The Plan to Profit Model
A Better Approach for Distribution Companies
A General Manager (GM) in baseball is responsible for the players and managers of their franchise. His/her tasks would include hiring or firing coaches, entering contract negotiations with players and engaging in trade discussions. The best GM's employ a data-driven, analytic strategy to determine which players to cut loose, keep or trade for. The data provides them with key insights that they might not have seen with their own eyes, which can help them plan for the future of the franchise. On the other side, the worst GM's treat their franchise like a video game - making decisions based off gut-feelings and their day-to-day mood. These GM's have no data or insights to base their decisions off of, so they often fail to plan for the future. Unfortunately, that can leave them looking back in a few years wondering how they failed.
Well, operating a distribution company is no different. It is important for distributors to plan for the future instead of operating at a loss or profit month to month. This is called the Order to Cash model, or O2C. In the Order to Cash model, the company is making key decisions based off an order or two just like a bad GM would trade away a player who just had a subpar game. The better option is to employ a Plan to Profit model.
A Plan to Profit model encourages distributors to plan ahead for future profits and opportunities based off the information they can access from their ERP solution. The proper ERP solution can help distributors analyze accurate costs, areas of margin erosion and performance data. From these key insights and many more, distributors can implement actionable plans that optimize profits.
How does the right ERP solution create the ultimate Plan to Profit model?
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Plan to Profit (P2P) Drives Real Results for Distribution Companies
"Is it really necessary to adopt a “Plan to Profit” methodology for my company? It is, but only if you are concerned with actually achieving your goals. (note sarcasm)..."