pic:Brian Moore, Moorgate 25th February 2013
An e-pic closure tells the story.......
Tuesday, 26 February 2013
Monday, 25 February 2013
Measuring value for the buyer? When the buyer needs convincing his gain is greater than your cost...
S: …and, as you know, we still need to solve this problem of your out-of-stocks Thursdays…how about upping the weekly order?
B: No way, I am already hitting my buying limits. How about delivering more frequently?
S: Unfortunately, the 20-unit size of our shipping outer means you would then breach your on-going stocking quantities. I really want to help, but I need some basic information…
B: I thought you were meant to be the expert on our business?
S: I can give you some general solutions based on my assumptions, but the more data you let me have, the more precise will be my recommendations. Let’s agree the size of the problem first.
B: I lose a day’s sales by running out of stock on Thursdays because your inflexible distribution system delivers to our depot on Fridays…
S: We deliver on Fridays to optimise our coverage of this part of the country, keeping your cost-of-goods low. So, what are your daily sales of our brands?
B: Confidential…
S OK, let’s use assumptions for now: you sell £5.5m of our brand per annum, making it just over £15k per day, at a gross margin of 35%, right?
B: Near enough, but where is this getting us?
S: So, if I could eliminate your out-of-stocks on Thursdays, it would represent £15k extra sales per week, £780k per annum, an annual extra gross margin of £273k (£15k x 52 =£780k x 0.35 = £273k)
B: How can you help?
S: The obvious answer is for us to deliver on Wednesdays, but that means re-routing, extra mileage and other costs. Our logistics guys tell me it would cost us an extra £1.5k per trip, making it £78k per annum.
B: Just a cost of doing business, and £78k is not a lot to improve customer service level.
S: As a matter of fact, with our published net profit of 12%, this incremental cost of £78k needs incremental sales of £650k for us to break even (£78k/12 x 100). Your extra sales of £780k of our brand means £507k sales for us (£780k x 0.65, allowing for your 35% gross margin), so I need something from you that will generate additional sales of £150k per annum.
Buyer: …I suppose if we are getting incremental sales of £780k per annum…
SuperNAM: Great! How about the two extra facings I’ve been wanting this past few months?
Adventures of SuperNAM (15)
B: No way, I am already hitting my buying limits. How about delivering more frequently?
S: Unfortunately, the 20-unit size of our shipping outer means you would then breach your on-going stocking quantities. I really want to help, but I need some basic information…
B: I thought you were meant to be the expert on our business?
S: I can give you some general solutions based on my assumptions, but the more data you let me have, the more precise will be my recommendations. Let’s agree the size of the problem first.
B: I lose a day’s sales by running out of stock on Thursdays because your inflexible distribution system delivers to our depot on Fridays…
S: We deliver on Fridays to optimise our coverage of this part of the country, keeping your cost-of-goods low. So, what are your daily sales of our brands?
B: Confidential…
S OK, let’s use assumptions for now: you sell £5.5m of our brand per annum, making it just over £15k per day, at a gross margin of 35%, right?
B: Near enough, but where is this getting us?
S: So, if I could eliminate your out-of-stocks on Thursdays, it would represent £15k extra sales per week, £780k per annum, an annual extra gross margin of £273k (£15k x 52 =£780k x 0.35 = £273k)
B: How can you help?
S: The obvious answer is for us to deliver on Wednesdays, but that means re-routing, extra mileage and other costs. Our logistics guys tell me it would cost us an extra £1.5k per trip, making it £78k per annum.
B: Just a cost of doing business, and £78k is not a lot to improve customer service level.
S: As a matter of fact, with our published net profit of 12%, this incremental cost of £78k needs incremental sales of £650k for us to break even (£78k/12 x 100). Your extra sales of £780k of our brand means £507k sales for us (£780k x 0.65, allowing for your 35% gross margin), so I need something from you that will generate additional sales of £150k per annum.
Buyer: …I suppose if we are getting incremental sales of £780k per annum…
SuperNAM: Great! How about the two extra facings I’ve been wanting this past few months?
Adventures of SuperNAM (15)
Friday, 22 February 2013
When the buyer says 'the retail margin is too small'... How to shift the buyer's point of view
B: It's too small. Our average margin for the category is 28%
S: So, your average category margin is bigger than your overall company gross margin of 23%?
B: How do you know that?
S: Simple, I downloaded your annual accounts from Companies House @ £1 per document. See, on the P&L, second line.... But anyway, let's work with your category margin, providing you tell me your average category stockturn per annum.
B: No, our stock rotation details are off limits... I shouldn't even have told you our category margin...
S: Hang on, the more information you give me, the more I can tailor-make a business solution for your category. I have a limited sized cake, and the better I slice it, the greater the value for you. But anyway, for the moment, I can work with your company data.
B: I'm listening, but make it quick...
