RETAILER AND MANUFACTURER FINANCE

Transcription

1 TEXT RETAILER AND MANUFACTURER FINANCE COURSE HANDOUT 1

2 TABLE OF CONTENTS Module 1: Introduction 2 Module 2: Retailer Analytical Tools 3 Module 3: Financial Statements & Metrics 6 Module 4: Business Partner Profitability 9 Course Wrap-up 14 Contacts 15 1

3 MODULE 1: INTRODUCTION WHAT YOU WILL DO: Gain a better understanding of the financial scorecard measures and analyses most commonly utilized by retailers and suppliers within the consumer products industry. This course includes current and emerging financial measures that are becoming more accepted and are having a significant impact on retail and manufacturer category business planning and implementation. You ll review the impact and benefits of these financial measures on retailer/supplier collaboration. WHAT YOU WILL ACHIEVE: Recognize key analytical retailer tools that evaluate category performance and identify where areas of opportunity exist Indicate current and emerging retail financial measures, terms, and calculations State the impact of financial measures Identify the benefits of these financial measures on retailer/supplier collaboration Recognize the key financial factors that drive the behaviors within retailer and supplier relationships 2

4 MODULE 2: RETAILER ANALYTICAL TOOLS OVERVIEW: The retailer is typically focused on financial success at the category, department or line of business level. In this module you ll learn the key analytical tools that retailers use to evaluate category performance and identify where areas of opportunity exist. OBJECTIVES: Identify the calculations for Gross Profit Dollars, Gross Margin Percent and Markup Percent Recognize a Cost of Goods analysis Indicate what a Category Manager at a retailer can do to positively impact gross profit margins Explain CTM Define GMROI 13

5 MODULE 2: RETAILER ANALYTICAL TOOLS Gross Profit $ Retail Sales - Cost of Goods = Gross Profit $ $935 = $310 Gross Margin % Calculated based on Retail Selling Price Gross Profit $ / Retail Sales = Gross Margin % $310 / $1245 = 24.9% Markup % Based on Intitial Cost of Goods Sold - before markdowns Gross Profit $ / Cost of Goods = Markup % $310 / $935 = 33.2% 4

6 MODULE 2: RETAILER ANALYTICAL TOOLS CTM CTM analyzes Gross Margin profitability and the relative size of the category. % of Sales x Gross Margin % = CTM GMROI The amount of Gross Profit Dollars generated on an annual basis for each dollar invested in inventory GMROI = Gross Profit Margin x Terms Gross Profit Margin 5

7 MODULE 3: FINANCIAL STATEMENTS & METRICS OVERVIEW: Financial statements are key to any business and understanding them enables better decision making for both retailers and suppliers. In this module you ll learn about profit and loss (P&L) statements, balance sheets, and the key scorecard measures for each. OBJECTIVES: Explain the purpose of a P&L statement Define what a balance sheet is Identify the scorecard measures for P&L statements and balance sheets 6

8 MODULE 3: FINANCIAL STATEMENTS & METRICS PROFIT & LOSS STATEMENT To show whether the company made money, or profits, over a certain period of time Backward facing document Looks at what happened in the past Revenue - Cost & Expenses = Net Income SAMPLE P&L 7

9 MODULE 3: FINANCIAL STATEMENTS & METRICS BALANCE SHEET A balance sheet is a statement that shows the assets and liabilities of a company at a particular point in time. Assets Liabilities Bank Accounts Credit Card Debt Stock Portfolio Checking Account Overdraft The House The Mortgage Balance Student Loan Balance The Cars Car Loans Furniture, Jewelry, Other Equity or Net Worth = Total Assets - Total Liabilities 8

10 MODULE 4: BUSINESS PARTNER PROFITABILITY OVERVIEW: In the final module we ll bring it all together with a focus on partnership and collaboration between retailers and suppliers. It starts with a review of the benefits of retailer and supplier collaboration. This is followed by a deeper discussion on key financial factors that drive the behaviors within these relationships. This module should prepare you to begin taking the learnings on retailer and manufacturer finance to improve your own partner relationships and results. OBJECTIVES: Identify the benefits of collaborative retailer and supplier relationships State the competitive pressures facing suppliers Recognize how many suppliers segment the retailers they work with to differentiate levels of service Indicate the common metrics used in a supplier s and retailer s scorecard 9

11 MODULE 4: BUSINESS PARTNER PROFITABILITY SUPPLIERS ARE REACTING TO COMPETITIVE PRESSURES New items Menu pricing programs Promotion programs and trade spend management Reduction of distribution complexities Price changes Deduction management Alignment with most profitable retailers 10

12 MODULE 4: BUSINESS PARTNER PROFITABILITY BENEFITS TO RETAILER OF BEING A GREAT PARTNER Menu service pricing Operations improvement Customer team effort Packaging/package size customization Pallets/pre-built displays Customized Shopper Marketing programs Customizes research and insights Who gets first new items Strategic planning and shared scorecards Others? BENEFITS TO SUPPLIER OF BEING A GREAT PARTNER Operations improvement Category captain selection/team effort Speed to market on new item Specialized promotional and shopper marketing opportunities Areas for more supplier resources Strategic plannings and shared scorecards Jump-ball decisions Others? 11

13 MODULE 4: BUSINESS PARTNER PROFITABILITY SAMPLE SUPPLIER SCORECARD OF RETAILERS What are some common metrics evaluated? 12

14 MODULE 4: BUSINESS PARTNER PROFITABILITY SAMPLE RETAILER SCORECARD OF SUPPLIERS Category Total Sales Comp Store Sales Selling Price - Avg. Plan Margin Initial Margin Plan Plan % of Change Plan Maintain Margin % Advertising Allow - number dollars Net Margin % Net Margin $ Inventory Inventory - $ cost On Order - $ cost % In-Stock Unit Turns Retail Turns Store Weeks on Hand GMROI Hurdele Rate Critical picks Markdowns Dollars Plan Percent of Sales Logistics Statistics Avg. Lead Time EDI Pick up rate Perfect Order On time Damge free As ordered Invoiced correctly What are some common metrics evaluated? 13

15 WRAP-UP In this Understanding Retailer and Manufacturer Finance course you ve learned new terms, calculations, and most importantly, how you may apply this learning to improve collaboration efforts with your business partners. RETAILER RETAILER AND AND MANUFACTURER MANUFACTURER FINANCE FINANCE The The Partnering Partnering Group, Group, Inc. Inc

16 CONTACT TPG s Category Management College is an unparalleled capability development program based upon rigorous assessment, best practice curriculum and innovative e-based & classroom delivery. For all technical questions and issues please contact our support desk: Phone number: address: tpgcollegehelpdesk@tpg-mail.com For more information about TPG University please visit or contact TPG at All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and/or retrieval system, without permission in writing from the copyright holder. 115