Latrobe Valley Product Gallery

Question: Discuss about the Latrobe Valley Product Gallery. Answer: Background Latrobe Valley Product Gallery (LVPG) is in the business of conducting trade fairs for a variety of customers. They are assisted by sales representatives whose job is to sell space to the customer in the stand and spend time with them for providing value added services. Services include a) Exhibitor stand organized b) Exhibitor travel arrangements c) Exhibitor accommodation arrangements d) Exhibitor marketing material organized e) Exhibitor hospitality organized. Customers pay for these services in the form of fees. In addition LVPG gets commission for ticket sales and space sold. For the work the sales representative gets wages and commission as a % of space sold. The analysis below contains information on the following Analysis of the profit mix Sales representative wise trade fair wise Analysis of the time spent by customer mix Sales representative wise trade fair wise Analysis of the components of income generated by each sales representative for LVPG Analysis of the components of expensed generated by each sales representative for LVPG Findings and Discussion Analysis of the sales mix Sales representative wise trade fair wise The data shows that 84% of the profit comes from Books, Clothing, Computing, Food, Furniture, HRM and Wine with Wine and Food contributing the highest mix of profits at 19% each. The best sales persons generating this profit include Kylie and Shane whose total contribution to profit is 75%. Sum of Profit (AUD) Sales Representative Trade Fair Jarrah Kylie Shane Sheila Grand Total Profit Mix Books 2,503 3,858 6,361 6,361 8% Builders 3,805 3,805 3,805 5% Clothing 3,410 6,150 9,560 9,560 12% Computing 2,393 3,121 2,840 8,354 8,354 10% Food 1,792 8,624 4,403 350 15,169 15,169 19% Furniture 1,517 1,586 3,783 6,886 6,886 9% Government 1,042 805 1,479 3,325 3,325 4% HRM 2,977 1,267 1,995 6,239 6,239 8% Manufacturing 544 663 1,207 1,207 1% Sports 1,505 991 257 2,753 2,753 3% Vehicles 2,016 2,016 2,016 2% Wine 7,469 7,441 271 15,181 15,181 19% Grand Total 4,769 30,274 30,349 15,463 80,855 80,855 100% Profit 4,769 30,274 30,349 15,463 80,855 Mix 6% 37% 38% 19% 100% Analysis of the time spent by customer mix Sales representative wise trade fair wise The data shows that 73% of the time is spent in Clothing, Computing, Food, HRM and Wine. Here as well, Kylie and Shane have spent the maximum time 70% of the total hours spent by all sales representative. This data also shows that higher the time spent will generate higher profits since the trade fairs overlap the mix of time spent Sum of Time spent by Sales Representative to complete sale (hours) Column Labels Row Labels Jarrah Kylie Shane Sheila Grand Total Time spent (Hours) Mix Books 1.58 1.17 2.75 2.75 4% Builders 2.22 2.22 2.22 4% Clothing 4.37 4.72 9.08 9.08 14% Computing 0.93 2.02 5.28 8.23 8.23 13% Food 1.37 5.63 4.50 0.77 12.27 12.27 20% Furniture 0.82 0.65 2.73 4.20 4.20 7% Government 0.45 0.22 0.75 1.42 1.42 2% HRM 2.13 1.98 0.98 5.10 5.10 8% Manufacturing 0.77 0.78 1.55 1.55 2% Sports 1.78 0.87 0.42 3.07 3.07 5% Vehicles 1.88 1.88 1.88 3% Wine 5.53 4.62 0.75 10.90 10.90 17% Grand Total 3.50 23.85 19.73 15.58 62.67 62.67 100% Time spent hours 3.50 23.85 19.73 15.58 62.67 Mix 6% 38% 31% 25% 100% Best 5 customers and worst 5 customers Further analysis shows that the best 5 customers and worst 5 customers in terms of revenue generating are Top 5 Sum of Total income (AUD) bluetailwines 2030 jobsrus 2162 magazone 2372 onlyscotchco 2056 readit 2336 Grand Total 10956 Bottom 5 Sum of Total income (AUD) berrydrinkco 418 BobsBits 440 Hick! 226 made4u 308 plonk2u 138 Grand Total 1530 Similarly, the best and the worst trade fair is as under Best Sum of Profit (AUD) Worst Sum of Profit (AUD) Wine 15,181 Manufacturing 1,207 Grand Total 15,181 Grand Total 1,207 The best and the worst sales representative in terms of profit is as under Best Sum of Profit (AUD) Worst Sum of Profit (AUD) Shane 30,349 Jarrah 4,769 Grand Total 30,349 Grand Total 4,769 Assuming an increase of 40% in the wages, the fall in profit will be only 2% or $ 1253 Current Rate New Rate Change Wages rate 50 70 20 Wages total 3133 4387 1253 Profit 80,855 79601 Fall in profit -2% Recommendation Based on the above, LVPG has to concentrate on Wine Trade fair and the best customers to focus on are bluetailwines, jobsrus, magazine, onlyscotchco, readit To improve decision making, the following extra information can be collected The profit per hour spent by the sales representative. Since the driver is number of hours spent and it is positively correlated to profit generated, this metric will be very useful The commission given to sales representative as a % of the profit generated by them. This will help in incentivizing those sales representatives who contribute more profit. For record keeping and improvement in quality of data collection and management, swipe machines can be used by LVPG which will record the time spent by the slaes representatives. This will save in manual tabulation of data. LVPG has to keep a bucket wise % fee to sales representative. Thus at higher levels of income generated by the sales rep more % should be given to them to motivate them to perform better. Similarly, laggards should be penalized by putting lower % at lower buckets. Currently, the company gives same % of fees to all sales representatives.