Exhibit 56
RECAP: MERRIFIELD
PLAYS & WAYPOINT REPORTS
1.
Calculate
sub-totals and grand totals of estimated profits for every customer by each
potential, cost-to-serve transaction type:
a.
Direct-shipped
orders
b.
Indirect
orders (pre-sold, hits docks, then delivered):
c.
Warehouse-inventory
supplied orders
d.
Will
call orders.
e.
Service,
parts, maintenance transactions
f.
Processing
charges
g.
Etc.
And then, rank them by: profit center
and sales territory
2.
If
customers are hand coded by - industry segment;
business model strata (A, B, C, D);
how they value service;
relative growth rate
– then data can be loaded into Waypoint and reports can be generated that:
a.
Rank
customers by profit within segment-strata niches
b.
Rank
the segment-strata niches by total
profits
c.
Customers
that are “marginal” can be sorted into three piles:
i.
target
for making profitable (#1 niche, service value buyer and growing faster than
average)
ii.
target
for sending firm new (profitable-for-us) letter.
iii.
Postpone
any action for now
3.
Reflective
questions step:
a.
Why
are we so profitable in our top 1 to few profitable niches?
b.
Why
are we so unprofitable in (too) many other segment-strata niches?
c.
What
alternative, business-model competitor makes money in those niches? Why might
their business model (location, mix) actually give better, situational service
value to that niche?
4.
Within
our best niche (one at a time):
a.
Who
can we sign up as “advisors” (big,
open, innovative) who will help us co-create next-level, service-value
equation?
b.
Who
are the biggest, best, fastest-growing target (gazelle) accounts that our entire team will focus on partnering?
c.
Who
are the few biggest losers in this
niche to target for “lead to gold” strategic, co-transformation calls/plans?
d.
Each
niche can have a 5-5-5-5-5 tracking
report that includes: (for more on 5-5-5 go to: http://www.merrifield.com/exhibits/Ex44555kit.pdf)
i.
5
best core accounts to defend and grow;
ii.
5
gazelles to crack, partner and then grow you;
iii.
5
super-losers to gold;
iv.
5
fastest-growing accounts (y-o-y); and
v.
5
most-down accounts (y-o-y).
5.
By
auditing and working with “advisor” accounts, refine and start daily tracking of the Big 8+ of service
metrics for each niche. Waypoint allows hand-gathered, process data to be
entered securely via the net from all locations and results to be accessed by
all individuals anywhere on a secure basis.
6.
Track
and win more (very profitable) direct-ship orders for best customers due to “fast price and availability response time”
(“P & A”) by short-circuiting the process at: the customer’s shop;
ours; and a few key supplier’s.
a.
Do
a customer-ranking report of only direct and indirect order profitability within
each niche.
b.
How
can we focus and excel in this niche area?
7.
Sort
out and analyze most-profitable,
warehouse-order-only customers. Who are they? How do we target more of
them?
MORE TO THE CORE
PLAYS
8.
Do
a most-popular item ranking report
for all of the (best) customers within a target niche and then do fill-rate
improvement investing to improve all aspects of “fill-rate economics”.
9.
Create
a list of all the most-popular-items-within-a-niche that a niche customer IS
NOT BUYING. Track how well the sales force sells these potential target items
by referring to article # 2.29 at www.merrifield.com.
(more “old – to - old”)
10.
Identify
new, commonly-bought items at “advisors” that can be added to round-out, the one-stop, in-stock,
highest fill-rate offering that we have for the niche.
11.
Develop
an audit scorecard system for a target niche by which to rate the customer’s
total procurement effectiveness for replenishment orders. The customers with
audits can be tracked to measure: further penetration and average order size
metrics. (Customer replenishment systems
Audit)
12.
Analyze
how to DURR (downsize, upgrade,
refocus and re-orient) the sales force
which will allow:
a.
Best
reps to call on best accounts to win 20%+ more penetration on a more total
profitable basis.
b.
Reduce
total sales force numbers and cost.
c.
Free
up 50%+ of the accounts currently assigned to reps for which the margin
potential can not support such coverage to then market in a more effective,
lower-total cost way.
13.
Support
the “high performance service excellence
culture and service excellence metrics by:
a.
Doing
regular anonymous surveys of
employees on: their morale; view on management effectiveness; overall value
ratings for co-workers; etc.
b.
Customer
retention ranking reports (last
month, quarter margin dollars vs. month, quarter before)
c.
To
support the “zero error” program
use:
i.
Credits/transaction ranking reports by customer and rep
ii.
Log of all mis-picked items to address the environment of the
most frequently mis-picked
d.
Spread-sheet
grids for front-liners to enter daily numbers for: cycle count accuracy scores;
on-time shipping and/or delivery; same day receiving; heroic acts and
recoveries accomplished per day; etc.
e.
Database scorecards (Module 5.3-6) can then be
created, tracked, rolled-up for all profit centers and used to spread best practices
from one location to another.
NEXT PHASE OF REPORTING (to be
developed as needed): HUMAN RESOURCE/HIGH PERFORMANCE INPUT DATA
Grade book for every corporate student
1.
age
2.
years
with company (how many are in the max. productivity window between young,
inexperienced and coasting on out)
3.
anniversary
(personal attention opportunity)
4.
current
annual wage (rank high to low and spot the grossly over and underpaid in the
line up and start a plan to rectify it, because everyone else senses the
unfairness)
5.
last
raise date (anticipate the annual anxiety/hope for raises)
6.
score
them from 1 - 10; 1 toast; 2-3 in workout; 4 heading there; 5 steady; 6-7
active +; 8 - 9 promising tigers; 10 intrapreneurs (what’s the profit centers
overall average score trend chart look like)
7.
monthly
path report a) on time; b) effort; c) spirit; d) overall grade 1 to 10 (this
replaces the annual, top-down performance review with a bottom-up,
are-you-investing-in-yourself-to-grow-how-can-we-help-you exercise)
8.
(others)
What questions does the grade book application answer or
raise?
1.
Assuming
that service excellence is a by-product of motivated people who have been with
the company long enough to be highly skilled at what they do, rank the branches
by:
a.
Average
years of experience
b.
Annual
turnover metric
c.
Average
mastery level metric
d.
Motivational
satisfaction score
e.
How
high employees rate the effectiveness of the branch manager
2.
If
great people yield great service, which then yields great economics, what is
the:
a.
GM$/FTEE for the past 12 months
trailing for the
branch?
b.
Total
employee compensation divided by GM$?
c.
ROCA – PBIT divided by average inventory and receivables
investment?
d.
Composite
weighted score for the “Big 8” of service excellence score?
3.
For
compensation strategy, we want to move toward general wage transparency, in the
sense that all employees have a chance to earn premium compensation for their
job niche in a given metro market.
a.
How
many have learned-and-earned their way to the maximum target compensation level
for their job niche?
b.
Yet,
we can’t grow total compensation faster than GM$/FTEE; for everyone wins
comp/GM$ must also drop for premium profitability and reinvestment growth
capital.
Free resource flow
and bright ideas pipeline
If we ever
get to the point where we dominate our target customer niches and have best
critical mass inventory economics and a high pretax ROTA,
then we have the enviable opportunity of deciding how to invest the excess cash
that the company will be throwing off and how to redeploy the excess intrapreneurial
talent and ambition. Until we are a 95%-ile performer at our core activities,
we have no business getting into someone’s else’s core business with initial,
beginner capabilities.
1.
How
do we measure excess resource flows?
2.
How
do we marry it with Innovation Management metrics that are aimed at strategic
adjacencies off of our core business.
©Merrifield
Consulting Group, Inc., Exhibit 56
