22% margin increase for a construction wholesaler from Radom
We rebuilt the discount system and eliminated unprofitable suppliers within 6 months of cooperation.
The Bud-Max wholesaler from Radom generated large turnovers, but too little money remained in the coffers at the end of the month. The Złoty Standard Marketing team entered the company to find cash leaks and fix the sales structure.
The challenge
In December 2023, the company's net margin was only 3.4%. The main problem was the autonomy of salespeople, who granted discounts of up to 15% without any control, just to close a sale. The company lost money on every seventh transaction.
Additionally, goods from three suppliers had been sitting in the warehouse without rotating for over 14 months. This froze 214,000 PLN of capital that was needed for current payments and development. The reporting system practically did not exist, and the owner found out about results with a month's delay.
Our approach
In January 2024, we sent two of our specialists to Radom. We carefully analyzed exactly 11,400 invoices from the entire previous year. We check facts, not promises, so we cut ourselves off from employees' opinions and focused on hard data from the ERP system.
For the first 45 days, we conducted tough negotiations with suppliers. We count every penny, so we compared purchase prices from 12 different entities. It turned out that Bud-Max was overpaying for construction chemicals by 8.5% compared to market prices.
The solution
We introduced rigid discount brackets locked in the sales system. A salesperson can now give a maximum of 5% discount. Any larger discount requires digital approval from the director, which is issued on average in 47 minutes. Your business must earn, so we eliminated sales below the break-even point.
We gave up the services of the two most expensive suppliers and consolidated orders with one partner. Thanks to this, we obtained free transport and an additional 3% discount for timely payments. We also implemented a simple panel for the owner, who sees the real profit from the previous day every day at 8:00 AM.
Results
After six months of action, the wholesaler's profitability jumped to a net margin of 5.8%. The company stopped financing customer purchases from its own pocket and regained financial liquidity.
Timeline
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January 2024Full audit of 11,400 invoices and analysis of product marginality.
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February 2024Implementation of system blocks for commercial discounts.
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April 2024Completion of negotiations with suppliers and return of non-rotating goods.
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June 2024Launch of the automatic profit report for the management board.
"Złoty Standard Marketing showed us that high turnover is not the same as profit. We count every penny and now it finally shows on the company's account."