SALES & MARKETING
The Six Attributes of Super-Profit Companies Laser focus is the key to your goals RANDY MACLEAN, PRESIDENT OF WAYPOINT ANALYTICS
F Randy MacLean is the founder of WayPoint Analytics, the inventor of LIPA, and best-selling author of a series of profit practices books. For more than a decade he’s been analyzing company results, thinking about, writing about and advising on profit issues in distribution and manufacturing. WayPoint software is used by hundreds of companies to control their profits, and their destinies.
or more than a decade, I have been working with distributors of all sizes and all profit levels in many different industries. We noticed a cadre of companies with profit rates far above those of their peers and started looking for the common attributes that were driving rates of 15%, 20%, and even 25%. We found these six attributes were the common markers of the high-profit companies: • core competency: moving product. • absolute minimum of inventory locations • mastery of delivery alternatives • focus on customer experience. • specialized sales force • numbers-driven
CORE COMPETENCE: MOVING PRODUCT
The top companies are really, really good at moving product. That is, they move more product value for less expense than their peers. This has been achieved through a relentless focus on efficiency and productivity in their operations. Implementing incentive-driving efficiency measures like OpCash Ratios and ROX metrics and supporting productivity metrics at each stage of your logistics chain will result in continuously improving efficiency that increases this kind of competence.
ABSOLUTE MINIMUM OF INVENTORY LOCATIONS Every location that holds inventory increases the quantity and value of duplicated stock, and also duplicates the personnel needed to handle it. Top companies have one single distribution center 88 • Summer 2021
and substitute the most modern and creative delivery processes for proximity, providing on-time delivery matched to customer needs. Most companies have grown by duplicating existing locations into new geographies and have done little rationalization. This makes them vulnerable to competitors that are a step beyond, because they can’t meet the price advantage available from comparatively lower handling costs, so their profits erode over time. Optimizing product handling everywhere it is done drives up OpCash ratios and ROX. Warehouse organization and zone picking have big impacts. Certain systems improvements, and even rudimentary automation can change these numbers significantly. Where volume and pick frequency warrant it, flooring inventory at a customer location can provide a ROX gain. Although it goes against the stated objective, having customers pick their own inventory from a stock you replenish can be a game-changer for some accounts.
MASTERY OF DELIVERY ALTERNATIVES Most companies already offer a de facto range of delivery options. They will send an emergency truck, or have a sales rep deliver the order. However, these are profit-eating exceptions that disrupt the orderly flow of business and cause a cascade of other expensive exceptions that magnify losses. (Nobody can find paperwork from a sales rep delivery, so the customer won’t pay.) Top players have formalized the range of delivery options so timescales can be chosen by the customer to meet the individual needs of each order. The customer can get more-expensive
