Monthly Archives: November 2015

12. Increase Innovation With A Curiosity Rule and Tool

Cost-to-Serve Math, Index, Line Item Profit Analytics, Profit Analytics

When it comes to innovation, doing new “stuff” with uncertain outcomes scares many.

It’s in our DNA. Hyper-vigilance enabled mankind to survive while a small percentage of wackos generated the innovations that have cumulatively lifted all of us into today’s first-world economies.

Industry best-practices pursue efficient economic activity, which is not “innovative” economic activity that will grow sales, profits or all stakeholders’ benefits faster. Fine-tuning the past leads to fading financial returns and eventual death.  Customers, suppliers and employees who are more ambitious and progressive will choose to work with more innovative, rewarding distributors. The innovative rich get richer.

If “innovation” sounds too abstract, big and scary, then relax.  Innovation comes in many speeds, ranging from common adaptations done by everyone to disruptive supply-chain innovations like Wal-mart’s cross-docking, quick response or Amazon’s 2-Hour, Prime delivery.

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11. Innovation! But, Specifically How?

AmazonBusiness, Index, Line Item Profit Analytics, Profit Analytics

Research proves that “Innovation” accounts for 80% of the premium profits and faster growth that the brave few get over the safety-seeking many who pursue “industry best practices”. Distributor association, financial-performance surveys support this.

90% of (the same) participants have been averaging a weak 7% pre-tax Return On Total Assets (ROTA) for 15+ years. But, the top 5% (also a constant group) averaged 20%+.

The top 5% will therefore get about 4-6 times greater after-tax, Return on Investment (ROI). That’s 75-92% more.

Innovation for distributors used to mean securing exclusive, best-factory franchise territories and then selling aggressively. In mature commodity channels, the players that now excel are doing customer-centric innovation starring: next level, service-value and/or supply-chain, process-cost improvements.

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10. Economy Worries in Distribution? Provide “Challenger” Scripts for Your Reps

Index, LIPA, WayPoint Analytics

Global economic clouds are gathering. Rain or shine, why not get bigger chunks of your best customers’ business with lower service-activity costs?

A recommended book, The Challenger Sale by Brent Adamson, tells you how. The book’s research proves that “Challenger Reps” killed the “nice guys” at the bottom of the 2009 downturn.

The Challenger Rep has better scripts to pitch to customers. Their solutions are to work together to reduce shared, heretofore, hidden activity costs to improve both parties’ bottom lines. The nice guys — who don’t rock the boat, suck up and reactively hustle harder for any customer request — are outdated.

Since 1988, purchasing has shifted from wanting just “Price” and “Availability” to also wanting replenishment-process cost reductions (“Supply Chain”). You’ve seen this!

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