Distribution Competitiveness Guide

7/23/2019 Distribution Competitiveness Guide

1/12

Industrial Distribution ProgramDWIGHT LOOK COLLEGE OF ENGINEERING

Advancing the Science of ResearchHigh resolution version of this

publication can be downloaded for free

at http://id.tamu.edu/knowledge


2/12

Texas A&M Industrial Distribution Program Research Resources

APPLIEDRESEARCH

Creating Competitive Advantage

GRADUATEPROGRAM

Developing Distribution Leaders

CONTINUINGEDUCATION

Enabling Branch/Line Managers

UNDERGRADUATEPROGRAM

Educating Future Employees

NEW INDUSTRYNEEDS

KNOWLEDGEADVANCEMENT

KNOWLEDGEDISSEMINATION

TRAINING FUTURELEADERS

OPTIMIZING

DISTRIBUTOR

PROFITABILITY

REVENUE - EXPENSE

ASSETS

Inventory Stratification

Forecasting & Replenishment

Transportation Management

Supply Chain Optimization

Supplier Management

Lean Distribution

Warehouse Management

Transportation Management


Supplier Management

Pricing Optimization

Sales & Marketing

Optimization

Optimizing Distributor Profitability:Best Practices to a Stronger Bottom Line

Available at: www.naw

.org

Customer Stratification: Best Practices forBoosting Profitability

Available at: www.naw.org

Sales and Marketing Optimization: Developing

Competitive Value Propositions in DistributionAvailable at: www.naw.org

ERP in Distribution

Available on www.amazon.com

eDistribution

Available on www.amazon.com


3/12

Business Processes Process Metrics Finance Elements Financial Drivers

DISTRIBUTORPROFITABILITYFRAMEWORKLinking Business Processes and Shareholder Value

STORE

SELL

SHIP

SUPPLYCHAIN

PLANNING

SUPPORT

SERVICES

SOURCE

STOCK

GrossMargin

DaysPayables Outstanding

Cash-to-Cash Cycle Time

Working Capital

InventoryTurnover

GMROII

TotalAsset Turnover

Revenue Growth

Cash-to-Cash Cycle Time

Working Capital

InventoryTurnover

GMROII

TotalAsset Turnover

Revenue Growth

GrossMargin

BUSINE

SS

PROCESSES

SHAREH

OLDER

VALUE

SHAREHOLDER VALUE

GROWTH PROFITABILITY

ASSET

EFFICIENCY

CASH

FLOW

BUSINESS

PROCESSES

FINANCIAL

DRIVERS

SOURCE STOCK STORE SELL SHIP

SUPPLY CHAIN PLANNING

SUPPORT SERVICES

DaysSales Outstanding

GrossMargin

TotalAsset Turnover

Revenue Growth

EBITDA

Supplier Management(Strategic Sourcing)

Fleet Management

Dispatch Management

3PL / Carrier Management

Customer Order Fulfillment

Sales Management

Pricing Management

Marketing Management

Warehouse Fulfillment (Inbound)

Warehouse Management

Inventory Management


Information Technology

Finance Management

Human Resource Management

Product ReceivingProduct Put-Away

Product PlacementLocationTypeLocationIdent ificationProduct Storage

Cycle Counting

SalesForce StratificationMappingCustomersandSalesForceSalesCompensation Techniques

Customer StratificationCost-to-Serve AssessmentNewCustomer Identification

Pricing Optimization

Voice of CustomerMarketSelectionand TargetStrategy

FleetCapacity ManagementFleetCostAssessment

Routing OptimizationLoading Optimization

Carrier Selectionand Performance

ProductPickingOrderDelivery

NewFacilityLocation

Network OptimizationResource and AssetAlignment(Supplier -Inventory -Customer)Service LevelOptim ization

