optimizing growth benchmark against best …id.tamu.edu/media/optgrms.pdf“the growth consortium...
TRANSCRIPT
“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!”
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 strate-gy/success in the future. The growth frameworks simply become the large “puzzle-pieces” to the overall map you are helping to create for distri-bution. Flat out - job well done.”
Aaron Elliott, Vice President of Sales
and Marketing, DW Distribution Inc.
Key TaKe-aways
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
who should aTTend?C-level executives
Business development managers
Regional sales managers
Future leaders
Program overview
Distribution Growth Framework• The Idea and Framework• Strategic Planning• Growth Dimensions• Growth Processes• Metrics and Financial Drivers• Shareholder Value
Generating Growth Framework• The Idea and Framework• Growth Strategy and Drivers• Best Practices• Growth Mechanism• Metrics and Shareholder Value
Managing Growth Framework• The Idea and Framework• Profitability Drivers• Process Groups• Growth Challenges• Best Practices• Growth Forces
Sustaining Growth Framework• The Idea and Framework• Strategic Risk Factors• What Went Wrong• Root Causes• Best Practices and Shareholder Value
Optimizing Growth and Market Share
Creating Competitive Advantage Through EducationINDUSTRIAL DISTRIBUTION PROGRAM
204 Fermier Hall, 3367 TAMU, College Station, TX 77843-3367 PH 979-845-4984 FX 979-845-4980 WEB http://id.tamu.edu
The IdeaSHAREHOLDER VALUE AND CUSTOMER SERVICE
FINANCIAL DRIVERSMETRICS
GROWTH PROCESSES
GROWTH DIMENSIONS
STRATEGIC PLANNING
CAPABILITY
Customers Human andIT Capital
Suppliers Shareholders
GROWTHFORCES
RISK MANAGEMENT
SUSTAINGROWTH
OpportunityAssumptions
RetentionStrategy
CapabilityAssumptions
GrowthStrategy
GrowthDrivers
GrowthMechanism
OPPORTUNITY
Optimizing Growth and Market ShareMethodology and Deliverables
COMPANY VISION AND MISSION
MANAGING GROWTH - BEST PRACTICESHow do we manage profitability while growing?
COUNCIL F R RESEARCHON DISTRIBUTOR BEST PRACTICESAn Alliance of the NAW Institute & Texas A&M University
CRDBP
www.naw.org/crdbp http://supplychain.tamu.edu
© 2011 Global Supply Chain Laboratory
www.nawpubs.org
Profitability Drivers ProcessGroups Growth ForcesGrowth Challenges Best Practices
Supplier proliferationProduct mix Supplier's channel strategyChannel power balanceChannel visibility
Competency GapTalent attractivenessTechnology and applications infrastructureLeadership gapLack of coordination, control & synergiesOrganizational mobility
Margin pressure from growing customersLack of pricing strategy (value proposition)Competency gapLack of support toolsSub-optimal market mix
SKU proliferationProduct portfolio / mixCost Vs service trade-offFill rate challengesSupplier performance
Sales force capacity vs customer coverageLack of sales-support productivity toolsMisaligned sales force incentives
Warehouse capacityOperating cost challengesCustomer service (accuracy & efficiency)
Ownership typeAccess to growth fundingInvestor attractiveness
Transportation capacityTransportation cost (routing & cubing / loading)Customer service (on-time delivery)
Credit requests from growing customers“New Normal” challenges
Credit, return and rebate policies forproduct expansion growth strategies
Supplier stratification & relationship strategyOptimizing channel compensationChannel growth strategy alignmentLeverage supplier performance
Customer stratificationPricing optimizationIn-built mechanism for early warningsActive adaptation of value propositionMarket segmentation
Inventory stratificationFocused forecastingDynamic replenishmentInventory network optimizationCompetency development
Sales force size & structureSales force productivity (support tools)Sales force compensationAligning customer, company and sales force
Operations (inbound & outbound) productivity - LeanEconomy of scaleBest practices sharingInternal benchmarking
Human capital developmentInformation capital readinessStrategic awareness and alignmentCustomer-centricGrowth mindset Creative leadershipStrategy & structure match
Financial fitness through free cash flow andoperating productivityInvestor confidence
Routing and loading optimizationEconomy of scaleSupply chain network optimization (Transportation vs Inventory)
Customers Human andIT Capital
Suppliers Shareholders
GROWTHFORCES
Customized terms based on customer stratificationIn-built mechanism for early warningsActive adaptation of value proposition
Optimizing channel compensation throughstrategic supplier relationshipLeverage supplier performance
GM%
CTS
DSO
DOI
DPO
OPPORTUNITY
CAPABILITY
> HUMAN CAPITAL> INFORMATION CAPITAL> ORGANIZATION CAPITAL
> FINANCIAL CAPITAL
OPERATINGMARGIN
CASHCONVERSION
CYCLE
SUPPORTSERVICES
STORE
SELL
SELL
SOURCE
STOCK
SUPPLYCHAIN
PLANNING
SOURCE
SHIP
BUSINESSMODEL
GROWTH
PROFITABILITY
CASH FLOW
ASSETEFFICIENCY
ECONOMICDRIVERS
RESOURCEDRIVERS
>> Shareholders>> Leadership
>> Human Capital>> Information Capital>> Organization Capital
>> Supplier>> Purchasing Workforce
>> Supplier>> Customer>> Cross-functional Workforce
>> Supplier>> Sourcing Workforce
>> Customer>> Sales Force
>> Customer>> Operations Workforce
>> Customer>> Sales Force
SUSTAINING GROWTH - BEST PRACTICESHow do we sustain profitable growth against strategic risk?
