Many IMARK member executives recognize that in order to survive and thrive in a very challenging environment, they must develop and implement a strategic multi-year business plan that serves as a practical working document. Without such a plan, it can be very difficult to identify and respond to changing customer requirements and preferences.
IMARK Group conducted a survey of member owners and senior company executives in the first quarter of 2017. The purpose of the survey was to discover the importance and relevance of planning both short-term and long-term in the member’s company.
Two hundred fifty-two IMARK member executives participated in the survey. A summary of the results is below:
1) Does your company develop a formal business plan (1-year time horizon), which includes projected estimates of expenses, sales and gross margin?
40.5% Yes, every year.
10% Yes, every couple of years.
49.5% No.
2) On average, members who answered yes to the first question rated the effectiveness of their company’s planning efforts at 6.5 on a scale from one (poor) to 10 (excellent).
3) Thirty-seven percent of member respondents said they develop a strategic plan with a multi-year (2-3 year) time horizon. Sixty-three percent of respondents said they do not.
4) Those who develop strategic plans addressed the following business functions as part of their plans:
93% Sales Management
70% Marketing (i.e. communications, promotions, merchandising, e-commerce)
76% Operations and Logistics
64% IT
72% Financial Management
45% Human Resources
5) Non-planning members selected the following reasons for not developing a business plan:
43% We are simply too busy to spend the time.
22% We have tried before but found it was not relevant to our business.
35% We think we are well positioned with our customers without a strategic plan.
6) Non-planners on the future of planning:
70% It is important to develop a business plan for the next 2-3 years and we would like to enhance our ability to do so.
30% It is not important to develop a business plan.
Monitoring of Operations and Profit Management
IMARK member respondents were asked to assess the value of various business metrics commonly used in the wholesale distribution industry. (See Frank Hurtte’s column, “26 Business Analytics Every Distributor Should Consider” on page 14 for a detailed description of the business indices listed in the survey).
For each metric below, IMARK executives were asked if they frequently (if at all) track the metric.
7) Gross margin (company overall)
84% Monthly
11% Quarterly
5% Annually
8) Gross margin (by salesperson)
74% Monthly
10% Quarterly
3% Annually
13% Never
9) Inventory value
70% Monthly
18% Quarterly
12% Annually
10) GMROI (turns and earns) by product line
26% Monthly
21% Quarterly
26% Annually
27% Never
11) Inventory turns
31% Monthly
25% Quarterly
31% Annually
13% Never
12) Incoming order rate
40% Monthly
13% Quarterly
5% Annually
42% Never
13) Inventory with no sales in 180 days
27% Monthly
32% Quarterly
27% Annually
17% Never
14) Sales lost to no inventory
31% Monthly
16% Quarterly
8% Annually
45% Never
15) A/R days outstanding
40% Monthly
13% Quarterly
5% Annually
42% Never
16) Sales by manufacturer
33% Monthly
29% Quarterly
29% Annually
8% Never
17) Customers with no sales for 30 days
40% Monthly
32% Quarterly
17% Annually
31% Never
18) Customers with down sales by product group
11% Monthly
24% Quarterly
15% Annually
50% Never
19) Sales of recently launched products
21% Monthly
27% Quarterly
6% Annually
45% Never
20) Percentage of business sold against SPA (by sales rep/product line)
18% Monthly
12% Quarterly
16% Annually
54% Never
21) Cost of services provided by activity type
9% Monthly
11% Quarterly
15% Annually
65% Never
22) Benchmark company performance against industry PAR reports
4% Monthly
6% Quarterly
42% Annually
48% Never
23) Number of lines entered by inside salesperson
26% Monthly
14% Quarterly
8% Annually
52% Never
24) Freight costs by manufacturer
32% Monthly
11% Quarterly
15% Annually
42% Never
25) Freight costs recouped on outgoing orders
55% Monthly
8% Quarterly
12% Annually
25% Never