Optimizing Growth and Market Share
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Program Overview Distribution Growth Framework • The Idea and Framework • Strategic Planning • Growth Dimensions • Growth Processes • Metrics and Financial Drivers • Shareholder Value Managing Growth Framework • The Idea and Framework • Profitability Drivers • Process Groups • Growth Challenges • Best Practices • Growth Forces Generating Growth Framework • The Idea and Framework • Growth Strategy and Drivers • Best Practices • Growth Mechanism • Metrics and Shareholder Value Sustaining Growth Framework • The Idea and Framework • Strategic Risk Factors • What Went Wrong • Root Causes • Best Practices and Shareholder Value Key Take-Aways “The Growth Consortium provided valuable insight and allowed us to benchmark against best practices for strategic growth. The study validated many of our current initiatives, but also illuminated areas to target for improvement. It was well worth the investment of time and resources!” Optimizing Growth and Market Share Bob Dill, President and CEO, Hisco “Texas A&M did an outstanding job of compiling best practices and strategy in a manner that is useful to wholesale-distribution audience. The Growth Consortium provided a road-map that will help our strategy/success in the future. The growth frameworks simply become the large “puzzle-pieces” to the overall map you are helping to create for distribution. Flat out - job well done.” Proven and structured approach to assess your business performance Understanding the growth framework Three critical growth dimensions: Generating, Managing, and Sustaining Growth Best practices for each of the growth dimensions Addressing growth barriers Key to sustaining profitable growth Real-world examples Aaron Elliott, Vice President of Sales and Marketing, DW Distribution Inc. Who Should Attend? C-level executives Business development managers Regional sales managers Future leaders Creating Competitive Advantage Through Education INDUSTRIA L DI S TRI B UTI ON P ROG R A M 204 Fermier Hall, 3367 TAMU, College Station, TX 77843-3367 PH 979-845-4984 FX 979-845-4980 WEB http://id.tamu.edu Optimizing Growth and Market Share Methodology and Deliverables The Idea COMPANY VISION AND MISSION STRATEGIC PLANNING GROWTH DIMENSIONS GROWTH PROCESSES SHAREHOLDER VALUE AND CUSTOMER SERVICE FINANCIAL DRIVERS METRICS MANAGING GROWTH - BEST PRACTICES How do we manage profitability while growing? Process Groups Profitability Drivers GM% SOURCE OPERATING MARGIN CTS SELL Growth Challenges Supplier proliferation Product mix Supplier's channel strategy Channel power balance Channel visibility Margin pressure from growing customers Lack of pricing strategy (value proposition) Competency gap Lack of support tools Sub-optimal market mix Sales force capacity vs customer coverage Lack of sales-support productivity tools Misaligned sales force incentives ECONOMIC DRIVERS Best Practices Supplier stratification & relationship strategy Optimizing channel compensation Channel growth strategy alignment Leverage supplier performance Customer stratification Pricing optimization In-built mechanism for early warnings Active adaptation of value proposition Market segmentation >> Warehouse capacity Operating cost challenges Customer service (accuracy & efficiency) Operations (inbound & outbound) productivity - Lean Economy of scale Best practices sharing Internal benchmarking BUSINESS MODEL OPPORTUNITY CASH CONVERSION CYCLE DOI Transportation capacity Transportation cost (routing & cubing / loading) Customer service (on-time delivery) Routing and loading optimization Economy of scale Supply chain network optimization (Transportation vs Inventory) SELL Credit requests from growing customers “New Normal” challenges Customized terms based on customer stratification In-built mechanism for early warnings Active adaptation of value proposition DPO STOCK SUPPLY CHAIN PLANNING RESOURCE DRIVERS Inventory stratification Focused forecasting Dynamic replenishment Inventory network optimization Competency development Credit, return and rebate policies for product expansion growth strategies Optimizing channel compensation through strategic supplier relationship Leverage supplier performance Competency Gap Talent attractiveness Technology and applications infrastructure Leadership gap Lack of coordination, control & synergies Organizational mobility Human capital development Information capital readiness Strategic awareness and alignment Customer-centric Growth mindset Creative leadership Strategy & structure match Ownership type Access to growth funding Investor attractiveness Financial fitness through free cash flow and operating productivity Investor confidence >> Customer Sales Force GROWTH FORCES Shareholders Suppliers GROWTH >> >> >> Supplier Customer Cross-functional Workforce GROWTH FORCES Customers ASSET EFFICIENCY PROFITABILITY Human and IT Capital RISK MANAGEMENT CASH FLOW Supplier >> Purchasing Workforce >> Customers CAPABILITY Human and IT Capital Human Capital Information Capital >> Organization Capital >> > HUMAN CAPITAL > INFORMATION CAPITAL > ORGANIZATION CAPITAL Growth Mechanism SKU proliferation Product portfolio / mix Cost Vs service trade-off Fill rate challenges Supplier performance Shareholders Customer Operations Workforce OPPORTUNITY >> SHIP Customer Sales Force Suppliers >> >> STORE DSO Supplier >> Sourcing Workforce >> >> Sales force size & structure Sales force