Growth Opportunities and Measurement Tools for Inflationary Times
Inflation creates a host of new challenges for distributors, but there are some great strategies and best practices to help overcome them. In a new webinar titled “How CRM and Business Intelligence Drive Growth During Uncertainty,” Modern Distribution Management and White Cup reviewed best practices distributors can use to measure progress toward company goals.
To kick off the event, the hosts polled participants regarding the economic outlook for the next year. The overwhelming consensus was that there will be a downturn over the next twelve months, but nothing drastic. The remainder of the webinar focused on ways to ensure that distributors succeed during that potentially challenging period.
Hitting the highlights
Economic downturns can present an opportunity: strong companies with strong balance sheets can capitalize on new opportunities for expansion. Expansion can take the form of geographical growth or product growth, but also provides a great opportunity for acquisition.
Be decisive – and willing to fail fast: Whatever decisions or paths you decide to pursue, be decisive – and don’t be afraid of “failing fast,” as this strategy can help prevent your company from going down a rabbit hole. To effectively use this model, set the criteria for success or failure upfront, and move on from the project if you’re not succeeding. Also, be ready to make small changes and test theories – pivoting as necessary to boost your results.
Measure, measure, measure
The event also covered measurement tools to help ensure your company is on the right track.
Keep an eye on FTE levels: salaries are one of the most significant line items for distributors, and ensuring that you have the right number of employees is critical for a distributor to stay profitable.
Track and project inventory levels: The global supply chain is still uncertain, so it remains critical for distributors to track inventory levels and project future needs to ensure that they have the product in stock to meet customer needs.
Use customer scorecards: utilize scorecards to help identify changes in customer purchase habits – measure a customer’s current ordering habits vs. their historical purchases. This can give important insight into your customer base’s risk tolerance and their customer outlook.
Watch out for dead stock: the last thing a distributor wants to have is dead stock. Make it a priority to review inventory levels and usage to ensure that ordering habits are in-line with customer usage to reduce the risk of dead stock.
Mind your metrics: Use metrics, such as GMROI by either total inventory or by product line. Utilizing metrics can provide a clear picture of results and can then be used as a leverage tool with vendors. One suggestion was that if the GMROI is indicating that margins are not where they need to be for a particular product line, then maybe the company can lean on the vendor to either direct ship the product to customers, or accelerate shipping terms, so the cost of carrying the inventory is reduced. For more on inventory metrics, see our blog post: “How Distributors Embrace Inventory Analytics.”
Review sales force performance: While the presenters acknowledged this might be one of the more difficult things to measure, a well-driven sales force will embrace the review and look for opportunities for growth. Two metrics suggested are keeping a log of sales schedules and results, and measuring dollars per sales call.
Positioned for growth
Ensuring that the company is positioned to grow during times of disruption or economic downturn will provide opportunities for future expansion and profitability. One of the most important takeaways from the webinar was the importance of how the company ties behavior to results, to help ensure the company is taking the appropriate road map.
Want to see the event for yourself? It’s available on demand on the MDM website.
Looking for new opportunities to grow your distribution business, or need some advice? Connect with one of Barnes Dennig’s top distribution industry pros for a free consultation. We’re here to help.