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RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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RETAILER AND MANUFACTURER FINANCECOURSE HANDOUT
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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TABLE OF CONTENTS
Module 1: Introduction
Module 2: Retailer Analytical Tools
Module 3: Financial Statements & Metrics
Module 4: Business Partner Profitability
Course Wrap-up
Contacts
2
3
6
9
14
15
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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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
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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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
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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MODULE 2: RETAILER ANALYTICAL TOOLS
Gross Profit $Retail Sales - Cost of Goods = Gross Profit $1245 - $935 = $310
Gross Profit $ / Retail Sales = Gross Margin % $310 / $1245 = 24.9%
Gross Profit $ / Cost of Goods = Markup % $310 / $935 = 33.2%
Gross Margin %Calculated based on Retail Selling Price
Markup %Based on Intitial Cost of Goods Sold - before markdowns
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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MODULE 2: RETAILER ANALYTICAL TOOLS
CTM
CTM analyzes Gross Margin profitability and the relative size of the category.
% of Sales x Gross Margin % = CTM
The amount of Gross Profit Dollars generated on an annual basis for each
dollar invested in inventory
GMROI = Gross Profit Margin x Terms
100 - Gross Profit Margin
GMROI
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
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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MODULE 3: FINANCIAL STATEMENTS & METRICS
PROFIT & LOSS STATEMENT
SAMPLE P&L
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
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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MODULE 3: FINANCIAL STATEMENTS & METRICS
BALANCE SHEETA balance sheet is a statement that shows the assets and liabilities of a company at a particular point in time.
Equity or Net Worth = Total Assets - Total Liabilities
Assets
Bank Accounts
The House
The Cars
Furniture, Jewelry, Other
Stock Portfolio
Liabilities
Credit Card Debt
The Mortgage Balance
Student Loan Balance
Car Loans
Checking Account Overdraft
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
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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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
RETAILER AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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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?
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MODULE 4: BUSINESS PARTNER PROFITABILITY
SAMPLE SUPPLIER SCORECARD OF RETAILERS
What are some common metrics evaluated?
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MODULE 4: BUSINESS PARTNER PROFITABILITY
SAMPLE RETAILER SCORECARD OF SUPPLIERS
CategoryTotal Sales
Comp Store Sales
Selling Price - Avg.
Plan
MarginInitial Margin
Plan
Plan % of Change
Maintain Margin %
Advertising Allow -
number dollars
Net Margin %
Net Margin $
Plan
InventoryInventory - $ cost
On Order - $ cost
% In-Stock
Unit Turns
MarkdownsDollars
Plan
Percent of Sales
Logistics StatisticsAvg. Lead Time
EDI Pick up rate
Perfect Order
Retail Turns
Store Weeks on Hand
GMROI
Critical picks
Hurdele Rate
On time
Damge free
As ordered
Invoiced correctly
What are some common metrics evaluated?
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RETAILER AND MANUFACTURER FINANCE
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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 AND MANUFACTURER FINANCE© 2015 The Partnering Group, Inc.
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CONTACT
TPG’s Category Management College is an unparalleled capability development program based upon rigorous assessment, best practice curriculum and innova-tive e-based & classroom delivery.
For all technical questions and issues please contact our support desk:Phone number: 1-513-429-2841 Email address: [email protected]
For more information about TPG University please visit www.thepartneringgroup.com or contact TPG at 513-469-6840.
© 2015 The Partnering Group, Inc. 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.
© 2015 The Partnering Group, Inc. 15