Advanced Profit Innovation Conference Profit Tuning for Wholesale Distributors Quantum Profit Management (QPM) Advanced Techniques for Distribution Companies

Advanced Profit Innovation Conference Why? QPM is the most effective way to manage a business for profitability. QPM keeps you focused on what really matters. QPM helps everyone pull together for real results.

Advanced Profit Innovation Conference Whale Curves You have to understand whale curves if you want to understand the way your business really generates profits. You have to understand whale curves if you want to understand your profit potential. You have to understand whale curves if you want to know your vulnerabilities (and those of your competitors).

Advanced Profit Innovation Conference Whale Curves

Advanced Profit Innovation Conference Whale Curves

Advanced Profit Innovation Conference Whale Curves

Advanced Profit Innovation Conference Whale Curves

Advanced Profit Innovation Conference Whale Curves

Advanced Profit Innovation Conference Whale Curves

Advanced Profit Innovation Conference Key Management Metrics GP: Gross Profit CTS: Cost-to-Serve NBC: Net Before Compensation

Advanced Profit Innovation Conference Key Management Metrics Gross Profit (GP) - Cost-to-Serve (CTS) = Profit (NBC)

Advanced Profit Innovation Conference Thinking About Spread GP spread CTS

Advanced Profit Innovation Conference Gross Profit (GP) Drivers Sales Volume Pricing (Gross Margin %) Product Mix Customer Mix

Advanced Profit Innovation Conference Cost-to-Serve (CTS) Drivers Transaction Counts – orders – picks (invoice lines) – invoices – shipments

Advanced Profit Innovation Conference Deltas Your basic job is to create a difference (or delta). Positive and negative deltas sum to make your performance. Managing the deltas gives you direct control over your results.

Advanced Profit Innovation Conference Granular Measurement Don’t draw conclusions from averages – dig into the numbers to find out what they’re made of. Look at service models at the granular level.

Advanced Profit Innovation Conference Granular Measurement

Advanced Profit Innovation Conference Granular Measurement

Advanced Profit Innovation Conference Best Profit Predictor CTS (cost-to-serve) per revenue dollar is the best predictor of profitability. CTS% will have a broad variability across the company. CTS% vs GM% directly reports profitability.

Advanced Profit Innovation Conference Best Profit Predictor report from WayPoint Analytics

Advanced Profit Innovation Conference Best Profit Predictor CTS (cost-to-serve) per revenue dollar is the best predictor of profitability. CTS% will have a broad variability across the company. CTS% vs GM% directly reports profitability. CTS is driven by transaction counts. (orders / picks / invoices / shipments)

Advanced Profit Innovation Conference NBC Ratios Manage NBC+/NBC- ratios everywhere. Increase gains, reduce losses. Where important segments drive losses, work to change ratios.

Advanced Profit Innovation Conference NBC+ : NBC- report from WayPoint Analytics

Advanced Profit Innovation Conference NBC Incentives Recognize and remove current incentives that cause people to drive losses. Create incentives that pay when people are contributing to company goals.

Advanced Profit Innovation Conference NBC Incentives report from WayPoint Analytics

Advanced Profit Innovation Conference Summary Whale Curves Key Metrics: GP / CTS / NBC Deltas Granular Measurement Best Profit Predictor NBC Ratios NBC Incentives