“The Growth Consortium provided valuable insight and allowed us to benchmark against best practices for strategic growth. The study validated many of our current initiatives, but also illuminated areas to target for improvement. It was well worth the investment of time and resources!”

Bob Dill, President and CEO, Hisco

“Texas A&M did an outstanding job of compiling best practices and strategy in a manner that is useful to wholesale-distribution audience. The Growth Consortium provided a road-map that will help our strate-gy/success in the future. The growth frameworks simply become the large “puzzle-pieces” to the overall map you are helping to create for distri-bution. Flat out - job well done.”

Aaron Elliott, Vice President of Sales

and Marketing, DW Distribution Inc.

Key TaKe-aways

Proven and structured approach to assess your business performance

Understanding the growth framework

Three critical growth dimensions: Generating, Managing, and Sustaining Growth

Best practices for each of the growth dimensions

Addressing growth barriers

Key to sustaining profitable growth

Real-world examples

who should aTTend?C-level executives

Business development managers

Regional sales managers

Future leaders

Program overview

Distribution Growth Framework• The Idea and Framework• Strategic Planning• Growth Dimensions• Growth Processes• Metrics and Financial Drivers• Shareholder Value

Generating Growth Framework• The Idea and Framework• Growth Strategy and Drivers• Best Practices• Growth Mechanism• Metrics and Shareholder Value

Managing Growth Framework• The Idea and Framework• Profitability Drivers• Process Groups• Growth Challenges• Best Practices• Growth Forces

Sustaining Growth Framework• The Idea and Framework• Strategic Risk Factors• What Went Wrong• Root Causes• Best Practices and Shareholder Value

Optimizing Growth and Market Share

Creating Competitive Advantage Through EducationINDUSTRIAL DISTRIBUTION PROGRAM

204 Fermier Hall, 3367 TAMU, College Station, TX 77843-3367 PH 979-845-4984 FX 979-845-4980 WEB http://id.tamu.edu

The IdeaSHAREHOLDER VALUE AND CUSTOMER SERVICE

FINANCIAL DRIVERSMETRICS

GROWTH PROCESSES

GROWTH DIMENSIONS

STRATEGIC PLANNING

CAPABILITY

Customers Human andIT Capital

Suppliers Shareholders

GROWTHFORCES

RISK MANAGEMENT

SUSTAINGROWTH

OpportunityAssumptions

RetentionStrategy

CapabilityAssumptions

GrowthStrategy

GrowthDrivers

GrowthMechanism

OPPORTUNITY

Optimizing Growth and Market ShareMethodology and Deliverables

COMPANY VISION AND MISSION

MANAGING GROWTH - BEST PRACTICESHow do we manage profitability while growing?

COUNCIL F    R RESEARCHON DISTRIBUTOR BEST PRACTICESAn Alliance of the NAW Institute & Texas A&M University

CRDBP

www.naw.org/crdbp http://supplychain.tamu.edu

© 2011 Global Supply Chain Laboratory

www.nawpubs.org

Profitability Drivers ProcessGroups Growth ForcesGrowth Challenges Best Practices

Supplier proliferationProduct mix Supplier's channel strategyChannel power balanceChannel visibility

Competency GapTalent attractivenessTechnology and applications infrastructureLeadership gapLack of coordination, control & synergiesOrganizational mobility

Margin pressure from growing customersLack of pricing strategy (value proposition)Competency gapLack of support toolsSub-optimal market mix

SKU proliferationProduct portfolio / mixCost Vs service trade-offFill rate challengesSupplier performance

Sales force capacity vs customer coverageLack of sales-support productivity toolsMisaligned sales force incentives

Warehouse capacityOperating cost challengesCustomer service (accuracy & efficiency)

Ownership typeAccess to growth fundingInvestor attractiveness

Transportation capacityTransportation cost (routing & cubing / loading)Customer service (on-time delivery)

Credit requests from growing customers“New Normal” challenges

Credit, return and rebate policies forproduct expansion growth strategies

Supplier stratification & relationship strategyOptimizing channel compensationChannel growth strategy alignmentLeverage supplier performance

Customer stratificationPricing optimizationIn-built mechanism for early warningsActive adaptation of value propositionMarket segmentation

Inventory stratificationFocused forecastingDynamic replenishmentInventory network optimizationCompetency development

Sales force size & structureSales force productivity (support tools)Sales force compensationAligning customer, company and sales force

Operations (inbound & outbound) productivity - LeanEconomy of scaleBest practices sharingInternal benchmarking

Human capital developmentInformation capital readinessStrategic awareness and alignmentCustomer-centricGrowth mindset Creative leadershipStrategy & structure match

Financial fitness through free cash flow andoperating productivityInvestor confidence

Routing and loading optimizationEconomy of scaleSupply chain network optimization (Transportation vs Inventory)

Customers Human andIT Capital

Suppliers Shareholders

GROWTHFORCES

Customized terms based on customer stratificationIn-built mechanism for early warningsActive adaptation of value proposition

Optimizing channel compensation throughstrategic supplier relationshipLeverage supplier performance

GM%

CTS

DSO

DOI

DPO

OPPORTUNITY

CAPABILITY

> HUMAN CAPITAL> INFORMATION CAPITAL> ORGANIZATION CAPITAL

> FINANCIAL CAPITAL

OPERATINGMARGIN

CASHCONVERSION

CYCLE

SUPPORTSERVICES

STORE

SELL

SELL

SOURCE

STOCK

SUPPLYCHAIN

PLANNING

SOURCE

SHIP

BUSINESSMODEL

GROWTH

PROFITABILITY

CASH FLOW

ASSETEFFICIENCY

ECONOMICDRIVERS

RESOURCEDRIVERS

>> Shareholders>> Leadership

>> Human Capital>> Information Capital>> Organization Capital

>> Supplier>> Purchasing Workforce

>> Supplier>> Customer>> Cross-functional Workforce

>> Supplier>> Sourcing Workforce

>> Customer>> Sales Force

>> Customer>> Operations Workforce

>> Customer>> Sales Force

SUSTAINING GROWTH - BEST PRACTICESHow do we sustain profitable growth against strategic risk?

