The Bottom Line is net profit that is arrived at by subtracting all costs and expenses from revenue. It represents profit for the year and it is usually the last line of an income statement.
In this article, I illustrate how a typical independent distributor can significantly impact the bottom line and reduce expenses by utilizing Lean Operating Principles.
This first part of our special management series focuses on improving distributor operations. Our next article will deal with Activity Based Accounting (also known as Unitized Cost) and how distributors can use it to make decisions that impact the bottom line. Our final article will address the concept of Dynamic Pricing and how it is used with Activity Based Accounting to further improve the distributor’s bottom line.
TAP Resources promotes the use of Lean Thinking as a way to reduce operations costs and achieve operational excellence (see “Lean Thinking in the Compressed Gas Industry,” CGI, May 2006). Our premise is that in many ways compressed gas distributors are quite similar, with profitability linked to costs. They buy liquid product from a major manufacturer, have it delivered to a storage vessel, pump it through manifolds into cylinders or liquid containers, and deliver it on trucks.
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