhere between 20 and 40% of capacity. Hmm. 4% coming in, soaking up something less than just half of your business. That's not good. 20 to 40 order lines, service minutes, expedites, credit memos, engineering changes, SKU helds, quote revisions, collection calls. Every one is a unit of capacity and Quad 4 consumes them at 5 to 10 times its share of revenue. It's easy. They're small customers buying products you don't really want to sell. They don't have the systems to handle it. They're going to depend on you to handle it and you're not making any money doing it.
