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    Profitability Analysis: Distributor Management Services by Jess Wiley

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    Nasir Mahmood
    This document discusses profitability analysis and how examining costs and profits at the customer, product, and supplier level can help distributors identify sources of wasted resources and opportunities for improvement. It provides examples of metrics and factors to analyze for each area, such as order size, inventory turns, and supplier lead times. The overall message is that traditional financial statements do not show where profitability is really going, and distributors should focus on eliminating waste in customer, product, and supplier relationships.

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    Profitability Analysis: Distributor Management Services by Jess Wiley

    Uploaded by

    Nasir Mahmood
    48 views20 pages
    This document discusses profitability analysis and how examining costs and profits at the customer, product, and supplier level can help distributors identify sources of wasted resources and opportunities for improvement. It provides examples of metrics and factors to analyze for each area, such as order size, inventory turns, and supplier lead times. The overall message is that traditional financial statements do not show where profitability is really going, and distributors should focus on eliminating waste in customer, product, and supplier relationships.

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    This document discusses profitability analysis and how examining costs and profits at the customer, product, and supplier level can help distributors identify sources of wasted resources and opportunities for improvement. It provides examples of metrics and factors to analyze for each area, such as order size, inventory turns, and supplier lead times. The overall message is that traditional financial statements do not show where profitability is really going, and distributors should focus on eliminating waste in customer, product, and supplier relationships.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    48 views20 pages

    Profitability Analysis: Distributor Management Services by Jess Wiley

    Uploaded by

    Nasir Mahmood
    This document discusses profitability analysis and how examining costs and profits at the customer, product, and supplier level can help distributors identify sources of wasted resources and opportunities for improvement. It provides examples of metrics and factors to analyze for each area, such as order size, inventory turns, and supplier lead times. The overall message is that traditional financial statements do not show where profitability is really going, and distributors should focus on eliminating waste in customer, product, and supplier relationships.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 20

    Distributor Management Services

    By Jess Wiley
    www.3dprofitability.com

    Profitability Analysis
    Questions to Answer

    Where did my EBIT(D)(A) go?


    How is Profitability Analysis different
    from reading financials?
    How can it foster growth?
    How can I begin to implement?
    Gross
    Profit

    Does this supplier bring


    Impact of Profit
    value?
    Supplier ? Or do they hurt my
    business?

    Return vs Dollars
    Profit
    Products Invested?
    ? Return vs Capacity?

    Cost-to-Serve?
    Customer Profit
    Relationship ? How can I improve, not
    lose?
    Gross
    Profit

    Impact of Profit
    Supplier ?

    Profit Lean
    Products
    ? Operations

    Customer Profit Contribution


    Relationship ? Profit
    Gross
    Profit Growt
    h
    Better Resource
    Alignment
    Better Pricing
    Decisions
    Better Product
    Choices
    Operational
    Supplier
    efficiencies
    Cooperation
    Lower Inventory
    Streamlined
    Transactions
    Technologically
    Contribution
    Savvy
    Profit
    Waste

    Any part of the


    process that does not
    add value to the

    Customer

    Or Your
    What is value to the
    customer?
    Voice of the Customer (VOC)
    insight in to customer needs, wants,
    perceptions, and preferences (
    www.businessdictionary.com)
    We use this data to align company
    resources with customer expectations
    What is value to your
    company?
    Voice of the Business (VOB)
    A summary of all needs related to a
    business and its stakeholders, including
    profitability, revenue, growth and market
    share. (www.businessdictionary.com)
    We use this data to align operations with
    stakeholder expectations.
    Gross
    Profit

    Impact of
    Supplier Add value and improve
    profitability for.

    Products Customer AN Shareholders


    D

    Customer
    Relationship
    Profitability Analysis

    Customer
    Tools such as Activity Based Costing
    Product
    Inventory, Carrying Costs, Handling Costs
    Supplier
    Supplier Score Cards
    Customer Profitability
    Sales Calls Small
    on small Orders
    customers Line Value
    Customer Transactio Returns
    Turnover Support Order Type
    nal
    Wrong
    Industry Where is
    the
    Waste?

    Fulfillment Overtime
    Excess
    Deliveries
    Mistakes
    Whse
    Motion
    Customer Profitability
    Different Customer Types

    Not Profitable

    Marginally Profitable

    Profitable

    0% 20% 40% 60% 80% 100%


    COGS Indirect Costs Clean Profit
    Customer Profitability

    Profitability Drivers and Metrics


    Transactional (IS)
    Order Size
    Order and Line Count
    Fulfillment (WHSE)
    Shipping Method
    Line Item Value
    Support (OS)
    Outside Sales
    Product Profitability
    Too much Occupancy
    labor Receiving
    Multi
    Location Customizat Opportunit
    Idle Inventory y Loss
    ion
    Equipment
    Skills Where is
    the
    Waste?

    Handling Equipment
    Head count
    Wasted
    Effort
    Product Profitability

    Profitability Drivers and Metrics


    Inventory
    Turns
    GMROII
    Handling
    Weight and Size
    Customization
    Fabrication Time
    Capital Costs
    Supplier Profitability
    Saturated Emotional
    Markets Lead Time Buys
    No new Growth Unnecessary
    Performan
    offerings Potential Buys
    Market ce Multiple
    trends Shipments
    Where is Safety Stock
    the
    Waste?
    Freight Return
    Minimum product
    Order Reputation
    Pkg Sales
    Quantity
    Policies Quality
    Resources
    Returns Purchasing
    Supplier Profitability

    Profitability Drivers and Metrics


    Lead time
    Comparison to Industry
    Variability
    Quality
    Product Defects
    Shipment Accuracy
    Policies and Procedures
    Freight Policy impact on EOQ
    Ordering System and Acknowledgement
    Process
    Supplier Profitability

    Profitability Drivers and Metrics


    Growth Potential
    Under utilization
    Vendor consolidation efforts
    Market based potential
    Final Thoughts on
    Profitability
    Financial Statements do not reveal
    where the lost profitability has gone
    Three Areas that consume resources
    Customer
    Product
    Supplier
    We must consistently think in terms of
    eliminating waste in those relationships
    Distributor Management
    Services

    Jess Wiley President


    [email protected]
    www.3dprofitability.com
    (817)692-5191

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