Category Archives: Cost-to-Serve Math

97. Bright-Spot Effectiveness Versus Busyness

Efficiency Versus Effectiveness

If efficiency is doing things right, and effectiveness is doing the right things (Drucker), then what are your existing most “right things”? Find out with a customer profitability ranking. Your most net-profitable accounts qualify as your best “right things”. So, why not assign a crack team to research how to take the most profitable customers and the best customer niches to the next level?

Are you and your colleagues currently too busy to spearhead new solutions for either super-winners or losers? You can google “Cult of Busyness” to address personal psychological issues.

Analytics helps you investigate how your company can get less busy overall in order to reinvest slack into your best accounts. What are your measurable wheel-spinners? Continue reading 97. Bright-Spot Effectiveness Versus Busyness

96. How to Be Strategic on Channel Rebate Management

Channel partner incentives, collectively and imprecisely known as rebates, are huge, addictive, and problematic programs for distributors. One 2012 survey estimated total channel incentives in the U.S. to be $55B. That’s 80% of the reported $69B in total channel management budgets. A Silicon Valley survey reported that the typical factory respondent ran an average of 21 incentive programs annually with an estimated overpayment of 6%.

Twenty-one incentives programs annually? Sure! Cash bribes get fast attention. Competitors understand indirect price cuts and can quickly follow, tweak and escalate with their own programs. But, without effective plans for disciplining, tracking—and in some cases exiting—these initiatives, what happens? Factory list prices generally keep rising as backend channel incentive checks multiply. Continue reading 96. How to Be Strategic on Channel Rebate Management

95. Rusty Staub and Your Unequal, Margin Dollars

UNDER-VALUED RUSTY: RIP

Daniel Joseph (Rusty) Staub passed on March 29th at 73. Rusty (Le Grand Orange) played 23 years in baseball’s major leagues retiring in ‘85. His career stats: batted in 1,466 runs; averaged .276 with 292 homers and 2,716 hits; and walked a spectacular 1,255 times. With walks, his career on-base percentage (OBP) was .362. He didn’t swing at bad pitches.

Rusty, a champ admired on and off the field, did not make the Hall of Fame. Baseball beliefs back then were still blind to the value of Walks. In 2000, the same Analytical Ignorance allowed the Oakland A’s to “buy runs to win games” cheap. They snagged free agents with superficial flaws, but high OBPs. (Well told in Moneyball: both the book and movie). Continue reading 95. Rusty Staub and Your Unequal, Margin Dollars

94. Amazon’s $7 Per Line-Item, Wake-Up Call

AMAZON’S SMALL-DOLLAR-ITEMS: Math and Solutions

Amazon knows warehouse activity costs to the penny. Their 9th generation warehouses may have the lowest, cost-per-pick on the planet. Some stats:

  1. The “click to ship” elapsed time is 15 minutes and dropping.
  2. The average human time input for each order is one minute which includes 15 seconds to pack.
  3. The cost per pick – in the narrowest sense – is 44 cents for a human and 20 cents for a robot.

Continue reading 94. Amazon’s $7 Per Line-Item, Wake-Up Call

92. Tight Labor Market Challenges? Here Are Solutions!

A February 2017 survey by Vistage Worldwide found that 67% of small business owners report a shortage of skilled workers. To try and bridge the gap, 87% have increased recruiting and 60% have boosted wages.

The answers beg more questions

But, what company doesn’t worry about skilled worker shortages, recruiting, and wages? Continue reading 92. Tight Labor Market Challenges? Here Are Solutions!

61. Discussion Exercise: Lessons to Be Learned from Moneyball

The critically acclaimed book turned Hollywood movie, Moneyball, tells the story of the Oakland Athletics baseball team and their industry-changing approach to winning more games per payroll dollar than any other team in history. How did they do this?  By being the first team to use analytical insights in distribution to increase profit instead of traditional player valuations.

The movie has strong messages, and you might be surprised to find they can be applied to your distribution business.  Below are YouTube links to a few of the most important scenes, plus some discussion questions. Watch the clips and add your own questions to spur management team discussion that will help you go beyond tradition and into the brave new world of analytics. Continue reading 61. Discussion Exercise: Lessons to Be Learned from Moneyball