Managing Channels to Markets Through Distribution Channels: Best Practice

The business of getting products and services to market
 Distribution matters
 Challenging business dynamics
 Business models are key to value propositions
 A structured approach to positioning tour value proposition

The role of the distributor
 Distributors/ Wholesalers
 Customer role – core functions
 Supplier role
 Supplier role – core functions

How the distributor business model works
 Role defines business model
 Profit is very small number between two very big numbers
 Managing working capital is a balancing act
 The measures that matter and how to manage with them

Margins and Profitability
 Multiple margins
 Gross margin and value add
 Margin mix or blended margin
 Contribution margin
 Net margin and operating margin

Working capital
 Working capital management
 Supplier credit
 Inventory
 Customer credit
 Working capital cycle

Productivity
 Earn and turn
 Contribution margin return on inventory investment
 Returns on working capital

Sustainability
 Sustainability – longer term business health
 Return on net assets and return on capital employed
 Return on invested capital
 Value creation
 Managing value creation on an operational basis

Managing growth
 Growth dynamics
 Internally financial growth rate formula
 Economies of scale – profitability
 Economies of scale – working capital management
 Risk of growth – diseconomies of scale

How to sell to distributors
 What we mean by selling to distributors
 The sales process
 Managing the account relationship
 Some rules of the thumb for making compelling business cases