The MHEDA Journal - Fourth Quarter, 2018 - 78

MONEY
DISC

MATTERS
Distributor Statistical
Comparisons (DiSC)
Little Things Mean a Lot
BY JOHN MACKAY

hy is it that one of every four material handling
distributors makes three times more than the
rest of the industry? Perhaps they have a great,
well trained sales team executing a brilliant market plan. Or, have they found a market niche that the other three
of four distributors hasn't focused on yet?
Maybe the successful distributors did
have a crack sales staff and maybe they
did have a better marketing focus. But,
there are no real solid benchmarks to
back that up.
What there are concrete benchmarks
for is that highly successful material
handling distributors managed the
details of their business just a little
better, resulting in a lot better return
on investment (ROI). Thriving distributors achieved their success by managing what the DiSC report calls the
Critical Profit Variables (CPVs), see
Exhibit 1. Those key CPVs are the decisive benchmarks that separate successful companies from other distributors
in the industry.
Interestingly, the high-profit firms
almost never truly excelled at any one
of the CPVs. Instead, they were able to
manage the collection of profit drivers
78

MHEDA | themhedajournal.org

just a "little bit" better than the typical
company in the industry. This small
delta in performance was enough to
generate dramatically higher profit.
The MHEDA DiSC study provides
some key insights into exactly how
the high-profit firms generate better
profit numbers. It focuses intently on
the key profit drivers - growth, gross
margin, expenses, inventory turnover and accounts receivable collections. The report provides a roadmap
for any firm wanting to improve its
financial performance.

Typical Versus High Profit
The term "Typical Firm" in the report
means the firm that is most representative of the industry. This typical firm is
the one with financial performance in
the exact middle of the results for all
participating MHEDA distributors. That

is, on any given measure, half of the
firms performed better than the typical
firm and half performed worse. It is the
best measure of industry performance
on the profit drivers.
In 2018 the typical firm generated
sales of $40 million in revenue. On that
sales base, it produced a pre-tax profit
of $1.24 million, which equates to a
profit margin of 3.1%. Stated somewhat differently, every $1.00 of sales
resulted in 3.1¢ of profit.
In contrast to the typical firm, the
"High Profit Firm" generated a profit
margin of 6.9%. This means that even
if the high-profit firm had produced
the same sales volume as the typical
firm, it would have generated more
profit for reinvestment in the company.
Higher profit along with higher asset
productivity ultimately resulted in
higher return on equity to the owners
of the business.

Managing the CPVs
In trying to move from typical to
high-profit, the key is to understand
the Critical Profit Variables with greater
precision. To facilitate that understanding, the CPV results for the typical firm
and high-profit firm in the industry are
summarized in Exhibit 1. While there
are other factors that could be examined
in evaluating performance, these are
the ones that really drive performance.


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The MHEDA Journal - Fourth Quarter, 2018

Table of Contents for the Digital Edition of The MHEDA Journal - Fourth Quarter, 2018

