DISTRIBUTOR P&L & ROI

Input Distributor Name here…

Why are we doing the P&L and ROI analysis?

As a business partner, we would like to understand the elements/factors affecting distributor’s profitability

For analysis and action planning, aimed at improving distributor’s business

Understand and agree on the role of both supplier and (distributor) in ensuring and maintaining viable business.

Distributor’s ProfitabilityWho is accountable?

Both (Distributor) and Supplier are responsible- Long-term partnership- Fact-based basis for agreeing on investments in the

business- Supplier able to direct focus and efforts of

(Distributor’s) organization- (Distributor) ultimately responsible for profitability of

its business, but Supplier has a supportive/guiding role

Roles

Support Distributor’s profit objectives

Collaborate with Distributor in development of best deployment, organization and operations

If needed, drive the process

Regular review of performance (put structure)

Candid and fact-based

Trust! 2-Way Share P&L data (e.g., cost

structures, salaries, DSO, etc.)

Open-mind in reviewing together with Supplier how to better manage resources/expenses to drive business

No surprises

Supplier Distributor

Basic tools that we will use..

Profit & Loss Statement (P&L)

Return on Investment (ROI)

Profit & Loss Statement

Definition:

A Profit and Loss Statement (P&L) is a standard financial document that summarizes a company's revenue and expenses for a specific period of time, usually one quarter of a fiscal year and the entire fiscal year.

Distributor P&L:

Provides level/percent of profit Distributor gets from a specific partnership with a Principal/Company.

Return on Investment (ROI)

Definition:

ROI measures how effectively the company uses its capital to generate profit; the higher the ROI, the better.

This is one of the most important profitability metrics. ROI shows how much profit a company earned in comparison to the total amount of capital the owners invested in the company.

A Distributor that has a high return on investment is more likely to be one that is capable of generating cash internally.

Benefits to Distributors

P&L and ROI analysis can deliver significant efficiencies and productivity

- When looking for improvements: focus on big ticket items, e.g., vehicles, salaries, allocation of fixed costs, inventory levels

- We need to Just do it!

Joint effort of Supplier and Distributor to improve resource use and improve business

Reinforces and strengthens business relationship between Supplier and Distributor

What it is NOT…

An exercise or tool to change/reduce distributor discounts

An excuse to change any of the contractual agreements between the distributor and Supplier Operational set-up Coverage area Deployment, etc.

A replacement to the official P&L Statement being used for government reporting and tax purposes

P&L/ROI Tool

P&L and ROI

Present the resulting P&L and ROI of the distributor using the template

Key Opportunity Areas

Opportunity 1 Opportunity 2

Action Plans & Timing

Next Steps

Next Steps Resp Timing