By John Mackay
If your company wants to increase profitability and continue to grow in today’s competitive environment, you have to realize that sometimes even your best instincts may not be enough (and without an industry benchmark, they’re only instincts). It is essential that you take the time to analyze your industry’s best practices and build them into your company’s business plans.
As your company sets its performance goals, you must set them within practical and workable achievement levels. Obviously, impractical and unachievable goals won’t be met, and in fact might as well not be set in the first place. But, how do you know if your goals are practical and achievable? By comparing your performance to reputable industry benchmarks.
The MHEDA Distributor Statistical Comparison (DiSC) survey is a process of comparing the costs of what one material handling distributor experiences against what another distributor encounters. The result is a business case for making changes in order to improve profitability.
Here are just some of the questions the DiSC results can help answer:
- What is the “profitability divide” between High Profit distributors from the rest of the pack?
- What is a competive gross margin in the material handling distribution industry?
- What type of productivity should I expect out of my employees?
- More importantly, are my payroll expenses in line with industry standards?
Each DiSC participant receives an individual company Financial Benchmarking Dashboard analyzing your company. This report compares your financial performance to industry benchmarks, to others with a similar sales volume, or in your region.
The Financial Benchmarking Dashboard delivers DiSC in an Excel© Dashboard. It provides participating MHEDA members with leading edge insights, intelligence and capabilities. The program was designed with maximum flexibility in mind, so you can slice and dice specific performance results in ways that are most useful to you. Build on your strengths, fortify your weaknesses with your individual company Excel© Dashboard, and make more money!
One of the first tabs in the individual Financial Benchmarking Dashboard is this Scorecard graph. This page of the individual report gives you a quick, visual view of strengths and weakness and ratios to dig deeper into in the rest of the report.
From a quick glance, you can decipher your strong suit and flaws. Categories where your company falls into the first quartile (1 – 25 percent) are your weaknesses that should be addressed immediately. On the other hand, benchmarks where your performance is in the fourth (top) quartile are strengths. Capitalize on these for a competitive edge.
Once you have pinpointed the preliminary strengths and weaknesses of your company versus the industry benchmarks it’s time to dig deeper in the rest of the report.
New innovative results format!
New this year, the DiSC Dashboard will be delivered in an Excel© dashboard that allows you to create customized reports in a more efficient and user-friendly format. The interactive Dashboard allows you to select just the specific columns of data you want to benchmark against your company.
Detailed Results – Your primary metrics can be supplemented by more granular views and analyzed using a variety of well-defined ratios.
Spend some time on the Detailed Results tab. See what separates “Typical” and “High Profit” distributors in the industry. Navigation buttons along the left side of the worksheet allow you to jump to a specific section of study. At the top of the worksheet you have six (6) columns to select the benchmarks that are meaningful to you. There are columns based on product emphasis, columns by sales size, region, etc. Click on a yellow box at the top of the columns and a drop down menu allows you to select the specific columns of data you want to benchmark against your company.
Financial Benchmarking studies are all about ratios and percentages. The DiSC report is no different, until now.
The “$ Benchmarks” tab demonstrates what typical and high profit dollar amounts in the income statement and balance sheet would be if they had exactly the same sales volume that your company did.
Now you can view your performance versus your peers in dollars and cents. This gives you a clear understanding of how much your company spends on key performance areas like payroll, or cost of goods compared to industry leaders. Once again, you can select the specific columns of data (or dollars) you want to benchmark against your company.
Finally, once you have selected the columns to benchmark against your company, you can print a report. The result is a short but detailed report customized based on the benchmarks that you chose.
Confidentiality – Only the staff of the Mackay Research Group will have access to your member’s financial information. Specific data masking procedures are in place to ensure that no one company’s data can be identified from the aggregate industry data being reported. Because the members send the survey directly to Mackay Research Group, neither the association staff nor its members have access to any individual company’s data. In order to protect your confidential data, Mackay Research Group sends your individual company Dashboard directly to you.
The DiSC study provides you with the tools you need to identify industry financial performance benchmarks, to identify the best practice performance based on the top twenty-five percent of the companies in the industry, and to identify your company’s strengths and weaknesses versus those industry benchmarks.
John Mackay is Chairman of Mackay Research Group which provides comprehensive, time-sensitive information on employee performance, operating performance and financial performance for trade associations and affiliated organizations.