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Commentary: Process Improvement

Fix Your Pricing, Profitability and Culture in 2019

Fix Your Pricing, Profitability and Culture in 2019

March 5, 2019

Do your sales and service employees keep discounting prices – giving away value they should be charging for and eroding your margins unnecessarily?

I can’t tell you how many times I’ve heard that complaint over the years – most recently at MDM’s Sales GPS conference two weeks ago in Las Vegas. It’s a tough problem that eight out of 10 distributors are trying to solve, it’s crucial to achieving your profit goals and it’s one of the key topics you’ll hear about from the experts at our upcoming MDM Pricing & Profitability Summit in Denver April 15-17. 

Perhaps because the economy has been booming, the number of distributors addressing this profit-sucking issue is still relatively small. That tells me it’s an incredible opportunity to take control of your profit levers this year to get the kind of margin performance you need to beat your plans and outperform your competitors. 

I can tell you from the relationships and dialogue we have with distributors and vendors who focus on this industry that there are some common denominators among the market leaders. And the key here is not rocket science: Commit to processes and systems that allow you to take control. We’ve repeatedly seen cases where margin enhancement initiatives drive profit improvements of 200 – 400 basis or more to a distributor’s bottom line. This type of effort can be the difference in your results as the competitive landscape shapes up in 2019. 

That’s one of the reasons why we are hosting our first annual distributor profitability conference. We have limited seating available, but I want to invite you to attend or send the right team members to learn. We’ve built an agenda that we think can add a lot of value, whether you are already driving this or just getting started on your journey to better profitability. 

Expert Speakers

First, we have an all-star line-up of thought leaders who have helped distributors create hundreds of millions of dollars of profit by changing their pricing and profitability processes, including Bruce MerrifieldAl BatesRandy MacLean and John Wass. My goal was to bring together these thought leaders – who offer different perspectives – into the same room to help you evaluate how you can move your effort forward in the best way. These speakers and our distributor case study presenters have had more impact on improving distributor profitability than anyone else I could find. 

Distributor Case Studies

In addition to consultants, we will also have distribution executives on stage who have attacked and solved these types of problems in their own companies. These individuals are incredibly generous in how they share what they learned and what was most successful for them to generate real profit dollars. 

I’m excited that a long-time MDM customer, Air Hydro Power, a Kentucky Parker Hannifin distributor, will share their story of their pricing improvement journey. They’ve worked on this for 10 years or more, and it has fundamentally changed their company – not only by helping the company generate strong profit margins, but by building a balance sheet and position to drive growth strategies and expand their territories. It’s a great success story of a distributor growing through process discipline.

We also have Janet Zelenka as a speaker, who as Essendant’s CFO & CIO built tons of value in strengthening that company’s position as it rebuilt for its recent acquisition by Staples. Janet will dip into her long experience to lead you on a “Distribution Treasure Hunt” to help you unlock cash from your business. 

Pre-Conference Workshop

The final piece is our pre-conference workshop. While many distributors invest in systems and training to improve margins by selling at higher prices, most do not build world-class purchasing organizations to ensure they’re buying at the lowest-possible costs. Yet this is an area of enormous opportunity for distributors. There are many ways of buying at lower total prices and – unlike customer price increases – these methods allow distributors to grow market share more easily while preserving or enhancing gross margins. 

In this workshop, distribution purchasing executive Brad Johnson will explain each area of opportunity in detail and give you the information you need to get immediate gains – and position your organization to achieve significant cost advantages in the long term.  

The Bottom Line on a Bottom Line Conference

This event truly brings together the latest thinking and best practices in pricing and profitability. I know that our discussions will include how you build this into the culture of your sales team and company overall. That’s where every distributor has to build a vision that’s right for their team and customer segments. I invite you to make the commitment to elevate your team now to leverage this kind of expertise. 

Click on the link to see more on what the MDM Pricing & Profitability Summit is all about.

As always, feel free to contact me if you have questions or comments. You can reach me at tom@mdm.com

© 2019 Gale Media, Inc.

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