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BUSINESS PARTNERBUSINESS PARTNER
COST + MODELCOST + MODEL
Lansana Sakho
Managing Director
http//www.experts-visions.com
experts@experts-visions.com
“The partnership is two way street. You’re depending
on the partner to supply the expertise you lack”
Cynthia Griffin, American Business Journalist
Distributor KPI
& Cost + Model
2
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
1. Ensure that the distributors
remuneration bears a direct
relationship to the relevant
costs & investment incurred
in fulfilling the business.
2. Enable recognition of
achievement in key focus areas.
3. Ensure equitable remuneration
of all distributors.
THE FUNDAMENTAL PRINCIPLESTHE FUNDAMENTAL PRINCIPLES
Distributor KPI
& Cost + Model
3
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
1. Identify the services required to
achieve the business.
2. Identify the structure required to
deliver the services.
3. Determine the cost of the identified
structure and services.
4. To ensure that the distributor
basic profit, is relative to the cost
incurred.
5. Determine Sales level for
calculating %.
5 EASY STEPS5 EASY STEPS
Distributor KPI
& Cost + Model
4
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Identify the services required to achieve the business.
¨ National Sales, Customer / Consumer Marketing.
¨ National distribution.
¨ Warehousing & Stock holding.
¨ Inbound logistics.
¨ Outbound Trading Terms.
¨ Reporting.
n Identify what the business needs, not what is currently
available.
STEP 1STEP 1
RELEVANT COSTSRELEVANT COSTS
Distributor KPI
& Cost + Model
5
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Identify the structure required deliver the services.
¨ Admin Structure & services.
¨ Warehouse Structure & services.
¨ National delivery to trade structure (Internal or 3rd party).
¨ Sales Force structure (incl. vehicles)
n Identify what the business needs, not what is currently
available.
STEP 2STEP 2
RELEVANT COSTSRELEVANT COSTS
Distributor KPI
& Cost + Model
6
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Determine the cost of the identified structure and
services.
¨ Variable Costs
¨ Variable Financial Costs
¨ Fixed Costs
¨ Business support funds (Duty payable, GtN, etc)
n Identify Business proportion with regard to a shared
structure.
STEP 3STEP 3
COSTSCOSTS –– DIRECT RELATIONSHIPDIRECT RELATIONSHIP
Distributor KPI
& Cost + Model
7
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Those costs that are directly variable according to the
level of activity.
¨ National distribution costs
¨ Clearing and forwarding costs.
¨ Cost of agreed stock holding (30days)
¨ Cost of sourcing Forex for imports.
n The costs are determined on a per unit basis and will
fluctuate from period to period, based on the agreed
sales level.
n The costs are based on the agreed sales level and the
agreed interest rate.
VARIABLE COSTSVARIABLE COSTS
Distributor KPI
& Cost + Model
8
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
VARIABLE COSTSVARIABLE COSTS
Example of variable costsExample of variable costs
August 2010 US$
Derived Basic Commission (Mark-up) >>> 15,59% = US$1.00
Projected Distributor Gross Sales Estimated Mark-up% @ 15,00% Mark-up 253 958
Projected Sales to Distributor per Month 220 833 2 650 000
Tons No of 40'FCL's per annum = 3 @ 24 Tons per 40' 70
Service Comments Monthly % Sales
Transport Costs National to all customers TSh per ton 29 254 67% 1 329 0,60%
Customs clearance Cost of clearing 40' Containers 3 @ 0 TSh000's - 0,00%
Total Variable Expenses 1 329 0,60%
Payment Terms Credit Terms & Interest Rate 16% x 30 Days (2 330) -1,05%
Inventory Finance cost to hold target cover. 16% x 30 Days 2 330 1,05%
Forex sourcing Forex payments only 16% x 0 Days - 0,00%
Payment Terms to trade 66% > 30 Days & Cash. 16% 79% x 30 Days 3 566 1,61%
Bad Debt Provision % 0,25% 542 0,25%
Total Variable Financing Charges Assumed Interest = 4% per month 4 109 1,86%
Distributor KPI
& Cost + Model
9
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Those costs that usually relate to the business structure,
i.e. are not determined by the level of sales.