S: Right. As you know we deliver our top selling SKUs to you daily, a stockturn of 250 times per annum, but let's take an average of weekly delivery for the brand, 50 times per annum.
B: So?
S: So, our annual sales of £350k of the brand to you means that at any time you are sitting on £7k stocks of our brand, £350/50...
B: And?
S: And, with our 22% retail Gross Margin making you £77k Gross Profit per annum on a stock investment of £7k, in other words, you are making £77k Gross Margin Return On Inventory Investment (GMROII*) on our brand. As you can see, £77k divided by £7k times 100 means you are making a Gross Return of 1100% on our brand, a little better than the 22% you were complaining about earlier?
B: I don't quite get it...
S: No problem, it took me a week to get my head around it. Our brand is a bit like a bank in which you deposit £7k and you get interest of £77k per annum. In other words 1100% interest!
B: We make that on all brands....
S: In your dreams...joking!... Let me explain?
B: It had better be good....
S: Your average company Gross Margin is 23%, in other words £184m on sales of £800m, and your average stock-turn is 17.5 times per annum, as you can see from your balance sheet showing Stocks of £45.7m. Dividing the £45.7m into your sales of £800m on your P&L, means your company is making £184m on your average stocks of £45.7m, an average GMROII of 403%, compared with your GMROII on our brand of 1,100%!
Buyer: Suppose I told you that our average category stockturn is 27......
SuperNAM: Now you're talking....
Adventures of SuperNAM (14)
* GMROII
Thursday, 21 February 2013
Skype job interviews: Some tips and tricks to shorten the odds…
Given the cost of travel and the need to ‘see’ as many potential NAMs as possible, companies are beginning to Skype the process, at least for initial interviews. In fact, in the US more than six out of 10 HR managers now use video to interview job applicants, according to a survey*.
As with other aspects of these unprecedented times, the key for proactive NAMs is to adapt to the Skype interview, while others are awaiting a return to the old fashioned face-to-face approach.
Besides, the use of Skype will allow you to apply for more jobs, with the added value that getting the first interview on Skype right, will make you more effective in the inevitable face-to-face second interview…..
Action
Get the background right: Unless you are blessed with an exceptionally open-minded sales director, the Skype interview will probably take place in your home office or a suitable part of your living room.
- Lock the door to prevent interruption (and explain why, to spouse, kids and pets…)
- Best to be sat behind a desk or table in order to avoid having to stage-manage your lower torso [this also allows any nervousness to be dissipated via ‘gesture-leakage’ (foot-tapping or worse, in extreme cases…)]
- Ensure that nothing that looks even vaguely confidential is visible on your shelves behind you. ‘If she leaves our stuff on open view like that, we need someone else..’
Get the equipment right: Ideally, and laptop permitting, it has to be worth buying a £50 webcam + bluetooth clip-on mic to ensure that you look and especially, sound as good as it gets... (seriously, would you buy anything, let alone employ, someone that looks like your distorted image, taken by a laptop camera?). Also, despite allowances being made for circumstances, interviewers have developed expectations of broadcast level standards in evaluating video-interviews. Also use an ear-phone to ensure you hear the whole question.
Get your appearance right: Dress as you would for a face-to-face interview, remembering that just because your bottom half is out-of-sight, it is possible that having to stand up in mid-interview may give away more than intended… Use your live image to ensure that that you are staying in-frame, and then ignore it and play direct to camera 99% of the time. This will ensure that you are giving full eye contact, where even a glance at your laptop screen looks shifty… You will get used to picking up most of the interviewer’s body-language via your peripheral vision..
Get your preparation right: If you need help here, you are not using the internet properly… However, anyone who goes for a job in these unprecedented times, without first checking the company out at Companies House at £1 per company, is not ready for the move…
Beware the ‘dirty tricks’: Some interviewers switch off the camera at their end (!) to avoid you seeing their reaction to answers etc… If this happens with you, pull the plug and go for a coffee, you are already pitching at the wrong company…
- Other dirty tricks can include the ‘sell me this’ routine: In a job-interview a few years back, a pal of mine, Joe, was handed a biro by his potential sales director and told ‘sell me this’. Joe examined the biro, snapped it in half and threw it into the waste-bin, saying: “Mr B, a man in your position shouldn’t be using rubbish like this. What you need is a pen like this, drawing his Mont Blanc into view… (No, he didn’t get the job, but reminds me of the story every time we meet….)
NB
- The key is practice, and enough preparation to minimise distracting glances at notes
- Above all, remember that your objective in the first-interview is to land a second-interview, all the good in-depth stuff really comes into play then…
All this for a new job? Real thinkers will be way ahead of me on this, but have you ever thought that all of the above could equally apply to at least some buyer-seller meetings, in these unprecedented times…….?
