Category Archives: Profit Analytics

49. Breaking Out of a Commodity-Hell Mindset

Distribution Strategy, Index, Profit Analytics

Data from the past 15 years of trade association PAR reports show 90% of distributors have averaged poor pre-tax returns on total assets (ROTA). Furthermore, the same top 5% distributors average 3-4 times the returns of the bottom 90%.  Probably,  same channel, same commodities, just much better results. This is a Commodity-Hell Mindset.

But, the bottom 90% aren’t slackers. We can assume these participants are:

  • Smart, conscientious, persistent and at least somewhat ambitious. Otherwise, why would they keep filling out the PAR surveys?
  • Best Practice seekers (at least from a financial-management perspective)
  • Members of the associations that sponsor the surveys, so presumably staying channel savvy
  • Members of a buying group (if channel appropriate) to remain efficient

Continue reading 49. Breaking Out of a Commodity-Hell Mindset →

35. Don’t Be A Fading-Economy Statistic

Distribution Strategy, Index, Line Item Profit Analytics, LIPA, Profit Analytics

The Q2 earnings for publicly traded distributors aren’t pretty. After netting out financial tricks, most distributors are reporting lower sales and profits. Going forward, will you be happy with just matching them, cutting costs, and trying harder? What about profitability and fading-economy statistics?

Why Not Find More Gold In Big Accounts?   

How? Apply a cost-to-serve (CTS) model on every account so you really understand your net profit and loss potential, and the fading-economy statistics. Then, investigate the sub-groups to uncover the: Continue reading 35. Don’t Be A Fading-Economy Statistic →

34. A Warehouse Robot Model for Every Distributor?

AmazonBusiness, Index, Profit Analytics, Supply Chain Partners

Have you considered a warehouse robot for your distribution business? This is becoming an increasingly attractive cost-saving solution, especially for high-volume, small-pick areas. Take a look at these two references for breakthrough news:

  1. This Bloomberg article from June 29th talking about a robot arms race in the distribution world
  2. This short video and other informative articles on the Locus Robotics site

Continue reading 34. A Warehouse Robot Model for Every Distributor? →

33. Getting to Win-Win: Larger-Order Solutions

AmazonBusiness, Index, Profit Analytics, Supply Chain Partners

Analysis: 62% of Small Order Are Money Losers

Looking for Larger-Order Solutions? Here’s an eye opener. Calculate the average cost of processing an order at your distributorship. (Annual operating expenses divided by all transactions.) Then, skim the daily transaction log for all orders with gross margin dollars less than your average dollar-cost per order.

Don’t panic at the number you see! The average Waypoint Analytics’ client starts out with 62% of all orders being losers. But, don’t comfort yourself by using incremental  cost per order logic. Sixty percent of your orders isn’t “just one more order”; overhead costs must be assigned! Continue reading 33. Getting to Win-Win: Larger-Order Solutions →

28. 5 CEO Goals to Finish Big

Core Renewal, Distribution Strategy, Index, Profit Analytics

Bo Burlingham of Inc. Magazine wrote the book: Finish Big: How Great Entrepreneurs Exit Their Companies on Top. He distilled his CEO survey results into these five general goals:

  1. Be treated fairly during your exit process.
  2. Have a sense of legacy accomplishment. The world is better for your fun work invested.
  3. Be at peace with what happens to those who helped you build the firm.
  4. Have new things to do that you are looking forward to.
  5. The company will continue to thrive (even better) without you.

But what pre-requisite skills must you to achieve these goals?

Continue reading 28. 5 CEO Goals to Finish Big →

26. Channel Reps: It’s Time to Reinvent Your Cost/Benefit Value!

AmazonBusiness, Index, Profit Analytics, Supply Chain Partners

The changing objectives of supply chain buyers and the Internet have combined to erode the value of traditional, product-pushing, channel reps. In today’s world, the challenge for reps will be in adapting and acquiring new skills before they fade away.

The Trends and Current Realities   

Since 1980, there has been a huge and ongoing reduction in and consolidation of factory reps in all major channels. The 1990s first saw the behemoth Wal-Mart change the game when it requested that suppliers switch out area reps working on commission for executive-led supply chain teams with the power to enter into new collaborative supply chain solutions.
Continue reading 26. Channel Reps: It’s Time to Reinvent Your Cost/Benefit Value! →