Recovered EBITDA by Exposing True Pocket Margins Across 2,000 Dealers – Distribution Company

Background
  • In negotiation retail margin shortages were heavily pushed towards the distributor. Fact-based insights into trade terms and profitability were missing for adequate defence.
  • No visibility of transactional costs at customer level, nor margins across value chain. Customer had gotten negative margin when all transactional costs were considered.
  • Lack of structured approach to set target prices & discounts, improve margins and reduce pocket price dispersion
Approach
  • Bring pocket margin and value chain margin visibility
  • Establish target prices by dealer segments
  • Build action plans to reduce transactional costs
  • Establish execution monitoring process
Results (In 3 Years)
  • EBITDA % grew 216Bps between 2008 to 2011
  • CAGR (2008-2011): Price=3.0% | Rev= 4.1% | EBITDA=9.9%
  • 2000 dealers with profitability improvement plan in a year (2008)
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