Is the financial theory of inventory management losing its validity?
by Jane E. Baynard and Scott Benfield Anyone familiar with distribution over the last several decades has been privy to the financial theory of inventory management. The foremost measure is the turn-and-earn theory of inventory management. As the body of knowledge goes, if you turn a product four times and make a 25 percent gross profit margin, the product’s turn-and-earn index is 1. Attention distributors! Maximize your sales force’s productivity. The new book Restructuring the Distribution Sales Effort for Maximum Productivity, from distribution industry consultant Scott Benfield and Progressive Distributor editor Rich Vurva is available now. Did you know that inside and outside sales forces are 30% to 40% of the typical distributor’s operating expenses? To learn more about this important book, click here. The turn-and-earn index is used as a metric that bridges asset management (turns) with market profit (gross margin percent) to arrive at an evaluative mechanism of a product’s perf
