Teeing up for 2024, which many in the distribution industry don’t envision being a revenue growth year, will require executives to make some tactical decisions.
During an episode of MDM’s QuickTake Podcast, Mike Marks, founding partner of Indian River Consulting Group, breaks down some strategies and bit-sized tactics wholesale distribution executives can take in order to enter 2024 in the best position possible.
He says the strategies and tactics fall into categories: offensive and defensive. Below are three of the tactics Marks discusses. Check out the podcast in the media player above for more details, including specific sales tactics and consulting techniques.
3 Defensive Strategies to Tee Up for 2024
1. Watch Your Cash.
“Tactically make sure that you’re doing 100% of all your available stock rotations with your suppliers,” Marks said. “We’ve had a period of growth and people have been buying and changing to different suppliers. This is a good time to review accounts receivable and selectively tighten it up.”
He also suggests that chief financial officers should be examining the company’s debt capacity and renegotiating debt and credit lines while numbers are good.
2. Review Inventory Replenishment.
Marks suggests reviewing the Top 5 suppliers, which make up a good portion of a company’s revenue, and identifying the safety stock and reorder rates. And then get 80-90% of those reorders done automatically.
“If a distributor has had issues with stocking what they sell, instead of selling what they stock, and they have this long tail of inventory and a bunch of working capital tied up… one of the things to get the salespeople going — and this is only if it’s severe — is reduce the commission rate on special orders and nonstock,” Mark shares.
3. Reduce Expenses.
By comparing current business expenses to a time when the business was smaller, but operating well, you can identify added costs that have crept into the business, but may not still be necessary to operations as they were at the time of growth.
“The whole idea is that if you get set up — your cost structures right and your balance sheets a little bit stronger — you’ll have fewer surprises,” Marks explains. “If you do some of that stuff, and not all of it, every company is different, then you can think about going on the offense.”
Listen to the full conversation via the audio player above, and find the full library of episodes on the MDM Podcasts page.