The Distribution Performance Project prepares quarterly articles on a wide range of topics of interest to distribution management. The latest articles are listed below. Copies are available free of charge by clicking on the title of each article. Copies of ancient articles (they go back twenty-five years!) are probably available upon request. Feel free to go to the contact page and inquire.
Maintaining Profit When Prices Are Rising (March 2022) – A review of the challenges associated with supplier price increase along with their potential for higher profit.
Making Supplier Price Reductions Profitable (December 2021) – An explanation of how occasional vendor price reductions can either increase or decrease profit.
Surviving the Payroll Challenge (September 2021) – An analysis of how payroll growth can often oustrtip sales growth and solutions for that issue.
Sales Growth is Great Until It Isn’t (June 2021) – An examination of how sales growth can drive higher profit or actually reduce profit.
Return of the Big Two (March 2021)– A review of the two key factors that firms must focus on to improve profitability.
Taking the Right Road Back (December 2020)– An analysis of the ways the different CPVs impact overall profitability.
The New Financial Normal Well Be the Old Normal (September 2020) – A review of the trade-off between sales and inventory in the new economic environment.
Let’s Make Things Worse: Cutting Prices in a Down Market (June 2020) – An explanation of how price cutting never makes things better in a economic downturn.
Meeting the Commoditization Challenge (March 2020) – A review of the problems associated with operating with a commodity-based approach.
What Really Drives Profit? (December 2019) – A look at the Critical Profit Variables in distribution to determine their relative impact on profit.
Same Sales Volume, Different Profit (August 2019) – An examination of how the way sales volume is generated creates some very different profit results.
Avoiding the Mistakes of the Past (June 2019) – An analysis of the mistakes that firms make when encountering, or even thinking about, a recession.
Controlling the Uncontrollable Payroll Costs (January 2019) – A review of how to maintain payroll costs in a tight labor market environment.
Why Not Give Customers What They Want? (December 2018) – An examination of what services customers really want and the economic impact of providing those services.
Making It Up With Volume: Return of the Periodic Plague (September 2018) – A discussion of how price cutting almost never improves profitability.
Who’s Afraid of the Big Bad Price Increase? (June 2018) – A consideration of the ways in which price increases improve profitability.
Learning To Love Expense Control (March 2018) – A review of the reality that sales will not solve all problems. Expenses must be considered.
The Rule of 72: Having the Assets to Support Future Sales (December 2017) – A detailed discussion of how higher-profit firms end up eventually being much larger than typical firms.
Cash May be King, but… (September 2017) – An examination of the unintended consequences of reducing the firm’s investment in inventory and accounts receivable.
Making Incremental Volume Profitable Volume (June 2017) – A discussion of the opportunities and follies associated with incremental sales.
Managing With the PPR (March 2017) – Guidelines on how to control both payroll and gross margin.
Blocking and Tackling: Obsolete Concepts? (December 2016) – A review of operational improvements in a world focusing on strategy.
An Order is Not an Order is Not an Order (September 2016) – An examination of how changing order economics can increase both sales and profit.
The Inventory Reduction Trap (June 2016) – A discussion of how efforts to free up cash by reducing inventory often backfire.
Too Much of a Good Thing (March 2016) – An examination of how sales growth that is too fast can be bad for the firm’s profitability.
Harpooning the Whale (December 2015) – An analysis of how many customers reduce the distributor’s profits. It includes a discussion of what to do about it and what not to do.
Pricing the Forgettable Last Five Percent (September 2015) – An indication of where pricing opportunities exist within every distribution organization.
Joining the 40/40 Club (June 2015) – An examination of how gross margin and expenses are the key to profit improvement.
The Sales to Payroll Wedge (March 2015) – A discussion of how payroll expenses can be controlled with some new approaches to planning.
Rethinking the Stretch Budget (December 2014) – A review of why budgeting for a “great leap forward” may well prove dysfunctional.
Price Cutting Economics: Know Before You Go (September 2014) – An analysis of the impact that price cutting has on distributor profitability.
Sales Versus Expenses: The On-Going Civil War (June 2014) – An examination of how both sales and expenses impact profitability.
Watching Sales Growth Go To Waste (March 2014) – A caution about how driving for higher sales often reduces profits.
Supplier Price Increases Are Your Friend (December 2013) – A suggestion that firms should relish, rather than fear, supplier price increases.
Taking It To The Street (September 2013) – A examination of the financial impact of continual price reductions in a competitive world.
Providing Services Nobody Really Wants (June 2013) – A review of how the continual rush to provide additional services impact profitability.
Bending the Payroll Cost Curve (March 2013) – A discussion of the implications of letting payroll costs continue to rise unchecked.
Question of the Day
We feel we have to get more price aggressive to drive up our sales volume. How large of a sales increase will be required to offset a price cut?
Probably a lot more than you think.