Many distributors assume that they can handle one more warehouse order for free. Aren’t – all warehouse operational-costs fixed in the moment? And, isn’t – keeping people busier good? Alas, no! Let’s look at the cold statistics for a contractor-supply distributor’s monster, Central Distribution Center (CDC).
Continue reading 234. Automate the Picking of Your Losing, Small-Dollar SKUs
Massive money was spent on polls and flipping Republican senate seats. Alas, no Blue Wave happened. Key lessons:
Continue reading 220. Election Polls, Smart Risks and Dumb Mistakes
Politics is giving QPQ a bad reputation. But, “this for that” can also be a selling tool for turning win-lose customer requests into win-win outcomes.
Distributor reps can use QPQ for transactional fairness.
“Mr. Customer: you want a lower price? Understandable! How can we turn a – you win, I lose event – into a win-win transaction? Perhaps a bigger order or the promise of greater future purchases?”
Valuations for WeWork, Uber, Blue Apron, etc. have been tanking. They all prove that a company’s business service-cost model can’t spend more costs on a unit of activity than the unit’s margin-dollar content, and then make it up on volume.
The same economic reality hit many retail dotcoms back in 2000. Remember eToys? In ’99, they were averaging $20 in margin per order while spending an all-in cost of $300 per order for fulfillment.
Continue reading 175. Melting-Unicorn Wisdom for DistributorsWhen decisions are made at Amazon, “the best data and innovation metrics” win. No hearsay, golden-gut, follow the herd, or political self-interest beliefs. The HiPPO (Highest Paid Person Opinion) in the room doesn’t win with suck-ups bobbling in agreement. Continue reading 174. Doctors Prescribe: “Evidenced-Based Management”
Corporate America (distributors included) is overwhelmingly NOT getting results from new analytical insights. Test your company’s Analytics IQ against:
Everybody uses financial analytics (lens 1). Distributors should also get/invent analytics for the three dimensions within the “Service Profit Chain”(SPC) (Google the term.) The SPC simplified: best quality people (lens 2) deliver service (lens 3), that yields(customer retention) profits (lens 4).
The SPC outlines how Costco can pay (v. Sam’s/Walmart) 141% more per employee to get 157% more sales and margin dollars. And, how Costco also has legendary customer loyalty, and better sales growth – while selling at a measly margin of 13%.
These four analytical lenses each have blind spots. For example: “Inventory management” from a financial perspective stresses “Turn-and-earn” with minimal “dead and excess stock investments”. But, service-value and people-productivity lenses spotlight “fill-rates”.
Best fill-rates (tuned to a target-customer niche) from one location reduce outages which:
Seek the best total-economic balance!
Financial thinking stresses pumping sales (and margin dollars) for economies of buying and operational fixed costs. Plus, get those fatter rebates from best-bribing vendors.
But, service analytics asks:
Most distributors are 110% focused on financial-belief activities. CPA reveals that some big, and many small customers, are unprofitable. Then, those who are incented on any sales/margin volume, resist. Why low buy-in for insight-plays that logically will deliver greater wins for all?
Four Nobel Prize winners (over the past 40 years) have proven that our brains are riddled with cognitive biases. Stubborn, short-cut, data-free beliefs win over longer-term realities.
Book an initial (free) C-suite, virtual session with me (bruce@merrifield.com). And, for Waypoint Analytics clients, join me at the workshop in Phoenix on November 7th (link below).