¨ Admin Structure & Cost of admin services.
¨ Logistics Structure & Cost of services.
¨ Sales Structure & Cost of sales services.
(Includes the cost of vehicles)
n The costs are based on the agreed structure and are
proportioned based on shared services.
FIXED COSTSFIXED COSTS
Distributor KPI
& Cost + Model
10
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Funds that are provided by to enable fulfillment of
objectives.
¨ Funds to facilitate consumer marketing activities.
n These funds are non-profit generating for the distributors
n Essentially, the Business Support Funds do not relate to
services provided by the distributor and are therefore not
profit generating.
n Secondly, in most cases they are investments in sales
growth, which assists the distributor in achieving the
targets.
BUSINESS SUPPORT FUNDSBUSINESS SUPPORT FUNDS
Distributor KPI
& Cost + Model
11
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n Based on the costs derived from both the structure
and the services provided, remunerate the distri-
butor based on a mark-up on the determined cost,
¨e.g. Cost + 10%.
n The principle is that : remunerate the distributor
based on services provided.
BASIC PROFITBASIC PROFIT
Distributor KPI
& Cost + Model
12
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
Budget or Forecast or Actual Sales ?
n The question is fundamental, as the cost relative to the
sales generates the %.
n Low Sales (Budget) = High %
¨ Over achievement = over recovery of fixed costs.
n High Sales (Forecast) = Low %
¨ Under achievement = non-recovery of costs.
n To be reviewed on a regular basis – Quarterly.
COMMISSIONCOMMISSION
STEP 5STEP 5
Distributor KPI
& Cost + Model
13
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011AMED Sales Conference
2004
13
Budget or Forecast or Actual Sales ?
n Stable volume markets
Sales = Average of Last 3 months Actual.
¨ Offers opportunity for over achievement > Improved profits
¨ Focuses effort on sales to avoid under recovery.
n Unstable volume markets (Growing or declining)
Sales = Best estimate for forward period.
¨ Focuses effort on sales to avoid under recovery.
¨ Offers reasonable opportunity for over achievement >
Improved profits
COMMISSIONCOMMISSION
RecommendationRecommendation
Distributor KPI
& Cost + Model
14
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
Response to significant on-going under achievement?
n This will lead to under recovery of costs.
¨ Implication = Higher Mark-up% required.
n Appropriate Response
¨ Review sales performance to determine potential.
¨ Review costs and implement revisions to structure as needed.
COMMISSIONCOMMISSION
RecommendationRecommendation
Distributor KPI
& Cost + Model
15
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011AMED Sales Conference
2004
15
Distributor Commission Calculation August 2010 US$
Derived Basic Commission (Mark-up) >>> 15,59% = US$1.00
Projected Distributor Gross Sales Estimated Mark-up% @ 15,00% Mark-up 253 958
Projected Sales to Distributor per Month 220 833 2 650 000
Tons No of 40'FCL's per annum = 3 @ 24 Tons per 40' 70
Service Comments Monthly % Sales
Transport Costs National to all customers TSh per ton 29 254 67% 1 329 0,60%
Customs clearance Cost of clearing 40' Containers 3 @ 0 TSh000's - 0,00%
Total Variable Expenses 1 329 0,60%
Payment Terms Credit Terms & Interest Rate 16% x 30 Days (2 330) -1,05%
Inventory Finance cost to hold target cover. 16% x 30 Days 2 330 1,05%
Forex sourcing Forex payments only 16% x 0 Days - 0,00%
Payment Terms to trade 66% > 30 Days & Cash. 16% 79% x 30 Days 3 566 1,61%
Bad Debt Provision % 0,25% 542 0,25%
Total Variable Financing Charges Assumed Interest = 4% per month 4 109 1,86%
Warehousing Costs TSh/mth CP %
Rent of Warehouse Space All national locations @ 561 000 100% 550 0,25%
