The REAL Profit Drivers: Managing the CPVs

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This research study is published by the NAW Institute for Distribution Excellence, a leading publisher of research exclusively for and about the wholesale distribution industry. More>>

Albert D. Bates, DBA

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Which should you use in making business decisions—profit anecdotes or profit facts?

For the first time, it's possible to use empirical information to determine what actually drives profitability in wholesale distribution. Al Bates of the Profit Planning Group has just completed The REAL Profit Drivers using information from 885 distributors in 17 lines of trade. The conclusions shatter much of the conventional wisdom in this, the largest study of profitability ever undertaken in distribution.

Much of what is known about profitability in distribution is just plain wrong. Urban legend and clever anecdotes dominate too much of management’s thinking about profitability.

This brand-new study identifies what actually drives profit. It does so by examining the financial performance on the Critical Profit Variables (CPVs) of the 885 distributors across 17 lines of trade included in the research. This study answers these questions that challenge wholesaler-distributors:

• How do some firms produce a return-on-investment that is 2.5 times larger than the typical firm in the same line of trade?
• Does sales volume size matter?
• Why do most firms focus on factors that don’t improve profit?
• How fast does a firm have to grow to be successful?
• Can gross margin be too high or too low?
• Is cost control an out-of-date concept as some consultants suggest?

What Readers Have to Say

“I just bought The Real Profit Drivers and I am devouring it! As usual, Al Bates has my head spinning and is challenging my preconceived notions after working in distribution most of my life. Thanks for this great work.
Bob Mumford, Director of Marketing, Eoff Electric Supply



Albert D. Bates, DBA

Al is Founder and Chairman of the Profit Planning Group, a research and executive education firm in Boulder, Colorado. The firm works exclusively in the area of corporate financial planning.