System Integration

Credit Management

Change Management

Recruitment and RetentionAttrition

SalesForceMix

CustomerMix

Cost-to-ServeandRight Price

Time-to-Market

QualifiedLeadsPer MarketingActivity

GROWTH

PROFITABILITY

CASHFLOW

TotalAsset Turnover

Working Capital

InventoryTurnover

EBITDA

Revenue Growth

Working Capital

DaysSales Outstanding

AccountsReceivable Turnover

EBITDA

Revenue Growth

ASSETEFFICIENCY

GROWTH

PROFITABILITY

CASHFLOW

ASSETEFFICIENCY

GROWTH

PROFITABILITYA

SSETEFFICIENCY

GROWTH

PROFITABILITY

CASHFLOW

ASSETEFFICIENCY

GROWTH

PROFITABILITYA

SSETEFFICIENCY

GROWTH

PROFITABILITY

CASHFLOW

ASSETEFFICIENCY

GROWTH

PROFITABILITY

CASHFLOW

ASSETEFFICIENCY

Supplier SelectionSupplier Performance

Supplier StratificationSupplier RelationshipRight Number of Suppliers

InventoryStratification

Whatto Forecast?Demand ClassificationForecasting Method

Whento Order?(Reorder Point)HowMuchto Order? (OrderQuantity)Replenishment Policy

InventoryMix

ForecastAccuracy

Fill Rate

Total LandedCost

Revenue

WarehousePayroll

WarehouseRent

InventoryWrite-Off

TotalAsset Turnover

Revenue Growth

EBITDA

TotalAsset Turnover

EBITDA

Revenue Growth

2008 SupplyChainSystems Laboratory,TexasA&MUniversity


4/12

Customer Stratification Model

Pricing Framework

Supplier Stratification Model

Strong brand

Exclusivity

Service intensive

Low market control

Strong brand

Exclusivity

High market control

High profitability

Weak brand

Saturation

Service intensiveLow market control

Weak brand

Product shortages

High market controlShort term

Margin or Profitability

Distributor Services

SupplierLoyalty

SupplierPerformance

VENDOR

CONTROLLED

STRATEGIC

PARTNERS

DISTRIBUTOR

CONTROLLED

OUT OF

CONTROL

VENDOR

CONTROLLED

STRATEGIC

PARTNERS

OUT OF

CONTROL

Strategic PartBrand EquityExclusivityHigh ProfitabiLong-Term Op

Low ProfitabilService IntensCompetitivelyCustomer Con

Their BusinessYour Money

Weak BrandSaturation DisService Intens

DISTRIBUTOR

CONTROLLED

OPPORTUNISTIC

CUSTOMERS

CORE

CUSTOMERS

SERVICE DRAIN

CUSTOMERS

MARGINAL

CUSTOMERS

High profitability

No relationshipLow cost to serve

Low volume

High profitability

Sustained relationshipLow cost to serve

High volume

Low profitabilityNo relationship

High cost to serveLow volume

Low profitabilitySustained relationship

High cost to serveHigh volume

Customer Life (Loyalty)

Sales Volume

GrossMargin

Costto

Serve

OPPORTUNISTIC

CUSTOMERS

CORE

CUSTOMERS

SERVICE DRAIN

CUSTOMERS

MARGINAL

CUSTOMERS

TEXAS A&M PRICINGMETHODOLOGY IMPACT

(Real World Results - HVAC Distributor)

Branch 1

($3.3MM Sales)Branch 2



($11.4MM Sales)

18.4%

14.9% 16.5%

36.3%

24.4%21.8%

48.6%

TRANSACTION DATA

Customer, Item, Geographyand Time

ANALYTICS EXECUTION

Customer stratifcation Item stratifcation

Customers item visibility Item unit cost level Customer-item GM level

Recent price/margin Recent cost

Customer max price/margin Group max price/margin Overall max price/margin

Potential GM$ improvement System aided decision-making

Augmenting Factors - New Customer

- Competitor price, etc.

CUSTOMER ANDITEM ANALYSIS

PRICING RULESENGINE

WHAT-IFANALYSES

1

OPTIMIZATION2 3

BEFORE

AFTER


5/12


6/12

DISTRIBUTIONGROWTHFRAMEWORK

GROWTH

PROFITABLE GROWTH

SUSTAINABLE PROFITABLE

GROWTH

I

COMPANY

VISI

N

&

MISSIO

N

. . . .

2011 Global SupplyChainLaboratory

. .

Strategic Planning Growth Dimensions Financial DriversGrowth Processes Metrics

WHY SHOULDCUSTOMERS

DO BUSINESSWITH US?

5

HOW DO WEGET THERE?

4

WHERE DO WEWANT TO BE?

3

WHEREARE WE?

2

WHAT ISTHE MARKET?

