There’s nothing special about being a generalist

Blogs Jason Cannon January 28, 2014

Daley Thompson is largely considered one of the greatest decathletes of all time.

An eight-time Olympic Gold Medalist, the London-born athlete has shattered decathlete records multiple times over.

Thompson is legendary in his speciality but Bruce Merrifield, who spoke at Heavy Duty Aftermarket Week Monday as part of the SOLD series, would argue Thompson’s specialty was in being a generalist.

Traditionally, the title of “World’s Greatest Athlete” has been bestowed to the winner of the Olympic decathlon, an event that is compiled of 10 track and field events.

Thompson excelled against his peers, all generalists in their own right. They didn’t specialize in anything. They simply excelled at multiple things.

If you compare the world records held by decathletes (generalists) and compare them to track and field Olympians (specialists), you can see the difference honing in on a talent can make.

For example, Jamacian-born Usain Bolt holds the world record in the 100 meter with a time of 9.58 seconds. American Ashton Eaton holds the decathlon record with a time nearly a full second slower. With rare exception, the decathletes are simply not as skilled in the individual events as the specialists, and in some cases it’s not even close.

Merrifield’s point was that it’s hard to be great at everything, and trying to do that could be keeping you from being great at something.

As part of his “Expanding Parts/Service Opportunities Using Analytics” session, Merrifield encourages distributors to take a deep dive on their net profit per customer visit at the store.

What you may find is your most popular product, the thing you’re known far – and maybe even a source of pride in your catalog – is a dud.

Merrifield challenged all distributors to look at how they do business, and how they chose to grow sales. Specifically, “is growing sales costing you profit?”

According to an anonymous study Merrifield cited, Walmart’s biggest 30 suppliers say Walmart receives each their company’s lowest price. No other customer could order products at that rate.

However, each of the 30 say Walmart was their most profitable customer. That was because Walmart wanted no perks – no football tickets, no rebates, discounts or bundles – just the best price.

The company’s cost to serve the customer (Walmart) dropped by 12-13 percent because there’s no money invested in the peripheral crap to make the sale.

Merrifield encouraged distributors to look at their whole system, not just the product for price, and challenged them to sell more to their most “net profitable customers.”

Audit big accounts’ replenishment system and math and find weeds between the silos (the piles of real-world problems that fall between the cracks in management structure.)

Merrifield says this can include looking at customers who have high numbers of “emergency orders,” and helping them become more efficient with regular inventory.  Odds are, the customer is getting killed on the added emergency fulfillment expense, and odds are it’s disrupting efficiencies at the distributor level. Sure, you’re charging for the inconvenience, but that’s preventing you from doing something else that can make you more money.

And as counterintuitive as it may sound, if you find you’re losing money servicing a customer, you either need to help them correct that or alter your relationship with them.

Merrifield says taking a look at your top 200 most profitable SKUs will prove revealing, because it will also expose your 200 least profitable SKUs if you go through your catalog.

Essentially, there’s a big difference in growing revenue and growing profits, and if you can’t track where your dollars are coming from, you’ll never be able to project their impact on your bottom line.

Jason Cannon is Online Managing Editor for Truck Parts & Service.

You can follow me on twitter at @By_Jason_Cannon