Page 23 - UnderstandingJanSanRedistribution_flipbook

So Bracket Pricing Considerations Can Cloud the Financial Comparison

$
Revenue from Sale
to Distributor
Minimum
¼ Truckload
DIRECT
$/LB. ½ Truckload
Truckload Revenue from Sale
to Re-D
Re-D Program
THROUGH RE-D Cost
Logistics and
Order Mgmt. Costs

ORDER SIZE

A Note About Quantifying Costs

The illustrations above use “cost per pound” as the unit of measure for logistics costs. The Sanitary
Supply industry is characterized by product lines which exhibit a wide range of “densities,” as well as
values per pound. For instance, chemical products are likely to have high weights, low cubes, and
relatively high value per pound. Plastic spray bottles and storage bins, on the other hand, are low-
weight, high-cube, low value per pound products.

For this reason, we must avoid generalities about quantifying costs. While a “per lb” approach makes
sense for some items, others might be better measured “per cube” or “per case.”

Even more importantly, manufacturers must understand that there are no hard and fast rules about a
“typical allowance program” for wholesalers. The spreadsheet below shows why comparing allowance
rates across product lines, especially if the rates are expressed as a % of price, is a fool’s errand.

Small Order
Product lb / unit Cube / lb / cu Price / Price Order Freight Freight Freight
Type unit unit / lb Size Cost / lb Cost %
Microfiber Dust 6.7 0.8 8.5 $30.00 $4.48 300 cu $325.00 $0.13 3%
Pads
Chemical 4/1 37.0 1.2 30.8 $34.00 $0.92 2000 lb $325.00 $0.16 18%
gallon
HD Trash Cans 19.0 5.9 3.2 $22.60 $1.19 300 cu $325.00 $0.34 28%

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