Costs of warehouse labor People 3 @ 1 249 500 50% 613 0,28%
Costs of operating warehouse @ - 50% - 0,00%
Management Senior Managers People 2 @ 8 874 000 50% 4 350 1,97%
Admin Team Non Management & Sales People 0 @ - 50% - 0,00%
Admin Expenses Office running costs, Audit Fee etc @ 2 550 000 50% 1 250 0,57%
Sales Team TSh /person/mth
Sales Supervision Sales Manager People 1 @ 3 315 000 100% 3 250 1,47%
Dedicated Sales Team Wholesale Preseller People 1 @ 2 244 000 100% 2 200 1,00%
Sales Supervisor - Expat People @ 3 315 000 100% - 0,00%
Sales Supervisor - Local People @ 2 244 000 100% - 0,00%
Retail Van Seller - Expat People 1 @ 2 244 000 100% 2 200 1,00%
Retail Van Seller - Local People 1 @ 714 000 100% 700 0,32%
Loaders People 2 @ 153 000 100% 300 0,14%
Seeding Van 2 Vans People 2 @ 357 000 100% 700 0,32%
Shared Sales Team Shared Sales Supervisors People 3 @ 2 244 000 50% 3 300 1,49%
Shared Drivers People 2 @ 153 000 50% 150 0,07%
Merchandising Shared Merchandisers People @ - 0% - 0,00%
Sales Team Expenses Commisions etc - 100% - 0,00%
Total Fixed Expenses 19 563 8,86%
Distributor KPI
& Cost + Model
16
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011AMED Sales Conference
2004
16
Distributor Commission Calculation August 2010 US$
Derived Basic Commission (Mark-up) >>> 14,45% = US$1.00
Projected Distributor Gross Sales Estimated Mark-up% @ 15,00% Mark-up 253 958
Projected Sales to Distributor per Month 220 833 2 650 000
Tons No of 40'FCL's per annum = 3 @ 24 Tons per 40' 70
Service Comments Monthly % Sales
Transport Costs National to all customers TSh per ton 29 254 67% 1 329 0,60%
Customs clearance Cost of clearing 40' Containers 3 @ 0 TSh000's - 0,00%
Total Variable Expenses 1 329 0,60%
Payment Terms Credit Terms & Interest Rate 16% x 30 Days (2 330) -1,05%
Inventory Finance cost to hold target cover. 16% x 30 Days 2 330 1,05%
Forex sourcing Forex payments only 16% x 0 Days - 0,00%
Payment Terms to trade 66% > 30 Days & Cash. 16% 79% x 30 Days 3 566 1,61%
Bad Debt Provision % 0,25% 542 0,25%
Total Variable Financing Charges Assumed Interest = 4% per month 4 109 1,86%
Warehousing Costs TSh/mth CP %
Rent of Warehouse Space All national locations @ 561 000 100% 550 0,25%
Costs of warehouse labor People 3 @ 1 249 500 50% 613 0,28%
Costs of operating warehouse @ - 50% - 0,00%
Management Senior Managers People 2 @ 8 874 000 50% 4 350 1,97%
Admin Team Non Management & Sales People 0 @ - 50% - 0,00%
Admin Expenses Office running costs, Audit Fee etc @ 2 550 000 50% 1 250 0,57%
Sales Team TSh /person/mth
Sales Supervision Sales Manager People 1 @ 3 315 000 100% 3 250 1,47%
Dedicated Sales Team Wholesale Preseller People 1 @ 2 244 000 100% 2 200 1,00%
Sales Supervisor - Expat People @ 3 315 000 100% - 0,00%
Sales Supervisor - Local People @ 2 244 000 100% - 0,00%
Retail Van Seller - Expat People 1 @ 2 244 000 100% 2 200 1,00%
Retail Van Seller - Local People 1 @ 714 000 100% 700 0,32%
Loaders People 2 @ 153 000 100% 300 0,14%
Seeding Van 2 Vans People 2 @ 357 000 100% 700 0,32%
Shared Sales Team Shared Sales Supervisors People 3 @ 2 244 000 50% 3 300 1,49%
Shared Drivers People 2 @ 153 000 50% 150 0,07%
Merchandising Shared Merchandisers People @ - 0% - 0,00%
Sales Team Expenses Commisions etc - 100% - 0,00%
Total Fixed Expenses 19 563 8,86%
TOTAL COSTS 25 000 11,32%
Distributor Profit 10% 2 500 1,13%
Distributor Margin 27 500 12,45%
Additional Funds provided by CP
Duties and taxes Provision for Duty Payment 0,00% - 0,00%
Price Discount Allowance Provision for GtN Discounts 58% of Sales @ 3,00% 4 419 2,00%
Advertising Allowance Provision for Advertising Payments 0,00% - 0,00%
Refundable Expenses 4 419 2,00%
Distributor KPI
& Cost + Model
17
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
n The Cost+ model is not a suitable incentive for
distributors.