COUNCIL F    R RESEARCHON DISTRIBUTOR BEST PRACTICESAn Alliance of the NAW Institute & Texas A&M University

CRDBP

www.naw.org/crdbp http://supplychain.tamu.edu

© 2011 Global Supply Chain Laboratory

www.nawpubs.org

Strategic Risk Factors Best PracticesWhat Went Wrong Root Causes

External market condition

Adjacency & acquisition failure

Lack of competitive value proposition

Disruptive competitor entry

Lack of customer rationalization

Restructuring

Competency gaps

Market segment overdependency

Execution breakdown

Supply chain disruption

Market conditions and opportunity

Opportunity potential and alignment

Market relevance of value proposition

Industry structure and opportunity

Customer potential and profitability

Acquisition integration capability

Competency & talent retention

End customer marketopportunity

Ability to deliver valueproposition effectively

GROWTH

PROFITABILITY

CASH FLOW

ASSETEFFICIENCY

SUSTAININGGROWTH

MOMENTUM

Assumptions about:

Growth Opporunity –Potential &Alignment

CustomerRetention

ValueProposition

Effectiveness

SupplierRetention

Economy

IndustryStructure

ASSUMPTIONSABOUT

OPPORTUNITY

InformationCapital

OrganizationalCapital

FinancialCapital

BusinessContinuity

ProcessCapital

ASSUMPTIONSABOUT

CAPABILITY

HumanCapital

>> Customized economic modeling & business cycle forecasting

>> Strategic planning (Competitive forces analysis)

>> Understand supplier channel strategies>> Align supplier & distributor strategies

>> Market intelligence>> Customer collaboration>> Alignment with core business model, opportunity & capability

>> Organization capital readiness (Leadership, Culture and Alignment)

>> Funding sources (Reliability & Accessibility)

>> Getting inside customer value map>> Retention metrics & drivers>> Loyalty recognition

>> Adapt value proposition for relevance and competitiveness

>> Strategic process performance

>> Disaster recovery readiness>> Supply chain risk management

>> Human capital readiness>> Human capital retention

>> Information capital readiness

>> Strategy & Capability Testing - Periodical validation of assumptions behind opportunity and capability through unbiased assessments

>> Decision Modeling and Scenario Planning

>> Retention Strategy - Customer, Supplier, Human Capital & Shareholders

GENERATING GROWTH - BEST PRACTICESHow do we generate growth opportunities?

COUNCIL F    R RESEARCHON DISTRIBUTOR BEST PRACTICESAn Alliance of the NAW Institute & Texas A&M University

CRDBP

www.naw.org/crdbp http://supplychain.tamu.eduwww.nawpubs.org

MetricsGrowth Strategy Best Practices

LEVERAGEAccount Penetration - Existing customers

GrowthMechanism

GROWTH

PROFITABILITY

CASH FLOW

ASSETEFFICIENCY

PENETRATEMarket penetration - New Customers

BROADENNew Products and Services

ADDSales & Marketing Channels

REACH OUTGeography

EXPANDMarket Segments

BUILDNew Platform (multiple drivers)

INNOVATEValue Proposition Innovation

DIVERSIFYLine of Trade & Value Chain Function

GROWTHDRIVERS

IndustryDynamics

CustomerRelationships

SupplierRelationships

Sales &MarketingStrategy

Sales ForceEffectiveness

Account gap analysisCustomer stratificationSales force effectivenessRetention strategyValue proposition update

Market gap analysisSupplier collaborationCompetitive value propositionSales force performance managementSelling process

Growth mapping core customer andstrategic supplierIndustry trends analysisCompetitive analysis

Customer feedbackPain point analysisGrowth mapping core customer and strategic supplierProduct & service portfolio management

Market mappingTechnology developmentsCustomer need/convenience

Market mappingIndustry trends analysisCompetitive analysis

Growth mapping core customer andstrategic supplierMapping key competitorsSupply chain network optimization

Market segmentationSupplier growth inputsCompetitive analysisIndustry trends analysis

Customer feedbackSupplier inputsValue chain analysisCross-industry best practices

Core customer retention rateCore customer conversion rateShare of walletBalance revenue reliance (risk)

New customer acquisition rateRevenue from new (core) customersNew customer retention rate

Growth pipeline run rateGrowth from new platformsChange in competitive advantage

Growth from new products and services Value proposition leverageBalance over-dependency

Growth from new channelsChange in competitive advantage

Change in competitive advantageRisk managementGrowth from diversification

Growth from new territories Value proposition leverage(national accounts)

Growth from new market segmentsDegree of variety in end markets(risk factors)

Number of innovative effortsGrowth from innovate opportunitiesChange in competitive advantage

OrganicDevelopment

Acquisition

Merger

Strategic Alliance

Growth Drivers

© 2011 Global Supply Chain Laboratory