Chairman’s Perspective
From the Desk of Liz Richards
Editor’s Note
MHEDA Learning Management System
Ask Your Board
MHEDA Member Profile
@Work
Women In Industry
Industry Pulse
2019 Material Handling Business Trends
Defining MHEDA’s 2019 Material Handling Business Trends
10 Years Of Material Handling Trends
Using Virtual Reality to Enhance Forklift Operator Training
Sales Success Stories
Women In Industry Conference
You Are Safe
Bank To Thanks
Be Bold
DiSC – Little Things Mean a Lot
Leading Change: The New Management Imperative
The Importance of Your Online Presence
Spotlight on Association News
New Members
MHEDA Milestones
Index to Advertisers by Product Category
Index to Advertisers Alphabetical
The Last Word
The MHEDA Journal - Fourth Quarter, 2018 - Intro
The MHEDA Journal - Fourth Quarter, 2018 - cover1
The MHEDA Journal - Fourth Quarter, 2018 - cover2
The MHEDA Journal - Fourth Quarter, 2018 - 3
The MHEDA Journal - Fourth Quarter, 2018 - 4
The MHEDA Journal - Fourth Quarter, 2018 - 5
The MHEDA Journal - Fourth Quarter, 2018 - 6
The MHEDA Journal - Fourth Quarter, 2018 - 7
The MHEDA Journal - Fourth Quarter, 2018 - 8
The MHEDA Journal - Fourth Quarter, 2018 - 9
The MHEDA Journal - Fourth Quarter, 2018 - 10
The MHEDA Journal - Fourth Quarter, 2018 - Chairman’s Perspective
The MHEDA Journal - Fourth Quarter, 2018 - 12
The MHEDA Journal - Fourth Quarter, 2018 - From the Desk of Liz Richards
The MHEDA Journal - Fourth Quarter, 2018 - 14
The MHEDA Journal - Fourth Quarter, 2018 - INSERT3
The MHEDA Journal - Fourth Quarter, 2018 - INSERT4
The MHEDA Journal - Fourth Quarter, 2018 - Editor’s Note
The MHEDA Journal - Fourth Quarter, 2018 - MHEDA Learning Management System
The MHEDA Journal - Fourth Quarter, 2018 - 17
The MHEDA Journal - Fourth Quarter, 2018 - Ask Your Board
The MHEDA Journal - Fourth Quarter, 2018 - 19
The MHEDA Journal - Fourth Quarter, 2018 - 20
The MHEDA Journal - Fourth Quarter, 2018 - 21
The MHEDA Journal - Fourth Quarter, 2018 - 22
The MHEDA Journal - Fourth Quarter, 2018 - 23
The MHEDA Journal - Fourth Quarter, 2018 - MHEDA Member Profile
The MHEDA Journal - Fourth Quarter, 2018 - 25
The MHEDA Journal - Fourth Quarter, 2018 - 26
The MHEDA Journal - Fourth Quarter, 2018 - @Work
The MHEDA Journal - Fourth Quarter, 2018 - 28
The MHEDA Journal - Fourth Quarter, 2018 - Women In Industry
The MHEDA Journal - Fourth Quarter, 2018 - Industry Pulse
The MHEDA Journal - Fourth Quarter, 2018 - 31
The MHEDA Journal - Fourth Quarter, 2018 - 32
The MHEDA Journal - Fourth Quarter, 2018 - 2019 Material Handling Business Trends
The MHEDA Journal - Fourth Quarter, 2018 - Defining MHEDA’s 2019 Material Handling Business Trends
The MHEDA Journal - Fourth Quarter, 2018 - 35
The MHEDA Journal - Fourth Quarter, 2018 - 36
The MHEDA Journal - Fourth Quarter, 2018 - 37
The MHEDA Journal - Fourth Quarter, 2018 - 10 Years Of Material Handling Trends
The MHEDA Journal - Fourth Quarter, 2018 - 39
The MHEDA Journal - Fourth Quarter, 2018 - 40
The MHEDA Journal - Fourth Quarter, 2018 - 41
The MHEDA Journal - Fourth Quarter, 2018 - 42
The MHEDA Journal - Fourth Quarter, 2018 - 43
The MHEDA Journal - Fourth Quarter, 2018 - 44
The MHEDA Journal - Fourth Quarter, 2018 - 45
The MHEDA Journal - Fourth Quarter, 2018 - 46
The MHEDA Journal - Fourth Quarter, 2018 - 47
The MHEDA Journal - Fourth Quarter, 2018 - 48
The MHEDA Journal - Fourth Quarter, 2018 - 49
The MHEDA Journal - Fourth Quarter, 2018 - INSERT1
The MHEDA Journal - Fourth Quarter, 2018 - INSERT2
The MHEDA Journal - Fourth Quarter, 2018 - 50
The MHEDA Journal - Fourth Quarter, 2018 - 51
The MHEDA Journal - Fourth Quarter, 2018 - Using Virtual Reality to Enhance Forklift Operator Training
The MHEDA Journal - Fourth Quarter, 2018 - 53
The MHEDA Journal - Fourth Quarter, 2018 - Sales Success Stories
The MHEDA Journal - Fourth Quarter, 2018 - 55
The MHEDA Journal - Fourth Quarter, 2018 - 56
The MHEDA Journal - Fourth Quarter, 2018 - 57
The MHEDA Journal - Fourth Quarter, 2018 - 58
The MHEDA Journal - Fourth Quarter, 2018 - 59
The MHEDA Journal - Fourth Quarter, 2018 - 60
The MHEDA Journal - Fourth Quarter, 2018 - 61
The MHEDA Journal - Fourth Quarter, 2018 - 62
The MHEDA Journal - Fourth Quarter, 2018 - 63
The MHEDA Journal - Fourth Quarter, 2018 - 64
The MHEDA Journal - Fourth Quarter, 2018 - 65
The MHEDA Journal - Fourth Quarter, 2018 - Women In Industry Conference
The MHEDA Journal - Fourth Quarter, 2018 - 67
The MHEDA Journal - Fourth Quarter, 2018 - 68
The MHEDA Journal - Fourth Quarter, 2018 - 69
The MHEDA Journal - Fourth Quarter, 2018 - You Are Safe
The MHEDA Journal - Fourth Quarter, 2018 - 71
The MHEDA Journal - Fourth Quarter, 2018 - Bank To Thanks
The MHEDA Journal - Fourth Quarter, 2018 - 73
The MHEDA Journal - Fourth Quarter, 2018 - 74
The MHEDA Journal - Fourth Quarter, 2018 - Be Bold
The MHEDA Journal - Fourth Quarter, 2018 - 76
The MHEDA Journal - Fourth Quarter, 2018 - 77
The MHEDA Journal - Fourth Quarter, 2018 - DiSC – Little Things Mean a Lot
The MHEDA Journal - Fourth Quarter, 2018 - 79
The MHEDA Journal - Fourth Quarter, 2018 - 80
The MHEDA Journal - Fourth Quarter, 2018 - 81
The MHEDA Journal - Fourth Quarter, 2018 - Leading Change: The New Management Imperative
The MHEDA Journal - Fourth Quarter, 2018 - 83
The MHEDA Journal - Fourth Quarter, 2018 - 84
The MHEDA Journal - Fourth Quarter, 2018 - 85
The MHEDA Journal - Fourth Quarter, 2018 - 86
The MHEDA Journal - Fourth Quarter, 2018 - 87
The MHEDA Journal - Fourth Quarter, 2018 - The Importance of Your Online Presence
The MHEDA Journal - Fourth Quarter, 2018 - 89
The MHEDA Journal - Fourth Quarter, 2018 - 90
The MHEDA Journal - Fourth Quarter, 2018 - 91
The MHEDA Journal - Fourth Quarter, 2018 - 92
The MHEDA Journal - Fourth Quarter, 2018 - Spotlight on Association News
The MHEDA Journal - Fourth Quarter, 2018 - New Members
The MHEDA Journal - Fourth Quarter, 2018 - MHEDA Milestones
The MHEDA Journal - Fourth Quarter, 2018 - Index to Advertisers by Product Category
The MHEDA Journal - Fourth Quarter, 2018 - Index to Advertisers Alphabetical
The MHEDA Journal - Fourth Quarter, 2018 - The Last Word
The MHEDA Journal - Fourth Quarter, 2018 - cover3
The MHEDA Journal - Fourth Quarter, 2018 - cover4
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