¨ There is no incentive to reduce cost.
¨ The profit does not reward growth.
n Therefore having covered the costs & basic profitability,
achievement of KPIs will generate additional profitability
on classic pay-for performance principles.
n The total profit should be structured to ensure a profit
relative to the distributor’s investment in the business
ADDITIONAL PROFIT > KPIsADDITIONAL PROFIT > KPIs
Distributor KPI
& Cost + Model
18
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
18
n The structure of the reward is such that when combined
with the Cost+ profit, achievement of KPI’s at 100% will
generate a total profit of 3% of Sales.
n As per the principles of EICP, achievement can increase
to 120%, further rewarding exceptional performance.
n The KPI’s are linked to the Subsidiary casita.
ADDITIONAL PROFIT > KPIsADDITIONAL PROFIT > KPIs
Distributor KPI
& Cost + Model
19
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
The Cost+ Model
n links additional profitability to achievement of defined
KPIs.
n Ensures equitable remuneration of distributors.
n Enables recognition of cost differences in different
markets
n Ensures equitable remuneration based on performance
through a combination of basic profit and KPI
achievement.
THE FUNDAMENTAL PRINCIPLETHE FUNDAMENTAL PRINCIPLE
Distributor KPI
& Cost + Model
20
experts@experts-visions.com www.experts-visions.com
The company to -go for providing added value to your business© Avril 2011
DISTRIBUTOR COST+ MODEL
Transparent,
Fair,
and Rewarding
remuneration
for Distributors
A BUSINESS Win/Win!

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Distributors cost + model

  • 1. BUSINESS PARTNERBUSINESS PARTNER COST + MODELCOST + MODEL Lansana Sakho Managing Director http//www.experts-visions.com experts@experts-visions.com “The partnership is two way street. You’re depending on the partner to supply the expertise you lack” Cynthia Griffin, American Business Journalist
  • 2. Distributor KPI & Cost + Model 2 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 1. Ensure that the distributors remuneration bears a direct relationship to the relevant costs & investment incurred in fulfilling the business. 2. Enable recognition of achievement in key focus areas. 3. Ensure equitable remuneration of all distributors. THE FUNDAMENTAL PRINCIPLESTHE FUNDAMENTAL PRINCIPLES
  • 3. Distributor KPI & Cost + Model 3 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 1. Identify the services required to achieve the business. 2. Identify the structure required to deliver the services. 3. Determine the cost of the identified structure and services. 4. To ensure that the distributor basic profit, is relative to the cost incurred. 5. Determine Sales level for calculating %. 5 EASY STEPS5 EASY STEPS
  • 4. Distributor KPI & Cost + Model 4 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Identify the services required to achieve the business. ¨ National Sales, Customer / Consumer Marketing. ¨ National distribution. ¨ Warehousing & Stock holding. ¨ Inbound logistics. ¨ Outbound Trading Terms. ¨ Reporting. n Identify what the business needs, not what is currently available. STEP 1STEP 1 RELEVANT COSTSRELEVANT COSTS
  • 5. Distributor KPI & Cost + Model 5 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Identify the structure required deliver the services. ¨ Admin Structure & services. ¨ Warehouse Structure & services. ¨ National delivery to trade structure (Internal or 3rd party). ¨ Sales Force structure (incl. vehicles) n Identify what the business needs, not what is currently available. STEP 2STEP 2 RELEVANT COSTSRELEVANT COSTS