1

CAPABILITY

RISK MANAGEMENT

Growth

Strategy

GrowthDrivers

Growth

Mechanism

Customers HumanandITCapital

Suppliers Shareholders

GROWTHFORCES

SUSTAINGROWTH

GROWTH

PROFITABILITY

CASH FLOW

ASSET

EFFICIENCY

>>Gross Margin (GM%)>>Operating Margin (EBITDA%)>>Cash Conversion Cycle (DSO + DOI - DPO)

>>CAGR (Compound Annual Growth Rate)>>Impact on Competitive

Advantage>>Risk Quotient

>>ROIC (Return OnInvested Capital)

SHAREHOLDER

VALUE

CUSTOMERSERV

ICE

GROWTH

PROFITABILITYASSET

EFFICIENCY

CASH FLOW

Opportunity

Assumptions

Retention

Strategy

CapabilityAssumptions

OPPORTUNITY

GENERATING GROWTH MAN AG ING G ROWT H SUST AINING G ROWT H

1 2

Key Attributes:

INNOVATION

FOCUS

STRATEGIC FIT

Key Attributes:

ALIGNMENT

COMMUNICATION

ACCOUNTABILITY

Key Attributes:

VALIDATION

CONSISTENCY

STABILITY

3


7/12

GENERATINGGROWTH- BESTPRACTICESHow do we generate growth opportunities?

I

. . . .. .

MetricsGrowth Strategy Best Practices

LEVERAGE

Account Penetration - Existing customers

GrowthMechanism

GROWTH

PENETRATE

Market penetration - New Customers

BROADEN

New Products and Services

AD D

Sales & Marketing Channels

REACH OUT

Geography

EXPAND

Market Segments

BUILD

New Platform (multiple drivers)

INNOVATE

Value Proposition Innovation

DIVERSIFYLine of Trade & Value Chain Function

GROWTH

DRIVERS

Industry

Dynamics

Customer

Relationships

Supplier

Relationships

Sales &

Marketing

Strategy

Sales Force

Effectiveness

Account gap analysisCustomer stratificationSales force effectivenessRetention strategyValue proposition update

Market gap analysisSupplier collaborationCompetitive value propositionSales force performancemanagementSelling process

Growth mapping core customer andstrategic supplierIndustry trends analysisCompetitive analysis

Customer feedbackPain point analysisGrowth mapping core customerand strategic supplierProduct & service portfoliomanagement

Market mapping

Technology developmentsCustomer need/convenience

Market mappingIndustry trends analysisCompetitive analysis

Growth mapping core customer andstrategic supplierMapping key competitorsSupply chain network optimization

Market segmentationSupplier growth inputsCompetitive analysisIndustry trends analysis

Customer feedbackSupplier inputsValue chain analysisCross-industry best practices

Core customer retention rateCore customer conversion rateShare of walletBalance revenue reliance (risk)

New customer acquisition rateRevenue from new (core) customersNew customer retention rate

Growth pipeline run rateGrowth from new platformsChange in competitive advantage

Growth from new productsand servicesValue proposition leverageBalance over-dependency

Growth from new channelsChange in competitive advantage

Change in competitive advantage

Risk managementGrowth from diversification

Growth from new territoriesValue proposition leverage(national accounts)

Growth from new market segmentsDegree of variety in end markets(risk factors)

Number of innovative effortsGrowth from innovate opportunitiesChange in competitive advantage

OrganicDevelopment

Acquisition

Merger

Strategic Alliance

Growth Drivers



8/12

MANAGINGGROWTH- BESTPRACTICESHow do we manage profitability while growing?

I

. . . .


. .

Profitability Drivers ProcessGroups

Growth ForcesGrowth Challenges Best Practices

Supplier proliferationProduct mixSupplier's channel strategyChannel power balanceChannel visibility

Competency GapTalent attractivenessTechnology and applications infrastructureLeadership gapLack of coordination, control & synergiesOrganizational mobility

Margin pressure from growing customersLack of pricing strategy (value proposition)Competency gapLack of support toolsSub-optimal market mix

SKU proliferationProduct portfolio / mixCost Vs service trade-offFill rate challengesSupplier performance

Sales force capacity vs customer coverageLack of sales-support productivity toolsMisaligned sales force incentives

Warehouse capacityOperating cost challengesCustomer service (accuracy & efficiency)

Ownership typeAccess to growth fundingInvestor attractiveness

Transportation capacityTransportation cost (routing & cubing / loading)Customer service (on-time delivery)

Credit requests from growing customersNew Normal challenges

Credit, return and rebate policies forproduct expansion growth strategies

Supplier stratification & relationship strategyOptimizing channel compensationChannel growth strategy alignmentLeverage supplier performance

