he critical success factors on the buy side, factors such as, margin improvement, inventory reduction and inventory turn rates. Include any others specific to your initiatives for profitability.

Try to take advantage of any "itchy-scratchy" opportunities. (A new term I learned from some friends in Detroit.) These are opportunities where you are buying a product from someone that uses the types of products you distribute. The academic term is "reciprocity".

Margin management is not rocket science. Improving gross margin is simple. You must either raise prices or reduce cost of goods sold. But, there is a little more to it than that when you consider net profit. Consider doing an activity based costing analysis on your entire account base. There are plenty of instruction manuals published on how to do this. I guarantee you that you will find some surprises. You should also consider implementing a “Margin Hold” system that forces management approval on orders entered below a minimum established threshold for gross margin percentage.

On the Sales Side

Ultimately to create margin improvement, your entire sales team must have good judgment of market potential as it relates to margin improvement. They must be self disciplined and make intelligent decisions based on fact. Each territory manager must develop his own plan for profit improvement and be flexible on the implementation of that plan. They must be action oriented and customer driven and yet be extremely conscious of profitability objectives.

Results must be measured against the plan. Trend lines need to be established both on revenue and profit growth. They must be able to see the rewards for their efforts. They must accept responsibility and accountability for improved profitability and achievement of established objectives. They need to understand activity based costing.

On the Buy Side

The buy side of the equation also offers numerous opportunities for margin improvements. Approach all of your vendors. Don’t be afraid to demand cost reductions. Your customers certainly aren’t embarrassed to ask you. Review your entire purchasing organization. Do you have true buyers or are they simply order schedulers.

Establish specific inventory reduction goals, turn-rate increase and fill rate improvement. Incenticize the critical success factors on the buy side, factors such as, margin improvement, inventory reduction and inventory turn rates. Include any others specific to your initiatives for profitability.

Try to take advantage of any "itchy-scratchy" opportunities. (A new term I learned from some friends in Detroit.) These are opportunities where you are buying a product from someone that uses the types of products you distribute. The academic term is "reciprocity".

that forces management approval on orders entered below a minimum established threshold for gross margin percentage.

On the Sales Side

Ultimately to create margin improvement, your entire sales team must have good judgment of market potential as it relates to margin improvement. They must be self disciplined and make intelligent decisions based on fact. Each territory manager must develop his own plan for profit improvement and be flexible on the implementation of that plan. They must be action oriented and customer driven and yet be extremely conscious of profitability objectives.

Results must be measured against the plan. Trend lines need to be established both on revenue and profit growth. They must be able to see the rewards for their efforts. They must accept responsibility and accountability for improved profitability and achievement of established objectives. They need to understand activity based costing.

On the Buy Side

The buy side of the equation also offers numerous opportunities for margin improvements. Approach all of your vendors. Don’t be afraid to demand cost reductions. Your customers certainly aren’t embarrassed to ask you. Review your entire purchasing organization. Do you have true buyers or are they simply order schedulers.

Establish specific inventory reduction goals, turn-rate increase and fill rate improvement. Incenticize the critical success factors on the buy side, factors such as, margin improvement, inventory reduction and inventory turn rates. Include any others specific to your initiatives for profitability.

Try to take advantage of any "itchy-scratchy" opportunities. (A new term I learned from some friends in Detroit.) These are opportunities where you are buying a product from someone that uses the types of products you distribute. The academic term is "reciprocity".

entation of that plan. They must be action oriented and customer driven and yet be extremely conscious of profitability objectives.

Results must be measured against the plan. Trend lines need to be established both on revenue and profit growth. They must be able to see the rewards for their efforts. They must accept responsibility and accountability for improved profitability and achievement of established objectives. They need to understand activity based costing.

On the Buy Side

The buy side of the equation also offers numerous opportunities for margin improvements. Approach all of your vendors. Don’t be afraid to demand cost reductions. Your customers certainly aren’t embarrassed to ask you. Review your entire purchasing organization. Do you have true buyers or are they simply order schedulers.

Establish specific inventory reduction goals, turn-rate increase and fill rate improvement. Incenticize the critical success factors on the buy side, factors such as, margin improvement, inventory reduction and inventory turn rates. Include any others specific to your initiatives for profitability.

Try to take advantage of any "itchy-scratchy" opportunities. (A new term I learned from some friends in Detroit.) These are opportunities where you are buying a product from someone that uses the types of products you distribute. The academic term is "reciprocity".

sting.

On the Buy Side

The buy side of the equation also offers numerous opportunities for margin improvements. Approach all of your vendors. Don’t be afraid to demand cost reductions. Your customers certainly aren’t embarrassed to ask you. Review your entire purchasing organization. Do you have true buyers or are they simply order schedulers.

Establish specific inventory reduction goals, turn-rate increase and fill rate improvement. Incenticize the critical success factors on the buy side, factors such as, margin improvement, inventory reduction and inventory turn rates. Include any others specific to your initiatives for profitability.

Try to take advantage of any "itchy-scratchy" opportunities. (A new term I learned from some friends in Detroit.) These are opportunities where you are buying a product from someone that uses the types of products you distribute. The academic term is "reciprocity".

he critical success factors on the buy side, factors such as, margin improvement, inventory reduction and inventory turn rates. Include any others specific to your initiatives for profitability.

Try to take advantage of any "itchy-scratchy" opportunities. (A new term I learned from some friends in Detroit.) These are opportunities where you are buying a product from someone that uses the types of products you distribute. The academic term is "reciprocity". The following is a checklist to review when considering margin improvement objectives.

• Do you have an established pricing policy?

• Do your pricing policies consider market segmentation, risk, service levels and value added?

• Is your counter sales/will call priced according to margin objectives?

• Do you have well trained buyers and do they negotiate?

• Is your purchasing/inventory control department managing the inventory well? Are they using the correct volume discount and item analysis?

• How do you measure your fill rate? Do you bench mark it to your competition?

• Do you have a system to review and evaluate your RGA’s? (Return Goods Authorization)

• Do you charge for restocking?

• Are you getting the optimum discounts from your supplier and are you keeping the discounts as profit?

• Have you done a supplier profitability analysis?

• Are your customers profitable?

• Do you have significant supplier error?

• Do you have a vendor returns program and do you manage it well?

• Do you track your own and your suppliers on time delivery? • Are you selling the right products to the right customers?

• Do you have an outcall program?

• Does your inside sales force understand the concept of up selling?

• Is your warehouse operating efficiently?

• Do you have a freight recovery program or do you fold under pressure and give it all away?

• Do you rank and evaluate your customers by gross margin dollars and gross margin percentages?

• Do you have an incentive program that is tied to gross margin growth both in dollars and percentages?

On the buy side of the equation, you must be able to determine which of your suppliers enhance your margin opportunities and which suppliers detract from it. Add up all the things that each suppl