www.randymaclean.com Randy MacLean
Where Does Your Business Really Make its Money?

•profit analytics •distribution management best practices •WayPoint reports •distribution industry technology •business math for distribution •wholesale distribution basic mathMany distributors have limited visibility into where their companies are most profitable. Here are a number of the items that every company should be cognizant of as they look at the numbers for their distribution business.

The central metric in profit analysis is P&L (profit and loss), which tells you whether or not your company is making money. However, P&L can be complicated to calculate given the various logistical elements associated with operating the business from the time that an order is entered into your system to when it's shipped out of the warehouse (not to mention the cost of your sales force!) There are a few ways to keep track of this information.

Line item profit analytics (LIPA) is the best way of getting a system to tell you much make or lose money on every single entity in the business, whether it's a customer, a product, a product line, a territory, or a delivery route. Being able to identify your best customers and products is the first step in maximizing your profit potential.

Your normal accounting system won't help you manage inventory and receivables nor does it provide sufficient overall financial information to keep your bank and the IRS at bay. It was never designed to tell you where you make and lose money. This is something that requires a specialized system.

This sort of detailed information not only allows you to identify your profitable areas but also helps to determine what's causing your unprofitable areas to lose money. You can get an enormous amount of new profitability out of your business by catching the profits that are slipping through your fingers right now. Every sale that comes in has a certain amount of gross profit dollars that it generates and a certain cost-to-serve envelope that comes with it. By managing that cost-to-serve (CTS), you can improve each transaction's profitability.

Using LIPA, you can look right down to the individual SKU level to see where those SKUs made money or lost money, the reason for that profit or loss, and see the customer's margin. Doing this will give you a strong sense of where things are being improperly priced, the benefits of changing the pricing, and the potential impacts. These are insights that will help you to capitalize on your profitability and maximize your return on investment.

Rating: (please tell us what you think)

For more information about Randy MacLean, visit: www.waypointanalytics.net


Customer Segmentation


Customer segmentation can be one of the most powerful tools you can use to develop and implement plans to optimize and deepen your customer relationships.

Novelties and New Core


Reviewing new improvements to the usability of WayPoint

How Money is Made in Wholesale Distribution


Randy MacLean shares his analysis of over $65B of distribution business to help others shed incorrect assumptions about how to make money.

Cost Structures: What Makes for a Good Sale?


Learn why distributors can't simply rely on gross margin when determining whether a sale will add to the bottom line.

Changing Sales Strategy Using LIPA


Randy MacLean talks about the emergence of a new sales strategy.

Using WayPoint's High Volume Account Report to Increase Profit


Randy discusses the benefits of the extraordinarily valuable High Volume Account Report.

Innovate Podcast: Ultimate Customer Segmentation To Drive Profit


Dirk Beveridge interviews Randy MacLean of WayPoint Analytics on the ultimate profit-based customer segmentation.

Innovate Podcast: The Analytics of Super-Performing Distributors


Dirk Beveridge interviews Randy MacLean of WayPoint Analytics on the analytics and metrics of super-profitable distributors.

Wholesale / Distribution Basic Math


Randy MacLean talks about the little-known real math behind profit production in a distribution business.

Keep the Best, Then Reform or Get Rid of the Rest


A superior territory has a greater-than-average proportion of profitable accounts. This is the critical factor in territory management.

Exec Brief #2: Tilting The Playing Field (Action)


Randy MacLean discusses the secret to sustainable profitability and lays out a proven 6-step strategic road map that will help you take your competitors down.

Exec Brief #1: Tilting the Playing Field (The Strategy )


Randy MacLean discusses a strategy to shift the profits in the market to your own company.

Why Does Gross Margin (Almost) Never Correlate to Profit?


Most executives were taught that increasing gross margin would increase profit, yet that's almost never true. Here's why...

Your Most Dangerous Customer


How to recognize the customers most dangerous to your profits