Customer stratificationPricing optimizationIn-built mechanism for early warningsActive adaptation of value propositionMarket segmentation

Inventory stratificationFocused forecastingDynamic replenishmentInventory network optimizationCompetency development

Sales force size & structureSales force productivity (support tools)Sales force compensationAligning customer, company and sales force

Operations(inbound & outbound) productivity- Lean

Economy of scaleBest practices sharingInternal benchmarking

Human capital developmentInformation capital readinessStrategic awareness and alignmentCustomer-centricGrowth mindsetCreative leadershipStrategy & structure match

Financial fitness through free cash flow andoperating productivityInvestor confidence

Routing and loading optimization

Economy of scaleSupply chain network optimization(Transportation vs Inventory)

Customers HumanandITCapital

Suppliers Shareholders

GROWTHFORCES

Customizedtermsbasedon customerstratificationIn-built mechanism for early warningsActive adaptation of value proposition

Optimizing channel compensation throughstrategic supplier relationshipLeverage supplier performance

GM%

CTS

DSO

DOI

DPO

OPPORTUNITY

CAPABILITY

> HUMAN CAPITAL

> INFORMATION CAPITAL

> ORGANIZATION CAPITAL

> FINANCIAL CAPITAL

OPERATINGMARGIN

CASHCONVERSION

CYCLE

SUPPORT

SERVICES

STORE

SELL

SELL

SOURCE

STOCK

SUPPLYCHAIN

PLANNING

SOURCE

SHIP

BUSINESSMODEL

PROFITABILITY

CASH FLOW

ECONOMIC

DRIVERS

RESOURCE

DRIVERS

>> Shareholders

>> Leadership

>>Human Capital>> Information Capital>>Organization Capital

>>Supplier>>Purchasing Workforce

>>Supplier>>Customer>>Cross-functional Workforce

>>Supplier>>Sourcing Workforce

>>Customer>>Sales Force

>>Customer>>Operations Workforce

>>Customer>>Sales Force


9/12

SUSTAININGGROWTH- BESTPRACTICESHow do we sustain profitable growth against strategic risk?

I

. . . .


. .

Strategic Risk Factors Best PracticesWhat Went Wrong Root Causes

External market condition

Adjacency & acquisition failure

Lack of competitivevalue proposition

Disruptive competitor entry

Lack of customer rationalization

Restructuring

Competency gaps

Market segmentoverdependency

Execution breakdown

Supply chain disruption

Market conditionsand opportunity

Opportunity potentialand alignment

Market relevance ofvalue proposition

Industry structureand opportunity

Customer potentialand profitability

Acquisition integrationcapability

Competency & talent retention

End customer marketopportunity

Ability to deliver valueproposition effectively

ASSET

EFFICIENCY

SUSTAINING

GROWTH

MOMENTUM

Assumptions about:

Growth Opporunity

Potential &

Alignment

Customer

Retention

Value

PropositionEffectiveness

Supplier

Retention

Economy

Industry

Structure

ASSUMPTIONS

ABOUT

OPPORTUNITY

Information

Capital

Organizational

Capital

FinancialCapital

Business

Continuity

Process

Capital

ASSUMPTIONS

ABOUT

CAPABILITY

Human

Capital

>>Customized economic modeling& business cycle forecasting

>>Strategic planning (Competitive forces analysis)

>>Understand supplierchannel strategies>>Alignsupplier& distributorstrategies

>>Market intelligence>>Customer collaboration>>Alignment with core business

model, opportunity & capability

>>Organizationcapital readiness (Leadership, CultureandAlignment)

>>Funding sources (Reliability & Accessibility)

>>Gettinginside customer valuemap>>Retentionmetrics& drivers>>Loyaltyrecognition

>>Adapt value proposition forrelevance and competitiveness

>>Strategic process performance

>>Disaster recovery readiness>>Supply chain risk management

>>Human capital readiness>>Human capital retention

>>Information capital readiness

>>Strategy & Capability Testing - Periodical validation of assumptions behind opportunity and

capability through unb iased assessments

>>Decision Modeling and Scenario Planning

>>Retention Strategy - Customer, Supplier, Human Capital & Shareholders


10/12

Stratification Model

Sample Results

Education & Roadmap

Distributor Process Framework

High profitabilityNo relationship

Low cost to serveLow volume

High profitabilitySustained relationship

Low cost to serveHigh volume

Low profitabilityNo relationshipHigh cost to serve

Low volume

Low profitabilitySustained relationshipHigh cost to serve

High volume

Customer Loyalty (Life)

