Page 43 - UnderstandingJanSanRedistribution_flipbook

Glossary of Terms

Cost Avoidance The opportunity to eliminate or reduce costs by utilizing
wholesalers.
Cost-to-Serve The total cost of serving a distributor customer, from receiving
orders through shipping, billing, and collecting.
Customer Freight The cost of shipping products from the manufacturer’s plant or
distribution center to the distributor customer.
Fill Rate Economics The cumulative financial benefits that arise from high order fill
rates and accelerated turns, including reduced inventories, fewer
high-cost/low-volume backorder transactions, and new customer
penetration.

Marketing Value A measure of the less tangible benefits of redistribution, including
customer satisfaction, rapid response to demand changes, and
access to new distributor customers.

Order Management Costs The costs of serving customers that are NOT directly related to
the physical movement of products. Includes handling orders,
scheduling carriers, reconciling prices, invoicing, collecting, and
clearing deductions.
Redistribution The service provided by wholesalers, wherein they purchase
products in large quantities from manufacturers, then sell
and deliver them to distributors in combination with other
manufacturers’ products.
Re-D (re-d) An abbreviation for “redistribution.”

Revenue Impact The difference between a manufacturer’s revenue when product is
sold to a wholesaler, and the revenue earned when the product is
sold directly to a distributor.
Trace Sales Report A report provided by the wholesaler to his suppliers, showing sales
volume by item and distributor customer. Trace Sales Reports
help manufacturers maintain distributor program payments and
agency rep commissions on volume sold through wholesalers, and
can help the manufacturer and wholesaler optimize the business.

Turns A measure of how quickly a distributor can receive and ship
inventory, thereby minimizing the time it spends in his warehouse.
Increasing turns is one of the primary levers for distributors to
increase profitability.

Turn-Earn Index A measure of the earnings provided by your inventory investments,
reflecting the value of holding less inventory and turning it faster
as a result of wholesaler sourcing.
Wholesaler A company that is engaged in the business of purchasing products
in large volumes from manufacturers, then selling and shipping
them to distributors in smaller lots, in combination with other
manufacturers’ products.

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