* BBC
As with other aspects of these unprecedented times, the key for proactive NAMs is to adapt to the Skype interview, while others are awaiting a return to the old fashioned face-to-face approach.
Besides, the use of Skype will allow you to apply for more jobs, with the added value that getting the first interview on Skype right, will make you more effective in the inevitable face-to-face second interview…..
Action
Get the background right: Unless you are blessed with an exceptionally open-minded sales director, the Skype interview will probably take place in your home office or a suitable part of your living room.
- Lock the door to prevent interruption (and explain why, to spouse, kids and pets…)
- Best to be sat behind a desk or table in order to avoid having to stage-manage your lower torso [this also allows any nervousness to be dissipated via ‘gesture-leakage’ (foot-tapping or worse, in extreme cases…)]
- Ensure that nothing that looks even vaguely confidential is visible on your shelves behind you. ‘If she leaves our stuff on open view like that, we need someone else..’
Get the equipment right: Ideally, and laptop permitting, it has to be worth buying a £50 webcam + bluetooth clip-on mic to ensure that you look and especially, sound as good as it gets... (seriously, would you buy anything, let alone employ, someone that looks like your distorted image, taken by a laptop camera?). Also, despite allowances being made for circumstances, interviewers have developed expectations of broadcast level standards in evaluating video-interviews. Also use an ear-phone to ensure you hear the whole question.
Get your appearance right: Dress as you would for a face-to-face interview, remembering that just because your bottom half is out-of-sight, it is possible that having to stand up in mid-interview may give away more than intended… Use your live image to ensure that that you are staying in-frame, and then ignore it and play direct to camera 99% of the time. This will ensure that you are giving full eye contact, where even a glance at your laptop screen looks shifty… You will get used to picking up most of the interviewer’s body-language via your peripheral vision..
Get your preparation right: If you need help here, you are not using the internet properly… However, anyone who goes for a job in these unprecedented times, without first checking the company out at Companies House at £1 per company, is not ready for the move…
Beware the ‘dirty tricks’: Some interviewers switch off the camera at their end (!) to avoid you seeing their reaction to answers etc… If this happens with you, pull the plug and go for a coffee, you are already pitching at the wrong company…
- Other dirty tricks can include the ‘sell me this’ routine: In a job-interview a few years back, a pal of mine, Joe, was handed a biro by his potential sales director and told ‘sell me this’. Joe examined the biro, snapped it in half and threw it into the waste-bin, saying: “Mr B, a man in your position shouldn’t be using rubbish like this. What you need is a pen like this, drawing his Mont Blanc into view… (No, he didn’t get the job, but reminds me of the story every time we meet….)
NB
- The key is practice, and enough preparation to minimise distracting glances at notes
- Above all, remember that your objective in the first-interview is to land a second-interview, all the good in-depth stuff really comes into play then…
All this for a new job? Real thinkers will be way ahead of me on this, but have you ever thought that all of the above could equally apply to at least some buyer-seller meetings, in these unprecedented times…….?
* BBC
Wednesday, 20 February 2013
When the buyer wants too much - how to say 'no'...
S: Sorry, we don’t give Early Payment Discounts…
B: We have a new policy on invoice payment and we are asking all suppliers for Settlement Discounts
S: I appreciate you have to ask, but I would like to explain why it is not going to happen with our business
B: So, you are refusing to cooperate with one of your biggest customers?
S: Cooperation is not the issue. I could say ‘no’ and walk. But, given our relationship, I felt you deserved an explanation
B: Well, It better be good…
S: As you know, based our £1m annual sales to you, a 1.5% settlement discount would be £15k
B: So, no big deal…
S: Hang on, there’s more... Being an ethical company, we would have to offer our other UK customers the same discount, amounting to £2.3m on our £150m sales
B: So you are not interested in growing your UK business
S: I didn’t say that. Because we are a global company we would have to offer the discount worldwide, amounting to £38m on our £2.5bn turnover, so you can see why it’s not going to happen.
B: I don’t know….
S: So if your company needs a line on our invoices reading 'payment discount', no way. However if you simply want to earn an extra £15k on our business, there may be ways…
Buyer: Sounds interesting…
SuperNAM: Great, now let me tell you what we want…
Adventures of SuperNAM, Part 13
B: We have a new policy on invoice payment and we are asking all suppliers for Settlement Discounts
S: I appreciate you have to ask, but I would like to explain why it is not going to happen with our business
B: So, you are refusing to cooperate with one of your biggest customers?
S: Cooperation is not the issue. I could say ‘no’ and walk. But, given our relationship, I felt you deserved an explanation
B: Well, It better be good…
S: As you know, based our £1m annual sales to you, a 1.5% settlement discount would be £15k
B: So, no big deal…
S: Hang on, there’s more... Being an ethical company, we would have to offer our other UK customers the same discount, amounting to £2.3m on our £150m sales
B: So you are not interested in growing your UK business
S: I didn’t say that. Because we are a global company we would have to offer the discount worldwide, amounting to £38m on our £2.5bn turnover, so you can see why it’s not going to happen.
