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The Challenge
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Profitability
Financial
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Ô ëigher Value-Adding Revenue Growth apital
Ô Improved Profitability Utilization
Ô Greater Capital Utilization
Aligning Logistics with Financial Goals:
A Top-Down Approach
Inventory, Revenue,
1 Financial SG&A, COGS, Fixed
Drivers Assets, A/R, A/P
3 Logistics Activities/Tasks
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Financial-Logistics Connection
Financial Metric Examples of ëow Logistics Adds Value
Fill rates Lead times
Revenue Growth (Same Store and Forecasting New Product Speed to Market
New Store Sales) Customer Service
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Logistics ± Who¶s View?
Better manage the balance sheet primarily in terms of inventory and fixed assets and
CFO the income statement in terms of logistics related expenses.
Better plan and fulfill market demand for goods and service and do so more efficiently.
VP Logistics Like Logistics buy-side, sell-side, planning and execution.
Much Potential to Unlock ëidden Value:
Retailers¶ Operating Income Margin
%
9 8%
0%
8 %
8% 7 5% 7 4% 7 %
6% 5 0%
4 %
4% 4%
0%
p p a re l le c tro n ic s on to re e p a rtm e n t
nnual value of
improving to st $ M $ 4M $ 9M $48M
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*per $ ,000 million in revenue
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GMROI ± Need for Logistics Speed
GP Margin 3 .1 31. 3 . 3 .
(GP / Revenue)
= GMROI 2 2 1 33 1 3
Profitability x
SPEED
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¢ase case: 30% Gross Profit Margin x 7
Inventory Turnover = 210% GMROII
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Inventory Turnover Increases
6 1 to 8.5:
6 25% GPM x 8.5 = 212%
GMROI
2 3
ompetition Lowers GPM to 25% but no change in
Inventory Turnover: 25% x 7 = 175% GMROI
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Observations on our retail customers
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Observations on our retail customers
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Observations on our retail customers
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Observations on our retail customers
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A Look at ëow FedEx ëelps Retailers
SCENARIO #1: DC by-pass and direct US distribution solutions that reduce
Time-to-Market: C- Store Retailer increasingly sourcing merchandise from
overseas
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A Look at ëow FedEx ëelps Retailers
SCENARIO # 2: Entire supply chain assessment for 23 -store multi-channel
retailer
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A Look at ëow FedEx ëelps Retailers
SCENARIO # 3: 1 -Store multi-channel retailer and FedEx conducted a µRetail
Best Practices and Framing Session¶
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Cost Fixed
Days Sales Days In Days
Revenue of Asset
Business Process Growth Goods
SG&A Outstandin Inventor Purchases
Utilizatio
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Sold n
Merchandising
Store Operations
Warehouse Management
Transportation
= Growth = Profitability > = apital Utilization
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