Customer Buying Power

CustomerProfitability

Costt

oServe

OPPORTUNISTIC

CUSTOMERS

CORE

CUSTOMERS

SERVICE DRAIN

CUSTOMERS

MARGINAL

CUSTOMERS

SUPPORT SERVICES

SOURCE STORE SHIPSTOCK SELLCUSTOMERSUPPLIER


Customer Stratification

RESEARCH PROJECTBest PracticesHActionable ResultsHEducation

Inventory StratificationRESEARCH PROJECTBest Practices HActionable Results HEducation

OptimizingDistributorProfitabilityBest Practices

to a StrongerBottom Line

F. Barry Lawrence SenthilGunasekaran PradipKrishnadevarajan

Stratification Model

Sample Results

Education & Roadmap

INVENTORY MOVEMENT

INVENTORY

PROFITABILITY

100%

80%

60%

40%

20%

0%AVG. INV ($) TOTAL SALES ($) TOTAL GM ($)

D

C

B

A

NEW

$14.5 MM

$8.5 MM

$10.3 MM

$3.7 MM

$4.3 MM

$41.3 MM

$16.3 MM

$23.3 MM

$ 54.4 MM

$81.3 MM

$12.8 MM

$188.1 MM

$5.1 MM

$5.2 MM

$10.3 MM

$16.7 MM

$2.3 MM

$39.6 MM

SUPPORT SERVICES

SELLSOURCE STORE SHIPSTOCKCUSTOMERSUPPLIER


A

B

C

D

Distributor Process Framework


11/12

The Thomas and Joan Read Center at Texas A&M University is the only

university center in the United States that focuses on research and

education in industrial distribution. Our professional development &

educational programs are designed to increase your organizationscompetitive advantage and profitability. We focus on relevant and

actionable education through proven methods and tools.

Some of the unique characteristics of our programs are relevant learning

distribution focus, research-based education, distribution domain experi-

ence of our faculty, and access to our research solutions and services.

Open Enrollment ProgramsHDistribution Manager Certificate Program

HExecutive Session on Best Practices

HIntensive Customer Stratification Program

HIntensive Inventory Management ProgramHOptimizing Distributor Profitability

HOptimizing Distributor Growth and Market Share

HPricing Optimization

HSales and Marketing Optimization

HAdvanced Lean Distribution

Professional Distribution SalesHClient Acquisition

HKey Account Development

HInside / Counter Sales

HSales Management

Intensive Customer Stratification Program

Intensive Inventory Management Program

DAY 1

Customer Stratification Overviewand Framework

EXERCISE: What would be the 4types of customers at your firm?


EXERCISE: Sample Buying PowerAnalysis

Customer Profitability

EXERCISE: Sample ProfitabilityAnalysis

WORKING SESSION: DataPreparation for Customer

Stratification

Discussion and Questions

DAY 2

Customer Loyalty

EXERCISE: Sample LoyaltyAnalysis

Cost-to-Serve (CTS)

EXERCISE: Sample CTS Analysis

WORKING SESSION: DataPreparation and Customer

Stratification Analysis


DAY 3

WORKING SESSION: DataPreparation and Customer


Bringing It All Together

EXERCISE: Customer LifetimeValue and Net Profit

WORKING SESSION: DataPreparation for Customer


GUEST LECTURE:CustomerStratification - Business &

IT Perspectives


DAY 4

Customer StratificationResults Presentation

Customer Strategies

EXERCISE: Customer StratificationImpact on Shareholder Value

Real-worldImplementation Results

CASE STUDY:Chapters 9 and 10from Customer Stratification Book

ACTION PLAN:Presentation


CERTIFICATE PRESENTATION

O BJECTI VERedepl oySales For ceTim ef r om Ser vi c e D r ainCust om er s toO ppor t unist ic Cust om er s andevaluat et heim pact onRet ur nonNet Asset s ( RO NA)

DATA Tota l C o r e O p po r t unist i c M a r g i n a l S e r v iceDr ai n

Sal esForceTi me 1 2 7, 2 96 4 0 % 5 % 2 5 % 3 0 %Sal es$ 148, 265, 879$ 6 0% 8 % 1 0% 2 2%

