4 Key Metrics Every Distributor Can Act On Today
As the distribution industry continues undergoing digital transformation, you have access to data like never before. You could spend hours on end trying to comb through every individual metric without capturing something to act on, but the fundamentals around the business don’t change. In fact, timely management of margin, expenses, inventory, and sales is more critical than ever. Here are 4 key metrics that every distributor can act on today to manage fundamentals and optimize cash flow to improve your bottom line:
Sales Margins
Margins play a critical role in your company as it is the difference between your product or service’s selling price and the price that you paid for said product or service. When you increase your margins, that extra cash flows right to your bottom line.
Dashboard views of your ERP data, along with other business systems, provide at-a-glance views of margin performance across customers, locations, and products.
Zero in on your sales reps who are discounting too much and maximize margin by looking at the entire vertical market to make sure you are selling uniformly.
Check progress daily to see if you are meeting margin goals. Consider how much two percent of extra margin could impact your distributorship with no extra work required. What action would you take with this information in hand?
Product Inventory
The days when a distributor could afford to let unwanted, obsolete products sit around in the warehouse are long gone. The combination of effective procurement procedures and getting rid of dead stock from years past can have a significant positive impact on your cash flow now and in the future.
Utilize analytics to identify which products are making you the most money and which are destined to become a bad investment. See up-to-date data about declining sales and determine how you can sell them before they get dusty on your shelf.
Sales Reports
What’s your process for managing your current sales volume today? Can you keep up with orders or do sales need a nudge in a better direction?
Highlight growing and slowing customers so you can give both the proper attention. Showing your sales reps where to spend their time for the biggest return can pay off big-time, such as knowing which products a customer has stopped buying so they can get that business back before it’s too late.
Expenses Trends
Running manual reports out of your ERP is an intensive process you don’t have time for when you are adjusting quickly to meet today’s objectives. By the time you compile them into results, they often only give you a look into the past with little or no view into what’s going on now.
Looking at expense data before month-end helps put the control back into expense control. See how each expense is trending and compare them to previous periods against sales, gross profit, or another branch of your company, or drill down into the ledger account to see what parts of your expense categories are causing problems.
Take control back by measuring these 4 key metrics every distributor can act on today. As your month unfolds, you have time to take action before it’s too late.
