Strategic Insights 31

MY NEW, PART-TIME JOB: GROWING SELECT DISTRIBUTORS’ PROFITS

For 34 years - this January - I’ve been a - consultant, advisor and turnaround player - within independent - distributor channels. I will keep doing so: half-time. The other half, I will be Waypoint Analytics’ (http://waypointanalytics.info/wp2.asp) new “VP of Client Results”.

I’ve consulted to Waypoint for six years. From Line-Item, NET-Profit calculations, we have invented a growing, shed-full of supply-chain-math tools. These tools are: designed for distributors; available as a web service for a monthly fee; and known collectively as Line-Item, Profit Analytics (LIPA) Management. If you focus on tweaks around your extremely, NET-profitable and unprofitable - customers and SKUs - you can create big economic gains for all stakeholder groups.   

I’ve had an option - all along - to buy stock in Waypoint, which I recently exercised. And, I have volunteered to help every Waypoint client be a top 10% best-practice performer. (Newsflash: going forward, any client can contact “Virtual Bruce” with questions for no additional charge!)

WHY THE BELL-SHAPED CURVE FOR CLIENT RESULTS?

Most Waypoint clients excel at conventional, best practices. And, they crave additional competitive advantages. But, new paradigms (like giving women the right to vote) are initially challenging and obvious only in retrospect. Best, Waypoint gold-rushers get up to four times better results than the average client and 6-8 times more than the bottom 10% who still get “OK” results.

There is nothing wrong with doing a few, easy fixes to get a 300% ROI on the monthly fee. But, I believe that: 

IF the bottom-10% managers all envisioned the full upside potential of LIPA insights and…

…They knew how to execute in non-threatening, baby-steps,

THEN they’d go for all of currently still unseen gold too.

(And, so would many non-Waypoint clients who have requested demos and attended Advance Profit Innovation Conferences. You’re invited, BTW, to the next APIC on March 4-5 in Phoenix. Check out the brochure at: http://waypointanalytics.com

NEW-PARADIGM, EDUCATIONAL OBJECTIVES   

Best performer actions inform my educational objectives:  

1.     Educate the top four managers of a distribution company – CEO, CFO, VP Sales, VP Purchasing on:  

a.     Understanding exactly what LIPA Management is and enables (in contrast to other types of canned “analytics”)

b.     Understanding the Four Levels of company transformation possible with LIPA Management, then…

c.     How to handle their own resistance to what Net-Profitability, ranking reports reveal:  losing (and embarrassing) customers; sales territories; SKUs; suppliers; and marketing promotions.

d.     How to then educate/sell ALL other employees on how LIPA Management solutions will grow their economic benefits.  

 

2.     If top management can master A-D above, then their shared #1 priority will be to get Waypoint’s service up quickly (best clients do it in 3 weeks or less) and get ALL employees pursuing Waypoint-revealed and enabled opportunities.    

If just one of the top four managers doesn’t “get it”, then they can blunt an effective Waypoint roll out. They and all other employees will raise many of the 39 (traditional belief system based) objections listed in Chapter Five/Part One of my E-book posted on the home page of my web site: http://merrifield.com/E%20Book%202013/Chapter%20Five.asp.  

THE MOST COMMON OBJECTIONS OF “THE 39”

Some distributors ignore “LIPA Management”, because “we already have analytics software” (that isn't being fully used). Why learn about or buy more “analytics” when the kitchen-sink of analytic “solutions” sits on the shelf? If you haven’t done your own cost-to-process modeling to know the net profit or loss for every line item event, then you don’t have the net-profit data that LIPA Management is built upon. (Don’t panic. Waypoint staff does the modeling for your on-going, continuous, editing refinement.) 

Other distributors did (or heard about) a customer profitability analysis and stopped. When some big, “best” customers star as highly unprofitable accounts, the fearful ‘logic” is:

·        Some sales rep is getting big commissions on the account. “The Sales Force will never believe in or want to be incented by the net-profit model and results.”

·        The Cost-to-Serve model isn’t perfect. (So, nitpick it to death). No perfection, no action.

·        If we tell a customer to buy differently, they will get angry and leave (along with best reps).

·        If we lose any sales activity, our payroll will stay the same with less to do. The lost GM$s will immediately reduce profits and rebates.

Exhaustive explanations (with links to video clip case studies) for these and other concerns are in my E-book: Chapter 5, Part 3 (http://merrifield.com/E%20Book%202013/5_Answersto39concerns.asp)   

MORE LIPA EDUCATIONAL SUPPORT MATERIALS

Want to learn more about the LIPA Gold-Rush for distributors, go to www.merrifield.com. Click on the “Insights” tab. Click on the “exhibits” tab and find LIPA material at #44, 56-64. Skim through the annotated index for my 450+ Youtube video clips that support LIPA Management. And, attend APIC on March 4-5 to hear my latest on LIPA Management Best Practices. Be “Sooner” than your competition!