G M $ 37, 363, 002$ 6 7% 8 % 1 0% 1 5%

A/ R $18, 829, 767$

2 7% 7 % 2 3 % 4 3 % N / A N / AN/ A

Avai labl e S a l e s 7 2 e m p loyees *40hr sper week*52weeksper yr *85% ef f ici ency=127, 296hour s per year For ceTi m e 7 2 4 0 5 2 8 5% N /A N /A

N/ A

25.2% N/ AN/ A 17.2%

N/ A

N/ A N/ A N/AN / A N / A

N/ A

O ppor tuni s t C o r e N/ A N/ A11,861, 270$ 88 ,959, 527$ N/ A N /A

Current EBI T D A $

-$ $ 7,709, 826

Addi t ionalSales $ New E BI TDA $Cur r ent Sales $bycust t ype

Addi t ionalhr s all ocat ed Add it ional#O r der s

Lost G M $

Cur r ent G M %

Expect ed Sal es$perr edepl oyed hour

Addi t io nal GM $ O ther Incom e&Exp$

SELLANALYZER

CUSTOMER

STRATIFICATION

SALES FORCE TIME REDEPLOYMENT WORKSHEET

Cur r ent Tot alG M $

Lost Sal es $37, 363, 002$

NewTot alG M $

11,861, 270$ 88 ,959, 527$ N/ A N /A

M a r g i na l S e r v iceDr ain N/ A N/ A N/ A N/A

14,826, 588$ 32 ,618, 493$ N/ A

N/A N /A1, 864$ N/ A

6,365 N/ A N/ A 854$

N/ A38, 189

N / A N / A

6,365 N/ A N/ A

N/ A 38, 189N/ A N/ A

N /A N / A N /A N/A N /A

N/ A N/ A N/ A N/ A N/A N/A` N/ A N/ A

Cur r ent Var i abl e O p Ex p $ T o ta l # Or d er s

15, 246, 922$ 75, 000

Cur r ent Tot a l S a les $

148, 265, 879$ AvgO r der Si ze

1, 977

Lost Sal es $#hr s f r eed Decr ease inVar O pExp$

%hrsredepl oyed Reduced#O r der s

C u r r e nt V a r O p E x p $ T o ta l V a r iableO pExp$

15, 246, 922$Cur r ent Sales For ceTim e( hr s)

Lost Sal es$per

r edepl oyed hour

Cur r ent Sal es $/ hr Cur r ent Sales For ceTim e( hr s) Var iabl eO pExp$per O r der

Addit i o n a l V a r O p Ex p $ F i x e d O p Ex p e n s e $

AvgO r der Si ze14, 406, 254$

Profit&LossElements

N/ A

N/ A

5, 084, 037$ S um

40.6 N/ A 4,330, 846$N/ A 90. 6

N/ AN/ A N/ A

L t S l $

#days in a y e a r N e w T o t al I n v e n to r y $ N e w To t al A s se t sNewTot alSales $

365

148, 265, 879$D OI O th er Cur r ent Asset s

#days inayear 57. 5 1 ,978, 468$

365 Addi t ionalSales $

NewSal es $bycust t ype

N e w A / R $ b y cu s t t y pe N e w T o ta l A /R$

DSO

Cur r ent Tot a l S a les $

Var O pExp$per O r der Current RO NA%

203$23. 57%

NewRO NA%

C ur r ent Oppor t . Sales+ Addit ional Oppor t. Sales Curren t Serv. D rain

Sal es Lo st

Serv.D rain

Sales

Profit&LossElements

ents

N/ A N/ A

N/ A

365

NewTot a l C OG S $ O t he rCur r ent Li abil it ies

2, 404, 335$

D PO N otes Payabl es

32. 5 1 ,427, 456$

NewTot alCur r entLiabi lit ies

#days in a ye ar N e wT ota l A /P$

Current Net Assets $ 3 2,705, 777

Cash&M ar ket . Secur it ies

1, 990, 029$NewNet Asset s $

Lost Sal es $NewTot a l C O G S $ F i x e d & N o n- c u r r ent Asset s

NewTot al G M $6, 153, 034$

C ur r ent Oppor t . Sales+ Addit ional Oppor t. Sales Curren t Serv. D rain

Sal es Lo st

Serv.D rain

Sales

Profit&LossElements

BalanceSheetElements

Customer Loyalty (Life)


