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Home » Re-thinking distributor profitability ' A case study

Re-thinking distributor profitability ' A case study

By    D. Bruce  Merrifield, 
June 25, 2002
More about:  Case Studies,  Management/Strategy,  Sales & Marketing
Executive summary: This article provides a composite case study that explores three key profitability areas for distributors: a) sales volume versus profitability, b) small order opportunities, and c) customer segmentation to create different service levels.


ABC Bakery Supply (ABC) is a $25M distributor with frustrated management. The company distributes bakery supplies to customer segments that produce baked goods in a channel that is over 100 years old. Although their sales volume is about 3 times greater than the average for a distribution center in the channel, the firm's - gross margin percent of 18.05%, operating profit margin of 1.15% and number of stocking units (3000+) - are quite typical.


Here is what's bothering ABC's management:


1) The profit '

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Executive summary: This article provides a composite case study that explores three key profitability areas for distributors: a) sales volume versus profitability, b) small order opportunities, and c) customer segmentation to create different service levels.


ABC Bakery Supply (ABC) is a $25M distributor with frustrated management. The company distributes bakery supplies to customer segments that produce baked goods in a channel that is over 100 years old. Although their sales volume is about 3 times greater than the average for a distribution center in the channel, the firm's - gross margin percent of 18.05%, operating profit margin of 1.15% and number of stocking units (3000+) - are quite typical.


Here is what's bothering ABC's management:


1) The profit '







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