  • 6. Distributor KPI & Cost + Model 6 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Determine the cost of the identified structure and services. ¨ Variable Costs ¨ Variable Financial Costs ¨ Fixed Costs ¨ Business support funds (Duty payable, GtN, etc) n Identify Business proportion with regard to a shared structure. STEP 3STEP 3 COSTSCOSTS –– DIRECT RELATIONSHIPDIRECT RELATIONSHIP
  • 7. Distributor KPI & Cost + Model 7 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Those costs that are directly variable according to the level of activity. ¨ National distribution costs ¨ Clearing and forwarding costs. ¨ Cost of agreed stock holding (30days) ¨ Cost of sourcing Forex for imports. n The costs are determined on a per unit basis and will fluctuate from period to period, based on the agreed sales level. n The costs are based on the agreed sales level and the agreed interest rate. VARIABLE COSTSVARIABLE COSTS
  • 8. Distributor KPI & Cost + Model 8 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 VARIABLE COSTSVARIABLE COSTS Example of variable costsExample of variable costs August 2010 US$ Derived Basic Commission (Mark-up) >>> 15,59% = US$1.00 Projected Distributor Gross Sales Estimated Mark-up% @ 15,00% Mark-up 253 958 Projected Sales to Distributor per Month 220 833 2 650 000 Tons No of 40'FCL's per annum = 3 @ 24 Tons per 40' 70 Service Comments Monthly % Sales Transport Costs National to all customers TSh per ton 29 254 67% 1 329 0,60% Customs clearance Cost of clearing 40' Containers 3 @ 0 TSh000's - 0,00% Total Variable Expenses 1 329 0,60% Payment Terms Credit Terms & Interest Rate 16% x 30 Days (2 330) -1,05% Inventory Finance cost to hold target cover. 16% x 30 Days 2 330 1,05% Forex sourcing Forex payments only 16% x 0 Days - 0,00% Payment Terms to trade 66% > 30 Days & Cash. 16% 79% x 30 Days 3 566 1,61% Bad Debt Provision % 0,25% 542 0,25% Total Variable Financing Charges Assumed Interest = 4% per month 4 109 1,86%
  • 9. Distributor KPI & Cost + Model 9 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Those costs that usually relate to the business structure, i.e. are not determined by the level of sales. ¨ Admin Structure & Cost of admin services. ¨ Logistics Structure & Cost of services. ¨ Sales Structure & Cost of sales services. (Includes the cost of vehicles) n The costs are based on the agreed structure and are proportioned based on shared services. FIXED COSTSFIXED COSTS
  • 10. Distributor KPI & Cost + Model 10 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Funds that are provided by to enable fulfillment of objectives. ¨ Funds to facilitate consumer marketing activities. n These funds are non-profit generating for the distributors n Essentially, the Business Support Funds do not relate to services provided by the distributor and are therefore not profit generating. n Secondly, in most cases they are investments in sales growth, which assists the distributor in achieving the targets. BUSINESS SUPPORT FUNDSBUSINESS SUPPORT FUNDS
  • 11. Distributor KPI & Cost + Model 11 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n Based on the costs derived from both the structure and the services provided, remunerate the distri- butor based on a mark-up on the determined cost, ¨e.g. Cost + 10%. n The principle is that : remunerate the distributor based on services provided. BASIC PROFITBASIC PROFIT
  • 12. Distributor KPI & Cost + Model 12 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 Budget or Forecast or Actual Sales ? n The question is fundamental, as the cost relative to the sales generates the %. n Low Sales (Budget) = High % ¨ Over achievement = over recovery of fixed costs. n High Sales (Forecast) = Low % ¨ Under achievement = non-recovery of costs. n To be reviewed on a regular basis – Quarterly. COMMISSIONCOMMISSION STEP 5STEP 5