Custom

erProfitability

Costto

Serve

OptimizingDistributorProfitabilityBest Practicesto a StrongerBottomLine


Deliverables

DeliverablesDAY 1 DAY 2 DAY 3 DAY 4 DAY 5

Inventory Management WORKING SESSION: WORKING SESSION: WORKING SESSION: WORKING SESSION: Overview Inventory Stratification Forecasting Replenishment/Service Process Assessment

vs. Cost Matrix Stock Group

Key Performance Attendees to Present Demand Pattern Attendees to EXERCISE: LinkingIndicators and EXERCISE Results and Policies Classification Present Results Inventory Management

to Shareholder Value

EXERCISE: Inventory Inventory Stratification - Replenishment Policies Debrief and Discussion Inventory Management Carrying Cost Concluding Remarks Challenges and Benefits

Inventory Stratification Forecasting EXERCISE: Inventory Buy Decision - EOQ EXERCISE: InventoryStock Out Cost Management Recap

EXERCISE: Sample EXERCISE: Forecasting Replenishment Policies - GUEST LECTURE: Discussions andStratification Analysis Rounds 1 & 2 Continued Inventory Management Questions

Business Perspective

WORKING SESSION: Forecasting Continued EXERCISE: ROP GUEST LECTURE: Certification PresentationData Preparation for Inventory ManagementInventory Stratification IT Perspective

Discussion and Discussion and CASE STUDY: Stock Group Discussion andQuestions Questions From Optimizing Questions

Distributor Profitability book

A

B

C

D

T Y P I C AL I N V E N TO R Y M I X I D E A L I N VE N T OR Y M I X

A

B

C

D

TexasA&Mmulti-criteria

inventory stratification

O BJECTIVEPer f or m Inventor yReductionand Inventor yRedeploym ent( to A &B item s) and evaluate the net im pact onRetur nonNet Asset s(RO NA)

D AT A C u rre n tIn v $ C u rre ntS a le s$ C u rr e ntC O GS $

Tot al 17,470,663$ 148,265, 879$ 110,902,877$A 2 8 % 65 % 6 5 %B 2 1 % 18 % 1 8 %C 2 5 % 15 % 1 5 %D 2 6 % 2 % 2%

9 6 ,37 2,8 2 1$ 2 6,6 8 7,8 5 8$ 9 6,3 7 2,8 2 1$ 2 6,6 8 7,8 5 8$

2 2 ,23 9,8 8 2$ 2,9 6 5,3 1 8$ 2 2,2 3 9,8 8 2$ 2,9 6 5,3 1 8$7 2,0 8 6,8 70$ 1 9,9 62 ,5 18$1 6,6 3 5,4 32$ 2,2 18 ,0 58$

1 4 .7 5 . 43. 8 0 .5 N /A N / A

48 9 17 86$ 36 68 8 39$Wheredoyouw ant toredeployi nventory( %)

Lost Sales % duetoInventoryReducti on / RedeploymentCur r entI nventor y$ (byit emr ank)

Cur r ent CO G S$(byitemr ank) New Sales$ (byitemr ank)ExpectedTurns uponRedepl oymentCur r ent Tur ns(byit emr ank) LostSales$( byit emr ank)

STOCKANALYZER INVENTORYSTRAT IFICATI ONI NVENTO RYREDUCTI O N/ REDEPLO YMENT WO RKSHEET

Cur r ent Sales$(byitemr ank) Cur r ent Sales$(byitemr ank)R efe rC u rre n tT u rns

4,8 9 1,7 86$ 3,6 68 ,8 39$4,3 6 7,6 66$ 4,5 42 ,3 72$

N / A N/ASum

N/A N / A

N /A N / AN /A N/A N/ A N /A S u m

V aria b le N ew T o talS a le s $ C u r re nt T ota lS a les $75 %

V aria b le

10 %

V aria b le

50 %

V aria b le

TotalFixedO p.Exp1 4,4 0 6,2 5 4$

Cur r ent Deliver yExp4 53 6 93 6$ 3 62 9 54 9$

NewEBITDA$14 8,2 6 5,8 7 9$

New TotalCO G S$

Cur r entEm ployeeCom p -O ther s

9,3 8 5,2 3 0$ 93 8,5 2 3$

C u rre n tE B ITD A $

Cur r entEm ployeeCom p -O ut side

$ 7 , 70 9 ,82 6

-$

COGS$ as%of Sales$

%I nventoryf orReduction

ReducedInventor y$7 4 .8%

%I nventoryf orRedeployment

NewTotal Sales$Redeployed Invent or y$

RedeployedInventor y$(byit em r ank)