COUNCIL F R RESEARCHON DISTRIBUTOR BEST PRACTICESAn Alliance of the NAW Institute & Texas A&M University
CRDBP
www.naw.org/crdbp http://supplychain.tamu.edu
© 2011 Global Supply Chain Laboratory
www.nawpubs.org
Strategic Risk Factors Best PracticesWhat Went Wrong Root Causes
External market condition
Adjacency & acquisition failure
Lack of competitive value proposition
Disruptive competitor entry
Lack of customer rationalization
Restructuring
Competency gaps
Market segment overdependency
Execution breakdown
Supply chain disruption
Market conditions and opportunity
Opportunity potential and alignment
Market relevance of value proposition
Industry structure and opportunity
Customer potential and profitability
Acquisition integration capability
Competency & talent retention
End customer marketopportunity
Ability to deliver valueproposition effectively
GROWTH
PROFITABILITY
CASH FLOW
ASSETEFFICIENCY
SUSTAININGGROWTH
MOMENTUM
Assumptions about:
Growth Opporunity –Potential &Alignment
CustomerRetention
ValueProposition
Effectiveness
SupplierRetention
Economy
IndustryStructure
ASSUMPTIONSABOUT
OPPORTUNITY
InformationCapital
OrganizationalCapital
FinancialCapital
BusinessContinuity
ProcessCapital
ASSUMPTIONSABOUT
CAPABILITY
HumanCapital
>> Customized economic modeling & business cycle forecasting
>> Strategic planning (Competitive forces analysis)
>> Understand supplier channel strategies>> Align supplier & distributor strategies
>> Market intelligence>> Customer collaboration>> Alignment with core business model, opportunity & capability
>> Organization capital readiness (Leadership, Culture and Alignment)
>> Funding sources (Reliability & Accessibility)
>> Getting inside customer value map>> Retention metrics & drivers>> Loyalty recognition
>> Adapt value proposition for relevance and competitiveness
>> Strategic process performance
>> Disaster recovery readiness>> Supply chain risk management
>> Human capital readiness>> Human capital retention
>> Information capital readiness
>> Strategy & Capability Testing - Periodical validation of assumptions behind opportunity and capability through unbiased assessments
>> Decision Modeling and Scenario Planning
>> Retention Strategy - Customer, Supplier, Human Capital & Shareholders
GENERATING GROWTH - BEST PRACTICESHow do we generate growth opportunities?
COUNCIL F R RESEARCHON DISTRIBUTOR BEST PRACTICESAn Alliance of the NAW Institute & Texas A&M University
CRDBP
www.naw.org/crdbp http://supplychain.tamu.eduwww.nawpubs.org
MetricsGrowth Strategy Best Practices
LEVERAGEAccount Penetration - Existing customers
GrowthMechanism
GROWTH
PROFITABILITY
CASH FLOW
ASSETEFFICIENCY
PENETRATEMarket penetration - New Customers
BROADENNew Products and Services
ADDSales & Marketing Channels
REACH OUTGeography
EXPANDMarket Segments
BUILDNew Platform (multiple drivers)
INNOVATEValue Proposition Innovation
DIVERSIFYLine of Trade & Value Chain Function
GROWTHDRIVERS
IndustryDynamics
CustomerRelationships
SupplierRelationships
Sales &MarketingStrategy
Sales ForceEffectiveness
Account gap analysisCustomer stratificationSales force effectivenessRetention strategyValue proposition update
Market gap analysisSupplier collaborationCompetitive value propositionSales force performance managementSelling process
Growth mapping core customer andstrategic supplierIndustry trends analysisCompetitive analysis
Customer feedbackPain point analysisGrowth mapping core customer and strategic supplierProduct & service portfolio management
Market mappingTechnology developmentsCustomer need/convenience
Market mappingIndustry trends analysisCompetitive analysis
Growth mapping core customer andstrategic supplierMapping key competitorsSupply chain network optimization
Market segmentationSupplier growth inputsCompetitive analysisIndustry trends analysis
Customer feedbackSupplier inputsValue chain analysisCross-industry best practices
Core customer retention rateCore customer conversion rateShare of walletBalance revenue reliance (risk)
New customer acquisition rateRevenue from new (core) customersNew customer retention rate
Growth pipeline run rateGrowth from new platformsChange in competitive advantage
Growth from new products and services Value proposition leverageBalance over-dependency
Growth from new channelsChange in competitive advantage
Change in competitive advantageRisk managementGrowth from diversification
Growth from new territories Value proposition leverage(national accounts)
Growth from new market segmentsDegree of variety in end markets(risk factors)
Number of innovative effortsGrowth from innovate opportunitiesChange in competitive advantage
OrganicDevelopment
Acquisition
Merger
Strategic Alliance
Growth Drivers
© 2011 Global Supply Chain Laboratory