Issue link: https://www.e-digitaleditions.com/i/774819
26 FEDA News & Views www.encoreplumbing.com/powerpulse 800-526-3694 • sales@encoreplumbing.com ® PREMIUM PLUMBING PRODUCTS by Component Hardware Now you can clean all of this using LESS WATER and 43% FASTER * . Introducing PowerPulse ™ Pre-Rinse Spray Valve. Unique pulsing action creates a high pressure stream that powers off dried and baked on food in less time with less water. • Easy retrofit to most existing pre-rinses – or available as a complete unit • Available in .67gpm, .74gpm, and 1.05gpm 1890 Swarthmore Avenue, PO Box 2020, Lakewood, NJ 08701 www.encoreplumbing.com C US NSF - 61/9 - U.P. Code ASME A112.18.1/CSA B125.1 Come see us at BOOTH #1063 US NSF - 61/9 - U.P. Code ASME A112.18.1/CSA B125.1 Easy retrofit to most existing pre-rinses – or available as a complete unit Available in .67gpm, .74gpm, and 1.05gpm C NSF - 61/9 - U.P. Code ASME A112.18.1/CSA B125.1 *Results provided by Fisher Nickel, Inc. Food Service Technology Center. © Copyright 2016, Component Hardware Group, Inc. Vendor Price Increase Another client used the sensitivity approach to raise prices when the man- ufacturer presented a new price sheet. One of the most common mistakes dis- tributors make is that they only raise their prices by the same percentage as the vendor price increase. Don't over- look this golden opportunity to raise prices and blame someone else. This company recognized that only a small percentage of the entire line, less than 5 percent, is highly competitive in the marketspace. Using the hits ranking, they broke up the vendor line into sensi- tivity groups. With the fi rst 5 percent, they matched the vendor price increase percentage. With the next 5 percent of the SKUs, they added 2 percent to the vendor price increase percentage. With the next 20 percent, they added 4 percent to the vendor price increase percentage. With the remaining SKUs in the line, they added 7 percent to the vendor increase. Last month, this client Gross Margin continued continued on page 30 reported that its average gross margin percentage was the highest it has been since 2008. Education In one of my fi rst margin-focused cli- ent relationships, the president of the company challenged me to help him raise gross margin percentage by 200 basis points. I must admit that I had to look that one up. It really just meant 2 percent, but I needed to verify what he was asking for. In order to meet this goal, we had to start with the sales teams, both inside and outside. Although their system-pricing matrix was very solid, the pricing concessions given by team mem- bers had driven the percentage down. In fact, one of the outcomes of our work is that the company tracks pricing devia- tions on a monthly basis. Branches are rewarded for having the fewest dollars of price deviation. With this company, I spent time teach- ing the team about the impact of gross margin on the bottom line. We worked on fi nding ways to raise prices and how to overcome pricing challenges. Ultimately, we analyzed customer profi tability by contribution to net. This last one can be a very scary realization. Beyond my exposure to the fi nancial side of the distributorship, we started driving more product education by the manufacturers. Again, this was a data-driven approach. We recognized where most deviation had occurred and invited those vendors in for training. The premise was that the pricing was being ignored because the sales teams did not truly understand how to sell the product. I am proud to say that we met the goal and they are continuing to raise those basis points. Loading the Cost In this approach, we created a cost fi eld that was slightly higher than the actual invoiced cost from the manufac- turer. This is commonly referred to as a standard or loaded cost. It can often become known as a commissionable cost. In this company, the sales team