In many sectors, Activity-Based Costing is being replaced by Quantum Costing, a newer and more accurate alternative that adds power and benefits to cost analysis. Randy MacLean explains the differences here.
Posts By Randy MacLean
Analytics-based policies & price breaks change everything, says Randy MacLean, president of WayPoint Analytics.
If you look around your organization and you see policies and processes that haven’t changed in years, you need to worry. If the consensus is you’re “under margin pressure” and “customer loyalty” has evaporated, those are warning bells alerting you to the lack of necessary and critical change in your company.
There are certain, specific attributes shared by companies that deliver profit rates three- to five- times the industry average. Most companies can immediately adopt them, and get significant cash-flow and profit gains beginning right away.
There’s only five fundamental items that truly influence customer purchasing decisions. Distributors with mastery of these items always lead the market, says WayPoint Analytics' Randy MacLean.
Dependence on traditional measures such as gross margin can put a drag on growth and profits. New metrics such as cash-flow value to expenses or expenses as percent of revenue, combined with customer-focused services, are propelling those who take advantage of them, says WayPoint Analytics Randy MacLean.
Distributors cannot generate high profit rates without high efficiency.
These high-volume, low-profit customers can put your company at risk.
Analytics-driven operations can deliver staggering profit gains, but it takes a visionary leader who won’t accept a company’s current limited analytical expertise. In this article the author, who will outline these concepts at MDM’s Pricing & Profitability Summit, www.pnp.com, Apr. 15-17, argues that distributors can shift from a revenue-share mindset to a profit-share mindset by zeroing in on three key metrics: gross profit, cost-to-serve and net before compensation. It also outlines how the concepts of line-item profit analytics and quantum costing can create an effective analytics environment. This article is an excerpt from a chapter in A Distributor’s Guide to Analytics, a book published by MDM.
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There is often a perception in sales that the smallest accounts are not worth the time and effort to obtain the small amount of sales they provide. But a shift in how these customers are served can result in a significant improvement to the bottom line. This special report examines ways distributors can overcome the challenges of selling to smaller customers to make these accounts a profitable part of their business.
Articles included in this special report:
- Making Money with Small Customers
- Cost-Effective Channel Alignment
- Balancing Margin & Cost
- Defeating the Profit Drag
Click on the link below to download this special report in PDF format.
Is Amazon a real threat to distributors?