B: I don’t know….
S: So if your company needs a line on our invoices reading 'payment discount', no way. However if you simply want to earn an extra £15k on our business, there may be ways…
Buyer: Sounds interesting…
SuperNAM: Great, now let me tell you what we want…
Adventures of SuperNAM, Part 13
Tuesday, 19 February 2013
Breakfast at Costco's?
Costco got something from Tiffany for Valentine’s Day: a lawsuit claiming it had sold diamond engagement rings falsely marketed in stores using the jeweller’s name.
According to the New York Times, the suit says “Tiffany has never sold nor would it ever sell its fine jewellery through an off-price warehouse retailer like Costco.”
The real issue in these austere times might be the fact that Tiffany may eventually be happy to join other prestigious brands like Breitling, Cartier and Chanel in discovering worthwhile numbers of their target audience in the Costco traffic-flow…
Then it remains to find a face-saving way of positioning their offering, if Costco agrees to list a brand that seems a little out-of-touch with the new realities of a super-savvy, well-heeled consumer, shopping regularly in warehouse clubs…
Meanwhile, scope for some interesting top-table explanations at the resulting wedding breakfasts…?
According to the New York Times, the suit says “Tiffany has never sold nor would it ever sell its fine jewellery through an off-price warehouse retailer like Costco.”
The real issue in these austere times might be the fact that Tiffany may eventually be happy to join other prestigious brands like Breitling, Cartier and Chanel in discovering worthwhile numbers of their target audience in the Costco traffic-flow…
Then it remains to find a face-saving way of positioning their offering, if Costco agrees to list a brand that seems a little out-of-touch with the new realities of a super-savvy, well-heeled consumer, shopping regularly in warehouse clubs…
Meanwhile, scope for some interesting top-table explanations at the resulting wedding breakfasts…?
Sunday, 17 February 2013
Amazing Amazon: Explore the supply-chain reaction to your 1-click order, in high definition...
Amazon's warehouse in Rugeley, Staffs, is the size of nine football pitches. Inside, hundreds of people in orange vests are pushing trolleys, glancing down at the screens of their handheld satnav computers for directions on where to walk next and what to pick up when they get there. They do not dawdle – the devices in their hands are also measuring their productivity in real time. They might each walk between seven and 15 miles today, ‘a sort of robot, in human form’.
At Christmas, the people working in this building, together with those in seven others like it across the country, were dispatching a truck filled with parcels every three minutes or so. According to the FT, before they go home at the end of their eight-hour shift, or go to the canteen for their 30-minute break, they must walk through a set of airport-style security scanners....
Products are stored anywhere there is free space, with only the computer ‘in the know’.
For a fascinating insight into Amazon ‘continuous improvement’ operations, recruitment, wage rates and its positive influence on other organisations’ operational efficiency, see this comprehensive FT article.
A ‘must-read’ for any organisation that feels they have cracked their online presence development….
In practice, Amazon’s operational bar-raising is (or should be) even more scary for online competition than their 1-click ease-of-use…
At Christmas, the people working in this building, together with those in seven others like it across the country, were dispatching a truck filled with parcels every three minutes or so. According to the FT, before they go home at the end of their eight-hour shift, or go to the canteen for their 30-minute break, they must walk through a set of airport-style security scanners....
Products are stored anywhere there is free space, with only the computer ‘in the know’.
For a fascinating insight into Amazon ‘continuous improvement’ operations, recruitment, wage rates and its positive influence on other organisations’ operational efficiency, see this comprehensive FT article.
A ‘must-read’ for any organisation that feels they have cracked their online presence development….
In practice, Amazon’s operational bar-raising is (or should be) even more scary for online competition than their 1-click ease-of-use…
Thursday, 14 February 2013
Another nail in the hoof? Heart Attack Grill claims second victim…
In 2012 a man in his 40s was hospitalised after he began sweating and shaking while eating a 6,000-calorie Triple Bypass burger at the restaurant. In 2011 another unofficial spokesman, a 260kg (575lb) man named Blair River, died at age 29 from what was said to have been pneumonia.
The diner is famous for its huge hamburgers, extra-fat milkshakes and fries cooked in lard. It uses the tagline: "Taste worth dying for."
The only issue now is whether the diner will add equine-based fare to its menu in response to leading-edge appetite evolution in the marketplace…?
Seriously, the above example illustrates the difference between knowingly eating food that has a proven record in compromising health, and being mislead as to ingredients that may or may not represent a health issue.
The issue is profit-enhancement deception, and no amount of buck-passing should be allowed to obscure that basic fact, its consequences, and treatment...
Subscribe to:
Posts (Atom)