Distributor margin analysis
FMCG Distributor Margin Analysis
Total gross margin answers whether the business retained value after product cost. It does not explain which customers, SKUs, channels, suppliers or sales decisions created the change.
Reconcile before diagnosing
Margin analysis begins with one agreed financial truth: gross sales, discounts, returns, net sales, COGS and gross profit. If transaction-level results do not reconcile to the agreed ERP or general-ledger totals, detailed rankings should not be presented as certified.
Separate the drivers
A margin decline can come from selling price, purchase cost, volume, customer mix, product mix, discounts, returns or timing. Combining these into one variance prevents management from assigning the right action.
- Price realization versus list or prior price
- Purchase-cost movement
- Customer and product mix shift
- Discount and rebate effect
- Returns and credit-note effect
- Channel and salesperson mix
Gross margin versus contribution
Gross margin uses product cost. Contribution analysis may also include direct logistics, commission or service costs when reliable data and an agreed allocation rule exist. Keeping these layers separate avoids labelling a customer unprofitable based on an arbitrary overhead allocation.
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