1. Advanced Profit Innovation Conference www.APICconference.com Profit Tuning for Wholesale Distributors Quantum Profit Management (QPM) Advanced Techniques for Distribution Companies

2. Advanced Profit Innovation Conference www.APICconference.com 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.

3. Advanced Profit Innovation Conference www.APICconference.com 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).

4. Advanced Profit Innovation Conference www.APICconference.com Whale Curves

5. Advanced Profit Innovation Conference www.APICconference.com Whale Curves

6. Advanced Profit Innovation Conference www.APICconference.com Whale Curves

7. Advanced Profit Innovation Conference www.APICconference.com Whale Curves

8. Advanced Profit Innovation Conference www.APICconference.com Whale Curves

9. Advanced Profit Innovation Conference www.APICconference.com Whale Curves

10. Advanced Profit Innovation Conference www.APICconference.com Key Management Metrics GP: Gross Profit CTS: Cost-to-Serve NBC: Net Before Compensation

11. Advanced Profit Innovation Conference www.APICconference.com Key Management Metrics Gross Profit (GP) - Cost-to-Serve (CTS) = Profit (NBC)

12. Advanced Profit Innovation Conference www.APICconference.com Thinking About Spread GP spread CTS

13. Advanced Profit Innovation Conference www.APICconference.com Gross Profit (GP) Drivers Sales Volume Pricing (Gross Margin %) Product Mix Customer Mix

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

15. Advanced Profit Innovation Conference www.APICconference.com 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.

16. Advanced Profit Innovation Conference www.APICconference.com 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.

17. Advanced Profit Innovation Conference www.APICconference.com Granular Measurement

18. Advanced Profit Innovation Conference www.APICconference.com Granular Measurement

19. Advanced Profit Innovation Conference www.APICconference.com 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.

20. Advanced Profit Innovation Conference www.APICconference.com Best Profit Predictor report from WayPoint Analytics

21. Advanced Profit Innovation Conference www.APICconference.com 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)

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

23. Advanced Profit Innovation Conference www.APICconference.com NBC+ : NBC- report from WayPoint Analytics

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

25. Advanced Profit Innovation Conference www.APICconference.com NBC Incentives report from WayPoint Analytics

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