www.randymaclean.com Randy MacLean

The Principles of Quantum Profit Management

Randy MacLean

QPM Principle #1: You're Making More Money than You Know

  • All companies have internal profits
  • Magnitude of the internal profits can be significant
  • Internal profits are being diverted away from the bottom line
  • Correcting this is completely in your control
  • Act to identify and retain more of the company's internal profits

QPM Principle #2: Measure & Manage on Net Profit

  • Net profit rarely correlates to GP/GM%
  • GP/GM% doesn't account for CTS variances
  • GP incentives drive dysfunction:
    • GP% mirage
    • Work against your true objectives
    • Pits management vs sales force
  • GP/GM% evaluation drives poor decision-making
  • Use Net Profit for decision-making

QPM Principle #3: Financial Averages Mask Reality

  • Every segment is made up of components
  • Component performance can vary wildly
  • Analyze and investigate homogeneous segments
  • Homogeneous segments lend themselves to uniform, profitable service models
  • Dig deep enough to find segments with homogeneous performance

QPM Principle #4: Measure & Evaluate at the Quantum Level

  • Simpler to measure
  • More direct control
  • Consumes less time / resources
  • Reduces risk of errors
  • Target for high-leverage results
  • Analyze and manage the business at the granular level

QPM Principle #5: Understand and Manage Service Models

  • Make money on everything you do
  • Every segment needs its own profitable service model
  • Service models must fit within the GP/Margin envelope of the segment
  • Profitable segment service models eliminate cross-subsidies, and divert profits back to the company
  • Develop profitable service models for every segment

QPM Principle #6: Manage the Deltas

  • Profit improvement is the main purpose of executive management
  • Focus on profit improvement management can differentiate a company from competitors
  • Profit deltas in customers, territories, product lines and vendors can all contribute
  • Drive profit improvement at the quantum level

QPM Principle #7: Price Strategically for Optimum Profits

  • Price curves are intended to match lower margins to more-efficient high-volume business
  • Loss of pricing discipline puts high-volume accounts at risk, and erodes profits on normal business
  • Smart pricing can provide significant profit upside without risking customer relationships
  • Match pricing to resource consumption & maintain price discipline

QPM Principle #8: Align Goals & Incentives with Net Profit

  • Make sure everyone has the same goals as the company and senior management
  • Make sure incentive aren't driving dysfunctional or counter-productive behavior
  • Ensure all incentives are based on Net Profit or CTS improvments

Webinar: Increase Profit Through Margin Analysis

6/6/2023

This webinar unveils the exceptional power of our Margin Analysis report. During this session, you will gain valuable strategies to immediately capitalize on lucrative opportunities and drive your company's success. The WayPoint Margin Analysis report provides a dynamic customer list segmented by profit value and efficiency. It presents their current margin, target break-even margin, margin required for contribution, and coverage of sales compensation. "Contributing" customers exceed the company average profit rates. Additionally, customers falling below the target margin display the precise price adjustment needed to reach the target. Unlock valuable insights for optimizing profitability and strategic decision-making.

Measuring & Managing Fleet Costs

2/16/2023

Any organization that runs a fleet can benefit substantially from knowing transport costs at the customer/delivery level. This component of the customer cost envelope plays a big part in understanding customer value and drives decisions on pricing delivery, setting margins and routing decisions. To do this at the top level, companies are moving away from using mileage, and toward a much more accurate and effective time-based measurement. WayPoint can utilize the better inputs, calculating very precise costs at the customer level. A time-based system is also dynamic, reflecting cost changes driven by daily route changes, opening numerous new ways to optimize delivery costs. In this session, we'll show your team how this is done, and how you can find significant reductions in delivery expenditures while improving customer service. This is a session for operations people, CFOs and chief executives, so assemble your team and be ready to continue the conversation at the end of this 30-minute session.

The 7 Areas That Need Your Focus (brief)

6/2/2021

The 3rd of 3 lists defining the markers of Distribution companies outpacing their peers. These are the specific areas that many companies commonly miss and places where your focus on new strategies and tactics will make a huge difference on your productivity and profitability.

The 6 Attributes of Super-Profit Companies

5/26/2021

The 2nd of 3 lists defining the markers of Distribution companies outpacing their peers.

The 5 Things Customers Want (brief)

5/19/2021

The 1st of 3 lists defining the markers of Distribution companies outpacing their peers.

Customer Segmentation

5/13/2019

With the right segmentation you can define customer service levels, delivering high service levels to the accounts that need and can afford it. You can set price levels appropriate customers needing every level of support from "no frills" to "gold-plated". You can focus your sales efforts precisely — working to acquire new customers that perfectly fit your strategy and deliver increased profitability through optimally-efficient logistical relationships.

New Money – How to Analyze & Boost Profit from Delivery

5/6/2019

Fleet and delivery operations are a frequently overlooked opportunity to add much more profit to your bottom line. In fact, every dollar you save or charge is just as beneficial as $25 in new sales. No wonder today's top companies are using surprising new methods to measure and optimize fleet costs, and implementing advanced analytics to set pricing and policies for deliveries.

New ideas and new tools are shaping customer choices, and increasing competitiveness. This video shares what we've learned from hundreds of the best companies across more than 15 years of strategic planning and on-the-ground tactics that have generated millions in new profits.

How Distributors Can Double Their Rebate Income

4/29/2019

Rebates have grown tremendously as a percentage of the bottom line of distributors over the course of the last 3 years. In fact, in most instances, they now account for more than half of year-end profit.

In this session you'll gain insights on: How rebates are impacting your true line-item profitability / How to leverage your existing agreements / How real-world product mix add-up.

Novelties and New Core

4/22/2019

We've added exciting new capabilities to the waypoint user interface. In this video we show you all the newly added features that will increase ease of use in the WayPoint program for a more convenient experience.

WayPoint Presentation

9/1/2018

In this session, Randy MacLean walks you through the newest and most effective analytics for profit management. Using these metrics, companies produce record-breaking profit rates and growth. In just 17 minutes, he covers the hidden dynamics that are adversely influencing profit rates, suggests the not-so-obvious solutions executives are using to address them, and shows how WayPoint measures and reports on them. You'll see the only reports available that give company executives the ability measure, monitor and manage the real drivers of company profit.

How Money is Made in Wholesale Distribution

8/9/2018

Randy MacLean shares his analysis of over $65B of distribution business to help others shed incorrect assumptions about how to make money. Businesses that have stellar results have been able to understand profit dynamics and move the profit needle not just by five or ten percent, but by doubling or tripling the bottom line over their competitors.

You've Lost Your Biggest Account – Now What?

2/20/2018

Everyone eventually faces the loss of a significant account. Sometimes it's one that represents such a large share of business, that "normal" operations are no longer possible. How you handle the situation will determine whether it's an unpleasant blip, or a near death emergency. This video shows what to do to keep your ship from afloat when the inevitable happens.

Recommended Sites: Profit-Ideas • Quantum Profit Management • Distribution Education Library • WayPoint Analytics

                   

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