Addit ional Sales$ (byit emr ank)Inv$available f or

r eduction/ r edeploym ent(byit emr ank)

% Invent oryconsideredf orr eduction / r edepl oyment

TotalI nv$available f or r eduction / New TotalG M$

eratingExpenses

9,0 5 9,0 4 5$ 6,7 9 4,2 8 4$O ther Incom e& Exp $

NewTot alVar O p.Exp

TotalVar iableO per at ingExpCur r ent War ehouse Exp New TotalO pExp$

4,4 7 7,6 3 0$ 2,2 3 8,8 1 5$ 1 5,2 4 6,9 2 2$

P r o f i t & L o s s E l e m e n t s

R efe rC u rre n tT u rns

80 %

V aria b le75 %

Inter est Incom e %

Su m

Cur r ent DSO NewTot al A/R$46 .4 C t N t A t

1,9 7 8,4 6 8$

NewTot al Sale s$ F ixed&Non-cur r ent Asset s NewTot al Asset s6,1 5 3,0 3 4$

Cur r ent Tot al Invent or y$17 ,4 70 ,6 63$

NewTot al Invent or y$Reduced Invent or y$

Ot her Cur r ent Assets

1,6 4 5,7 5 1$

Cu rre n tR O N A %

23 .5 7%

New RONA%

4,5 3 6,9 3 6$ 3,6 2 9,5 4 9$

Cur r ent Ot her Op. Exp (G &A)

I nt er estI ncom e-$1 2%

Ope

2,1 9 4,3 3 5$


e e t E l e m e n t s


32 .5

#daysina ye a r O ther Cur r ent Liabili ties3 65 2,4 0 4,3 3 5$

NewTotal CO GS $ N ot esPayables1,4 2 7,4 5 6$

NewTot al Cur r entLiabilit iesCur r ent DPO NewTotal A/P$

#daysina ye a r C a s h&M ar ket .Secur it ies3 65 1,9 9 0,0 2 9$ New Net Assets$

46 .4 C urr e nt N etA s s ets $ 3 2 ,70 5 ,77 7


B a l a n c e S h e e t E l e m e n t s


OptimizingDistributor

ProfitabilityBest Practicesto a StrongerBottomLine


Professional Development Programs


12/12

College Station, Texas21 Months

Study While Working Full-Time

Two 5 - Day Residency at College Station Campus

Four 15 - Week Online Semesters

1 One - Week Global Trip

3 Day Capstone Presentation & Graduation at College Station C

One Week International MID Trip During Second YearPart of Global Distribution Course

August of Each Year

Admission Closes April 30th of Each Year

See Fee Fact Sheet

2012 MIDGlobal Distribution Tripto Brazil

Global Distribution Class

>> 2007: Germany [TTI, Sonepar]>> 2008: Italy [Marrazi Tile, Euro-Fer, Bosch Rexroth Oil

Control, Smith Technologies]>> 2009: China [Transmark, Rockwell, Brenntag]>> 2010: Austria, Hungary, Czech Republic [Sonepar]>> 2011: Spain & Portugal [Trane]>> 2012: Brazil [Brenntag & Brightstar]>> 2013: Norway & Sweden>> 2014: India - Planned

>> Real-time case studies in which distributors and their

suppliers provide a problem environment for students

to work on supply chain solutions.

>> Each year, new case studies are prepared for a new

location with new problem environments to reflect

the changing challenges

HDesigned for Working Professionals

HWeb-based Program

H21 Months to CompleteHFocused on Industrial Channels

HGlobal Distribution Trip

HLife-long Networking

Residency Week 2012 Texas A&M Campus58 Distribution Professionals Representing 56 Companies

FOR MORE INFORMATION VISIT:http://mid.tamu.edu

Individual Capstone Project

INDUSTRIAL DISTRIBUTION PROGRAM204 Fermier Hall, 3367 TAMU,

College Station, TX 77843-3367

Phone:979-845-4984

Fax: 979-845-4980

Web:http://id.tamu.edu

Visit our website:http://mid.tamu.edu

Sign up to attend aMIDwebinarand talk to an advisorfaculty and staff.

Contact our Program Office:979.845.4984

Find Out More...

Documents

Distribution Competitiveness Guide