KDAT.W DEANffi The anatomy of planning

By Welly Lynch P.A.t.D. Associates

ents: p,roducts, advertising, pricing, and distribution with each having goals, objectives, and desired results.

All three planning concepts have been around a long time with successful companies embracing their use. Planning progresses when understood, scheduled, and implemented. About mid-fi scal year current performance can be extrapola0ed against history and new projections can be made. Lots ofbooks are written on these three methods, but, like other knowledge banks, they're useless unless assimilated and executed.

No matter what formal planning you do, everyone must be concemed with two areas: the financial effect and the focus needed to achieve beneficial

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Reasons why a stors should bcgin planning for'99 now explanation ol strategic, business and markcting plans. ways to imPlement.. competition and survival benefits.

change. Few owner/managers can measurably influence customer demand beyond their immediate trading area on a sustained upward basis. Conversely, management can markedly and continuously influence expenses and operating structures and deficiencies.

Our industry generally generaies pretax profits of around 2% of sales. To cover each dollar of expense, a company must achieve $50 in sales. If you reduce expenses by one dollar, it is as if you have made $50 in sales. Similarly, a $10 reduction is like $5fi) in sales. Save $l0O and it can substitute for $5,000 in sales. Cutting costs $1,000 per month is tantamount to a $6(X),fi)0 annual sales increase.

Note the reverse applies as well. If you add a manager at $25,000 per year, it will take $1,250,000 in sales to generate enough profit to pay the salary.

Every company has four main areas of outgo: people, communication, product, and occupancy expense. Management can and should control these cost centers, but spending money internally and operating effectively is like conducting a symphony orchestra. Your planning process must deal with employees, managers, benefis and bo- nuses, suppliers, vendors, government employees, professional and consumer customers. Communication, product and occupancy expenses are the asset side that equals profits in the business equation. hoduct is the inventory yow store should be carrying. ff you are a member of a buying group(s), you are buying as well as the chains. Your profits therefore are dependent on how well you operate or pass merchandise through your system. Figures recently published for one major chain showed total expenses to salesof 20.9%; gross margins 27 .9 % with pre-tax inc ome 7 % of sales. They're minimizing the average inventory on hand and its costs by ordering weekly and/or in quantities that are sold before they have to be paid for. Their inventory control is managed and mechanized. Eight, 10 and 12 time turnovers are not uncommon. Buying is easy. A plan to sell separates leaders from also rans.

For pressure-treated wood thafs kilndded after treatment, call Dean Lumber Co.

The gente conditioning of our steam dry kilns yields exceptional products such as Dean Deck, Dricono fire retardant treated wood, Outdooro wood, Wolmanizedo E)dra'" lumber, and treated specialties.

Communication expense versus retum calculation will help you manage this area. Media expense plus printing and mailing costs are advertising expenditures. Training (indoctrination, on-the-job, formal product and industry, people skills and leadership development) is part of in-house communication as are internal publications (budgets, plans, and operations manuals). Because public relations are important to most companies, expenditwes must be cost effective.

Occupancy costs are real property, fixtures and equipment. How you manage your building(s) fixtures, and equipment determines the effectiveness of pass-through of product to your customers. Successful merchants understand cube utilization. If you have 48 inch gondolas and your competitor has 12 foot racks, they're using three times the cube your organization has working for it. There are companies in our industry with annual deliveries per kuck of $4,(XX),000. From about $2,Ofi),(XX) per truck and up is doable and done daily by successful dealers. Forklifts should be used effectively about 30 hours weekly per shift.

Planning, like the rest of this crazy business, is simple with only two dimensionspeople and assetsbut there's nothing easy about it. If you've not planned before, you'll be pleased by how many surprises will be pleasant ones.

Window & Door Assembly

National Wood Window & Door Association's slrnmer meeting will be at Grove ParkInn, Asheville, N.C., Aug. 8-12.

Meetings of the various divisions and sections are scheduled along with a variety of activities. Political satirist P. J. O'Rourke will speak at brealdast on the last day.

Next NWWDA meeting will be Feb. 6- 10 at Marriott Rivercenter Hotel, San Antonio, Tx.

Ar., La., Tx., Glub Forming

Lumbermen in southwestern Arkansas, northwestern Louisiana and northeastern Texas will soon have an opportunity to affiliate with Hoo-Hoo International, the lumber industry fraternity.

Ronald R. Yarbrough, engineered wood products division, Anthony Forest Products, El Dorado, Ar., a2O yeat Hoo-Hoo member, and Hoo-Hoo Intemational District 7 Supreme Nine member Frank Aranza are working to establish a club for that area.

Hoover Treated Wood Products announces that a NATIONAL EVALUATION REPORI (NER-457) has been issued by the National Evaluation Service of the Council of American Building Officials to confirm that PYRO-GUARD Fire Retardant Treated Lumber and Plywood meets requirements of the BOCA, UBC, and SBCCI model building codes.

PYRO-GUARD has a degradation-free track record, a So-year projected useful life, and is the FIESI Fire Retardant Treated Wood with: a fhrrd Party Klln frlonltoring in oddltlon to U,L. follow-up service a FRf lobor and malerials replacement cost warranly

I Code Compllance Report wlth evalualion of e-levated ]emperatune tlrength testlng for roof applicallons

I Hlgh temperolure slrength ]es] results

I New York State Smoka loxlclty |est. results

* NER reports arc subject to rc-examination, revisions and possible closing of file.

For Technlcol Informqllon Coll l-800-TEc-wooD