  • 13. Distributor KPI & Cost + Model 13 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011AMED Sales Conference 2004 13 Budget or Forecast or Actual Sales ? n Stable volume markets Sales = Average of Last 3 months Actual. ¨ Offers opportunity for over achievement > Improved profits ¨ Focuses effort on sales to avoid under recovery. n Unstable volume markets (Growing or declining) Sales = Best estimate for forward period. ¨ Focuses effort on sales to avoid under recovery. ¨ Offers reasonable opportunity for over achievement > Improved profits COMMISSIONCOMMISSION RecommendationRecommendation
  • 14. Distributor KPI & Cost + Model 14 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 Response to significant on-going under achievement? n This will lead to under recovery of costs. ¨ Implication = Higher Mark-up% required. n Appropriate Response ¨ Review sales performance to determine potential. ¨ Review costs and implement revisions to structure as needed. COMMISSIONCOMMISSION RecommendationRecommendation
  • 15. Distributor KPI & Cost + Model 15 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011AMED Sales Conference 2004 15 Distributor Commission Calculation August 2010 US$ Derived Basic Commission (Mark-up) >>> 15,59% = US$1.00 Projected Distributor Gross Sales Estimated Mark-up% @ 15,00% Mark-up 253 958 Projected Sales to Distributor per Month 220 833 2 650 000 Tons No of 40'FCL's per annum = 3 @ 24 Tons per 40' 70 Service Comments Monthly % Sales Transport Costs National to all customers TSh per ton 29 254 67% 1 329 0,60% Customs clearance Cost of clearing 40' Containers 3 @ 0 TSh000's - 0,00% Total Variable Expenses 1 329 0,60% Payment Terms Credit Terms & Interest Rate 16% x 30 Days (2 330) -1,05% Inventory Finance cost to hold target cover. 16% x 30 Days 2 330 1,05% Forex sourcing Forex payments only 16% x 0 Days - 0,00% Payment Terms to trade 66% > 30 Days & Cash. 16% 79% x 30 Days 3 566 1,61% Bad Debt Provision % 0,25% 542 0,25% Total Variable Financing Charges Assumed Interest = 4% per month 4 109 1,86% Warehousing Costs TSh/mth CP % Rent of Warehouse Space All national locations @ 561 000 100% 550 0,25% Costs of warehouse labor People 3 @ 1 249 500 50% 613 0,28% Costs of operating warehouse @ - 50% - 0,00% Management Senior Managers People 2 @ 8 874 000 50% 4 350 1,97% Admin Team Non Management & Sales People 0 @ - 50% - 0,00% Admin Expenses Office running costs, Audit Fee etc @ 2 550 000 50% 1 250 0,57% Sales Team TSh /person/mth Sales Supervision Sales Manager People 1 @ 3 315 000 100% 3 250 1,47% Dedicated Sales Team Wholesale Preseller People 1 @ 2 244 000 100% 2 200 1,00% Sales Supervisor - Expat People @ 3 315 000 100% - 0,00% Sales Supervisor - Local People @ 2 244 000 100% - 0,00% Retail Van Seller - Expat People 1 @ 2 244 000 100% 2 200 1,00% Retail Van Seller - Local People 1 @ 714 000 100% 700 0,32% Loaders People 2 @ 153 000 100% 300 0,14% Seeding Van 2 Vans People 2 @ 357 000 100% 700 0,32% Shared Sales Team Shared Sales Supervisors People 3 @ 2 244 000 50% 3 300 1,49% Shared Drivers People 2 @ 153 000 50% 150 0,07% Merchandising Shared Merchandisers People @ - 0% - 0,00% Sales Team Expenses Commisions etc - 100% - 0,00% Total Fixed Expenses 19 563 8,86%
  • 16. Distributor KPI & Cost + Model 16 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011AMED Sales Conference 2004 16 Distributor Commission Calculation August 2010 US$ Derived Basic Commission (Mark-up) >>> 14,45% = US$1.00 Projected Distributor Gross Sales Estimated Mark-up% @ 15,00% Mark-up 253 958 Projected Sales to Distributor per Month 220 833 2 650 000 Tons No of 40'FCL's per annum = 3 @ 24 Tons per 40' 70 Service Comments Monthly % Sales Transport Costs National to all customers TSh per ton 29 254 67% 1 329 0,60% Customs clearance Cost of clearing 40' Containers 3 @ 0 TSh000's - 0,00% Total Variable Expenses 1 329 0,60% Payment Terms Credit Terms & Interest Rate 16% x 30 Days (2 330) -1,05% Inventory Finance cost to hold target cover. 