One of the objectives of a company, perhaps most importantly, is to obtain profit. Achieve gross profit formula is classical, known by everyone: revenues minus expenses. As found in this formula there is only one known term: expense. Income is variable. For a company working in the import and distribution segment, rent, salaries, telephone, etc., have approximately the same cost, regardless if you made 95% of target sales or 50% of it. In a market where margins are eroding under the pressure of continuous hypermarket chains and companies from outside Romania, only those companies that control their known term: cost will survive and develop.
How easy is to develop?
A study conducted last year on the portfolio of SeniorERP clients in import and distribution of goods, was an accelerated growth with a dynamic ordered on several coordinates. This growth has two major components: one qualitative related to market and increases the number of customers, and a quantitative increase in the related portfolio of products and geographic expansion. Almost every company in the portfolio managed by SeniorERP opened new points of the territory, for better coverage nationally. Course, at this stage of life’s problems concerning the control of operating costs are exponentially more complicated. It is difficult to manage from a central point situated 600 km far. Also, the supply of goods, the activity of communication, fast and effective control of the processes and flows in business – raise questions for a careful manager.
It is the best to illustrate how power may be an ERP system is able to interconnect all these various activities, distributed nationally. A model of online work, make available to the makers last-minute information related to the inventory, sales and receipts of the fleet, cost overrun on approved budgets. Such a system is a growth and control factor, and its lack in the life of a company is clearly a factor in the blocked development.
In general, when speaking of cost control, we talk of a system of budgets of revenues and expenses that are approved and the placement of tracking actual costs within the budget. In general, expenditure budgets for a company of import and distribution are based on geographic structures (work points), departments (marketing, logistics, marketing, etc.), by type of expenditure (energy, telephone, salaries, depreciation, etc.) on projects. Some companies choose to pursue also the costs to the commercial agent or car. To have a comprehensive overview of all these indicators is required an ERP system to effectively control costs, which provides high flexibility in configuration and provides automatic distribution formula in the cost centers defined.
You know what profit you can make with a particular product?
Increasingly in the last period, it raises the issue of sharing the costs of logistics products, wishing to know exactly how profitable a product is. This must take into account several factors: weight, volume, storage conditions and transport Returns, coefficient of rotation. Any combination of these factors is still a degree of approximation. If we take into account, for example, backflows, it is incorrect to assume that the fault is a product that was delivered to the customer, although he ordered something else. Typically, product costs are influenced by other factors not directly related to the nature of the product, but to the quality of sales force, logistics capabilities, the accuracy or quality of supply of marketing activity. The product itself is rarely a cost center, excluding the cost of goods, of course.
How can you have a proactive management of costs?
An effective system of controlling not only has a passive component, finding expenditures, but also it is preventive, proactive. There is a kind of operations that generates expenses long before registration in accounting documents. For example, for an advance payment for a travel business, it is given today, and its justification (registration costs) shall be effected in the return trip. Finally, the cost of travel may be higher or lower than the amount granted. Meanwhile you can intervene and apply for grant of advance, and approval should take into account not only the travel expenses actually made and recorded, but those ongoing. Tracking of expenditure has, therefore, several stages to be followed by effective implementation of it.
Wishing to increase profitability, distribution companies that already have a sufficient number of warehouses and a large car park well-made point, begin to provide services and logistics. Also, smaller warehouses were closed, and large extended by incorporating an effective component of Warehouse Management System (WMS).
It’s easy to reach a sales target?
If you look a bit at the second factor in the profit formula, namely the realization of income and, if a company of import and distribution, we talk inevitably target sites, and where companies are commercial agents, systems stimulants. Achieving a sales target is not an easy job. Factors such as trend, promotions, investments, changes in market structure are difficult to quantify. Management analysis should be based on detailed reports. Tools of Business Intelligence (BI), although bear significant costs, are only able to support such decisions.
Regarding the algorithms for calculating the fees to reward traders and at the same time to focus their work in the desired direction, were mostly made up of the following indicators: volume of sales (the game, the types of customers, the working points, etc..) selling quality (number of customers, number of products, the product range, the average discount given, the terms of payment), the revenues, earnings quality (the time of payment, tracking client and working with the client). Depending on the specific company, if there are a telemarketing is also required integration with other operational and financial indicators listed. The reports follow all of these indicators or combinations of indicators crucial for an intelligent management of the business.
Segmentation into divisions and sales channels alterative is a possible response to increasing the number of products?
Because increasing portfolio of products means a decrease of the ability of an agent to promote equally the products of its portfolio, companies and Senior Software have segmented the sales force in the division and associated sales to each division, in a balanced manner, with product grade different rotation. In the desire to reduce costs, the emergence of alternative sales channels such as online portals for business-to-Business or Business-to-Consumer is an option increasingly attractive for companies and a distribution of development trends of today.
In your company, money flows as you want?
In addition to expenditure and revenue, controlling the analysis involves cash flow, as a financial indicator base. Knowing the peak time of payment, the payment terms for customers, you can block and alert in real time to overcome them, planning, developing new investment are stringent requirements for a company of import and distribution. Also financial instruments such as the factoring, contribute to increased realization of the parameters of cash flow.