productivity (support tools) Sales force compensation Aligning customer, company and sales force CAPABILITY Growth Forces SOURCE >> >> > FINANCIAL CAPITAL SUPPORT SERVICES >> Retention Strategy Shareholders Leadership © 2011 Global Supply Chain Laboratory CRDBP COUNCIL F R RESEARCH Growth Strategy Growth Drivers SUSTAIN GROWTH ON DISTRIBUTOR BEST PRACTICES An Alliance of the NAW Institute & Texas A&M University www.nawpubs.org www.naw.org/crdbp http://supplychain.tamu.edu Capability Assumptions Opportunity Assumptions SUSTAINING GROWTH - BEST PRACTICES How do we sustain profitable growth against strategic risk? GENERATING GROWTH - BEST PRACTICES How do we generate growth opportunities? Growth Strategy Growth Drivers Account Penetration - Existing customers P E N E TR ATE Market gap analysis Supplier collaboration Competitive value proposition Sales force performance management Selling process Market penetration - New Customers B R OADE N Customer feedback Pain point analysis Growth mapping core customer and strategic supplier Product & service portfolio management New Products and Services Industry Dynamics ADD Sales & Marketing Channels Sales Force Effectiveness Customer Relationships GROWTH DRIVERS Market Segments B U I LD New Platform (multiple drivers) I N NOVATE Value Proposition Innovation DIVE R S I FY Line of Trade & Value Chain Function Sales & Marketing Strategy Market mapping Technology developments Customer need/convenience Supplier Relationships Market segmentation Supplier growth inputs Competitive analysis Industry trends analysis Growth mapping core customer and strategic supplier Industry trends analysis Competitive analysis Customer feedback Supplier inputs Value chain analysis Cross-industry best practices Market mapping Industry trends analysis Competitive analysis Strategic Risk Factors Metrics External market condition New customer acquisition rate Revenue from new (core) customers New customer retention rate Organic Development What Went Wrong Root Causes Adjacency & acquisition failure Lack of competitive value proposition Growth from new products and services Value proposition leverage Balance over-dependency Market conditions and opportunity Supplier Retention Market relevance of value proposition Merger Strategic Alliance Strategic planning (Competitive forces analysis) >> Market intelligence Customer collaboration Alignment with core business model, opportunity & capability >> >> >> GROWTH SUSTAINING GROWTH MOMENTUM ASSET EFFICIENCY PROFITABILITY CASH FLOW >> Value Proposition Effectiveness Growth Opporunity – Potential & Alignment Getting inside customer value map Retention metrics & drivers Loyalty recognition >> Adapt value proposition for relevance and competitiveness >> >> Understand supplier channel strategies Align supplier & distributor strategies >> Strategic process performance >> Strategy & Capability Testing - Periodical validation of assumptions behind opportunity and capability through unbiased assessments >> Decision Modeling and Scenario Planning Customer Retention Market segment overdependency End customer market opportunity Lack of customer rationalization GROWTH >> Customer potential and profitability Growth from new market segments Degree of variety in end markets (risk factors) Process Capital Execution breakdown Restructuring Human capital readiness Human capital retention Information capital readiness >> Organization capital readiness (Leadership, Culture and Alignment) >> Financial Capital Acquisition integration capability Information Capital >> Funding sources (Reliability & Accessibility) >> Disaster recovery readiness Supply chain risk management Organizational Capital Change in competitive advantage Risk management Growth from diversification Competency gaps CASH FLOW Retention Strategy Customer, Supplier, Human Capital & Shareholders ASSUMPTIONS ABOUT CAPABILITY Supply chain disruption Number of innovative efforts Growth from innovate opportunities Change in competitive advantage >> >> ASSET EFFICIENCY PROFITABILITY Human Capital Business Continuity Ability to deliver value proposition effectively Growth pipeline run rate Growth from new platforms Change in competitive advantage Competency & talent retention >> © 2011 Global Supply Chain Laboratory © 2011 Global Supply Chain Laboratory CRDBP CRDBP COUNCIL F R RESEARCH ON DISTRIBUTOR BEST PRACTICES ON DISTRIBUTOR BEST PRACTICES An Alliance of the NAW Institute & Texas A&M University www.naw.org/crdbp Customized economic modeling & business cycle forecasting >> >> COUNCIL F R RESEARCH www.nawpubs.org Industry Structure ASSUMPTIONS ABOUT OPPORTUNITY Industry structure and opportunity Growth from new channels Change in competitive advantage Growth from new territories Value proposition leverage (national accounts) >> Economy Opportunity potential and alignment Disruptive competitor entry Acquisition Best Practices Assumptions about: Core customer retention rate Core customer conversion rate Share of wallet Balance revenue reliance (risk) Growth mapping core customer and strategic supplier Mapping key competitors Supply chain network optimization Geography E XPAN D Growth Mechanism Account gap analysis Customer stratification Sales force effectiveness Retention strategy Value proposition update LE VE R AG E R E AC H OUT Best Practices An Alliance of the NAW Institute & Texas A&M University http://supplychain.tamu.edu www.nawpubs.org www.naw.org/crdbp http://supplychain.tamu.edu
