Footnotes for “Strategic Insights #3:

 

“DO WELL BY DOING GOOD FOR ALL “FIRST CHOICE” STAKEHOLDERS”

 

1.       The idea of expanding the pie for all four, main stakeholder groups in any business is covered in more detail in the following “Merrifield sources”:

a.       It is the cover concept for my “High Performance Distribution Ideas for All” DVD training program. The kit includes 6 DVDS with 53, 10 minute training modules (11 hours and 40 minutes in total) suitable for using with ALL employees. There is a near-300 page Implementation Guide. It lists for $995. Waypoint webinar attendees can buy it for $300. And Waypoint clients get a copy for free, or a credit back on what they may have paid for it. It has a 30-day unconditional guarantee.

b.       Article 5.6 develops the virtuous reinforcing cycle of why employees must come first. (http://merrifield.com/articles/5_6.asp)

2.       For more on how the best service companies pay front-line service employees 150% of the going compensation for a given job niche in a given metro labor market see:

(http://merrifield.com/articles/5_2.asp) Pay 150% To Get 200% Output

To insure that no employees slack off after they arrive at premium wages, high performance work systems have transparent metrics everywhere and tie incentive compensation to how well the team of peers do. Then, the ambitious will cajole the laggards. For “six systems” that I have put into high performance distribution systems, you can read article 5.10 at my site and/or watch DVD program modules 5.1-8.

3.       A case example of a service equation for a contractor supply distribution business is the “Big 8” of Service Excellence which is well covered in Ex. 3 at my site: http://merrifield.com/exhibits/8elements.pdf.

As for “what’s in it for me”, think about ways to link the -hearts, minds and wallets - of front-liners into continuous improvement in the Big 8; “gross margin $/employee” for the last 12 months trailing; and ultimately some sort of companywide gainsharing bonus which might emphasize not just total profit levels, but during “core renewal” programs “delta profit”.

For background training for all employees as to how premium compensation for their job niche is tied into exception “margin dollars/employee” through working smarter, see DVD modules: 2.1-4. For more on the ABC’s of the need for the company to make profits to reinvest in the growth of the company and every employees career growth, see modules 2.5-12. The entire second section of the DVD training is key to going “open book” in an effective way.

4.       For a full discussion on how to segment customers and re-serve/term them differently, see footnote #3 for “strategic insight” essay #1. For ideas on how to hyper-focus on big target whales and steal them from your competition who can’t focus and serve as well because they are too distracted over-serving minnows, see: The annotated slide show on “How to Crack Target Accounts” at this link: http://merrifield.com/articles/Cracking_Target_Accounts.pdf.

As well as skim through Ex. 59 (a training document entitled: “Buy-Sell Process Improvement Guidelines” at this link: http://merrifield.com/exhibits/Ex%2059%20BSPI%20exhibit.pdf

5.       Understanding these strategic concepts for distribution are critical:

a.       “critical mass inventory investment” for best local fill-rates for a target niche

b.       “critical mass sales” from dominating a customer niche pool of customers

c.       The core-intersection of most profitable customers and items and plays to maximize the sales of these two inter-dependent elements to each others

d.       The flow-through economics of selling “more old items to the same customer on a larger average order size basis

*They are all covered extensively in footnote #4 for Insight Essay #1.

6.       Overcoming “financial management” ideology and subordinating it to competitive strategy realities is so difficult, I spent an enormous amount of time detailing how and why “financial management practices” are harmful in “Chapter Two” of a virtual book that I did not finish at this link: http://merrifield.com/books/Chapter%202.pdf.

7.       Another great ideology that grips distributors in a detrimental way is organizing all of their marketing around product promotional programs that are larded with incentives from suppliers. Distributors in mature channels should be selling better value-delivering demand replenishment solutions to customers who are asking for “supply chain” solutions rather than product promotions. Making the subtle, but powerful switch to having (profitable) suppliers work with you on tailored programs to sell more profitable items into most profitable customers/niches instead of to any and all old and new customers is tough. Chapter three of the virtual book is about addressing this challenge: http://merrifield.com/books/Chapter3.pdf.