Engineered Systems DiSC: We’re Different

By John Mackay, Mackay Research Group

Each year MHEDA conducts the Distributor Statistical Comparisons (DiSC) study. DiSC is a financial benchmarking study of MHEDA members. This study has become an important tool for MHEDA members to be more successful and without your participation this tool would not be available.

Actually there are three DiSC studies, one aimed at each of three major segments of MHEDA members; industrial trucks, storage and handling, and engineered systems. Each of these segments has different business models and, therefore, different benchmarking needs.

For years engineered systems companies have been saying, “We don’t fit into the typical distributor model for financial benchmarking.”

In 2018, MHEDA decided to conduct a comprehensive benchmarking study of engineered systems companies only.  Our goal was to provide a valuable business planning tool for engineered systems businesses and to provide a resource, which continues to evolve.

The specific operational and financial questions were developed by a group of MHEDA engineered systems companies and MHEDA staff leadership in conjunction with the Mackay Research Group, a third-party research firm that conducted the benchmark survey.

Mackay Research Group collected and analyzed all individual firm data which was kept confidential from MHEDA and participants. The sample size, 10 participating firms in 2018 and 12 firms in 2019, was statistically significant and sufficient for Mackay Research Group to derive accurate estimates for comparison and planning purposes. This report does not contain company-specific results. Instead, an aggregated analysis of findings is presented that is relevant to the industry at large.

There are concrete benchmarks that highly successful engineered systems businesses manage to improve profitability. Those benchmarks are what the Engineered Systems DiSC report calls the Critical Profit Variables (CPVs), see Exhibit 1. The “range of common experience” for the results are summarized below. This range is between the lower quartile and the upper quartile results based on all participating firms.

Exhibit 1
Engineered Systems by the numbers
Range of Common Experience 
 Performance Results    
 Net Sales$11 million $62 million 
 Profit Margin (pre-tax)2.5% 8.9% 
 The Critical Profit Variables    
 Sales Change-22% +30% 
 Gross Margin22.6% 31.6% 
 Payroll Expense12.5% 21.4% 
 Non-Payroll Expenses1.4% 6.8% 
 Revenue Per Employee$398,124 $784,478 

Moving Forward

Ultimately MHEDA conducts the Engineered Systems DiSC survey to establish realistic, attainable profitability goals and determine the critical benchmarks for achieving those goals. In order to improve this benchmarking study, what MHEDA needs now is for more engineered systems members to participate.  The Engineered Systems DiSC survey is only one page long.  Who doesn’t have time to complete a one page survey?