Beyond BI:

Distribution Analytics

Topics

•main functions of available systems

• system classes

•what we’re trying to achieve

•why certain elements really matter

•metrics you need

•what to do next

Randy MacLean

• creator of WayPoint Analytics

• 10+ years working with distributors on detailed costing and profit analysis

• invented many of the metrics in use

System Functions

•Reporting – creates new report formats out of existing numbers

•Metrics – mathematically produces new measures from numbers already available

•Cost Engine – subsystem thatcalculates cost-to-serve & profit numbers that don’t exist in system

System Classes

•Business Intelligence – usually an add-on system that produces reports using data existing in a software package

•Analytics – metrics and measurements derived from existing numeric data

•Cost-to-Serve & Profit – calculates expenses, so has cost-to-serve & profit data to analyze & report

System Capability Comparison

WayPoint BusinessIntelligence

Report System

reporting metrics cost engine

Individual Sale (with BI)

Revenue $312

Cost of Goods $234

Op Cash (GP) $78 24.9%

O/E Exp $19

Whse Exp $23

Transport $22

G & A $35

Op Exp $100 31.9%

Profit -$22 7.0%

Individual Sale (with CTS)

Revenue $312

Cost of Goods $234

Op Cash (GP) $78 24.9%

O/E Exp $19

Whse Exp $23

Transport $22

G & A $35

Op Exp $100 31.9%

Profit -$22 7.0%

You can’t manage what you can’t measure.

Objectives of Analytics

• Increase Efficiency:maximize value for unit expenditure

• Improve Productivity:maximize value per unit resource

•Highly leveraged – more powerful and permanent than sales increases

Steps to High Profit Rates

• know more about your profit dynamics

• protect your core profits

• identify and build on your strengths

• focus limited resources on what will produce

• increase profits thru efficiency

• increase profits thru productivity

Knowing Your Costs

Money-Losing Invoices

G2E – GP per Expense (Winning)

G2E – GP per Expense (Losing)

Price Programs

• can be powerful profit drivers

• drive impressive margin gains

•margin gains don’t always convert to profits

•CTS and profit-driven price programs deliver bigger gains

Price MatrixDemographic

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Price Matrix (margin gains)Demographic

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Price Matrix (no profit gains)Demographic

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Price Matrix (new losses)Demographic

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Price Matrix (lost accounts)Demographic

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Profit-Value Segmentation

• group customers by:• cash-flow production

• relationship efficiency

• profit rate

•homogeneity within groups so works for almost all accounts

• drives sales programs and activities

Profit-Value Segmentation

Price Matrix (Profit Value)Cost Efficiency

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Price Matrix (Profit Value)Cost Efficiency

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Customer Relationship Efficiency

• critical metric for sales activities

• “Platinum” accounts

•high-efficiency companies are the best for growth

• drive selection for Concierge Customer Service

• target for new account acquisition

Tactics Supported by Analytics

• shift balance of accounts

• shift focus of resources

• reduced losses = profit gains

• trading customers

• efficient relationships

• operational efficiency

Efficiency – per Delivery

Productivity – OpCash:Expense

Recommendations

• analytics at core of strategy

• get Cost-to-Serve & Profit capability

• buy – don’t make (so you can act, not calculate)

• one shot vs on-going

•never another opportunity to change this year’s results

Follow-up eMail

• link to webinar recording

• slide deck

•my contact info

•Critical Analytics cheat sheet

• tomorrow

Let Me Show You More!

www.WayPointAnalytics.net

480-426-9955