The main findings were these smaller companies do a

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Supply Chain Management: A Logistics Perspective
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Chapter 11 / Exercise 6
Supply Chain Management: A Logistics Perspective
Coyle/Langley
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The main findings were these: Smaller companies do a poorer job of setting clear objectives and establishing systems to measure performance. Less than half of the companies studied knew their individual products profitability. About one-third of the companies had no regular review procedures for spotting and deleting weak products. Almost half of the companies fail to compare their prices with those of the competition, to analyze their warehousing and distribution costs, to analyze the causes of returned Higher Diploma in Sales and Marketing 31
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Supply Chain Management: A Logistics Perspective
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Chapter 11 / Exercise 6
Supply Chain Management: A Logistics Perspective
Coyle/Langley
Expert Verified
merchandise, to conduct formal evaluations of advertising effectiveness, and to review their sales force’s call reports. Many companies take four to eight weeks to develop control reports, which are occasionally inaccurate. Annual-plan control The purpose of annual-plan control is to ensure that the company achieves the sales, profits, and other goals established in its annual plan. The heart of annual-plan control is management by objectives. Four steps are involved. First, management sets monthly or quarterly goals. Second, management monitors its performance in the marketplace. Third, management determines the causes of serious performance deviations. Fourth, management takes corrective action to close the gaps between goals and performance. This control model applies to all levels of the organization. Top management sets sales and profits goals for the year that are elaborated into specific goals for each lower level of management. Each product manager is committed to attaining specified levels of sales and costs; each regional and district sales manager and each sales representative is also committed to specific goals. Each period, top management reviews and interprets the results. Managers use five tools to check on plan performance: sales analysis, market-share analysis, marketing expense-to-sales analysis, and market-based scorecard analysis. Figure 4.The control process Goal setting Performance Measurement Performance Diagnosis Corrective action Module 8 Business Environment 1 The Organization Sales Analysis Sales analysis consists of measuring and evaluating actual sales in relation to sales goals. Two specific tools are used in sales analysis. Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance. Suppose the annual plan for selling 4,000 widgets in the first quarter at $1 per widget, for total revenue of $4,000. At quarter’s end, only 3,000 widgets were sold at $1,600, or 40 percent of expected sales. How much of this underperformance is due to the price decline and how much to the volume decline? The following calculation answers this question: Higher Diploma in Sales and Marketing 32 What do we want to achieve?

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