16% x 30 Days 2 330 1,05% Forex sourcing Forex payments only 16% x 0 Days - 0,00% Payment Terms to trade 66% > 30 Days & Cash. 16% 79% x 30 Days 3 566 1,61% Bad Debt Provision % 0,25% 542 0,25% Total Variable Financing Charges Assumed Interest = 4% per month 4 109 1,86% Warehousing Costs TSh/mth CP % Rent of Warehouse Space All national locations @ 561 000 100% 550 0,25% Costs of warehouse labor People 3 @ 1 249 500 50% 613 0,28% Costs of operating warehouse @ - 50% - 0,00% Management Senior Managers People 2 @ 8 874 000 50% 4 350 1,97% Admin Team Non Management & Sales People 0 @ - 50% - 0,00% Admin Expenses Office running costs, Audit Fee etc @ 2 550 000 50% 1 250 0,57% Sales Team TSh /person/mth Sales Supervision Sales Manager People 1 @ 3 315 000 100% 3 250 1,47% Dedicated Sales Team Wholesale Preseller People 1 @ 2 244 000 100% 2 200 1,00% Sales Supervisor - Expat People @ 3 315 000 100% - 0,00% Sales Supervisor - Local People @ 2 244 000 100% - 0,00% Retail Van Seller - Expat People 1 @ 2 244 000 100% 2 200 1,00% Retail Van Seller - Local People 1 @ 714 000 100% 700 0,32% Loaders People 2 @ 153 000 100% 300 0,14% Seeding Van 2 Vans People 2 @ 357 000 100% 700 0,32% Shared Sales Team Shared Sales Supervisors People 3 @ 2 244 000 50% 3 300 1,49% Shared Drivers People 2 @ 153 000 50% 150 0,07% Merchandising Shared Merchandisers People @ - 0% - 0,00% Sales Team Expenses Commisions etc - 100% - 0,00% Total Fixed Expenses 19 563 8,86% TOTAL COSTS 25 000 11,32% Distributor Profit 10% 2 500 1,13% Distributor Margin 27 500 12,45% Additional Funds provided by CP Duties and taxes Provision for Duty Payment 0,00% - 0,00% Price Discount Allowance Provision for GtN Discounts 58% of Sales @ 3,00% 4 419 2,00% Advertising Allowance Provision for Advertising Payments 0,00% - 0,00% Refundable Expenses 4 419 2,00%
  • 17. Distributor KPI & Cost + Model 17 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 n The Cost+ model is not a suitable incentive for distributors. ¨ There is no incentive to reduce cost. ¨ The profit does not reward growth. n Therefore having covered the costs & basic profitability, achievement of KPIs will generate additional profitability on classic pay-for performance principles. n The total profit should be structured to ensure a profit relative to the distributor’s investment in the business ADDITIONAL PROFIT > KPIsADDITIONAL PROFIT > KPIs
  • 18. Distributor KPI & Cost + Model 18 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 18 n The structure of the reward is such that when combined with the Cost+ profit, achievement of KPI’s at 100% will generate a total profit of 3% of Sales. n As per the principles of EICP, achievement can increase to 120%, further rewarding exceptional performance. n The KPI’s are linked to the Subsidiary casita. ADDITIONAL PROFIT > KPIsADDITIONAL PROFIT > KPIs
  • 19. Distributor KPI & Cost + Model 19 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 The Cost+ Model n links additional profitability to achievement of defined KPIs. n Ensures equitable remuneration of distributors. n Enables recognition of cost differences in different markets n Ensures equitable remuneration based on performance through a combination of basic profit and KPI achievement. THE FUNDAMENTAL PRINCIPLETHE FUNDAMENTAL PRINCIPLE
  • 20. Distributor KPI & Cost + Model 20 experts@experts-visions.com www.experts-visions.com The company to -go for providing added value to your business© Avril 2011 DISTRIBUTOR COST+ MODEL Transparent, Fair, and Rewarding remuneration for Distributors A BUSINESS Win/Win!