Customer Stratification Case Study / How One Distributor Increased Gross Margin and Revenue with Customer Stratification

Vertical: Pet Supply Wholesale Distribution 

A distributor in the pet supply space wanted to drive profitable growth by enabling purchasing and sourcing teams to make data-driven decisions. 

The Roadblock 

The distributor had several issues related to a lack of information and analytics around supplier relationships. The distributor was: 

• Experiencing spend leakage that affected the bottom line because annual was spend scattered among too many suppliers across product categories. 
• Struggling to hold suppliers accountable due to lack of a detailed supplier scorecard. 
• Experiencing an increase in working capital that was caused by lead time variability, but lacking the tools to identify the root cause.  

How ACTvantage Helped  

The distributor enlisted our services and we helped them deploy supplier stratification to optimize their sourcing/purchasing strategy. We used actionable intelligence from supplier stratification to develop supplier-specific growth playbooks. We also introduced an easily accessible cloud-based analytics platform for the sourcing/purchasing team.  

To ensure the success and sustainability of the analytics program, we focused on the PEOPLE aspect of the implementation, as follows: 

• Coached managers to use supplier analytics and optimize spend 

• Trained purchasing teams on:
  • Which suppliers to focus on 
  • What to discuss with those suppliers 
  • How to increase performance 

• Provided quarterly updates of playbooks and ongoing training reinforcement 

What is supplier stratification?  

Supplier stratification involves categorizing suppliers based on their behaviors, performance, profitability and other valuable metrics. Distributors can use this data to inform their relationships with and decisions about specific suppliers. It will also help distributors identify inefficiencies that reduce profitability so they can be addressed.  

The Difference 

The distributor was able to optimize working capital investment by improving supply chain performance and increase profitability by consolidating suppliers across categories. They also improved: 

• Communication with CORE suppliers using objective feedback 
• Customer experience – via product availability – through a systematic approach to supplier development 

About ACTvantage 

At ACTvantage, we are a people-centric industry partner. We help distributors drive profitable growth through analytics and talent development. We take a holistic approach, integrating people, process and technology to improve distributor performance in four areas: 

• Sales
• Supplier Management 
• Inventory 
• Pricing 

We have conducted over 750 client engagements over the past 15 years, and we’ve provided coaching and micro-learning to thousands of professionals in the past 10 years. We apply field-tested principles which we also share in our seven best-practice books published with the National Association of Wholesaler-Distributors.  

Why ACTvantage? We let our clients answer! 

ACTvantage is our thought partner. Their data aggregation is huge, but the ideation and view from dealing with other distributors are significant. The analysis and easy-to-use and digest playbooks have helped reduce costs, gain margins and strengthen partnerships with our vendor community. We improved vendor payment terms through focused negotiation – from Net 30 to Net 45. VP Supply Chain and Vendor Relations, Large Distributor   

We are enjoying the content! It affirms some of the things that we’ve already been doing, but we’re also learning some new things. ACTvantage’s training has led us to some good internal discussions, and we’re developing some common language around pricing. Mark Bray, President ACR Supply