Money Matters: Elevate Your Bottom Line With the DSC Report
January 31, 2024
Every year, a financial benchmarking study known as the MHEDA DSC (Distributor Statistical Comparisons) Report examines and contrasts MHEDA distributor member companies according to their size, line of business and location.
Important details on how high-profit companies produce higher profit margins are provided by responses gathered from the DSC Survey. This survey pays close attention to the primary drivers of profit, which include growth, gross margin, expenses, inventory turnover and accounts receivable collections.
By evaluating return on investment, income statement costs and margins, balance sheet comparisons, financial ratios, asset productivity ratios and employee productivity, the study offers a road map for any company looking to enhance its financial performance.
The MHEDA Journal sought out MHEDA Board members John Gelsimino, president of All Lift Service Co. and Tom Albero, CEO of Alliance Material Handling to share their expertise on the DSC Survey and ensure members are well-informed and equipped to use this incredible resource.
Here’s what they had to say.
TMJ: How many years has your company participated in the DSC Survey?
Gelsimino: We have participated in the DSC Survey for roughly 15 years. One of my MHEDA DSC memories was at my first MHEDA Convention in Arizona. A group of us broke down the data and applied it to our businesses in a way that I never saw done before. I returned to my dealership and started implementing changes and haven’t stopped since.
Albero: We have participated in the survey for more than 20 years.
TMJ: Why do you recommend MHEDA members participate in completing this survey?
Gelsimino: I recommend members participate in the survey for the simple fact that benchmarking works. There is no better way to measure and improve your business than to compare your department’s performance with other like-sized businesses. Without this benchmarking, you can never realize the full potential of your organization because your only perspective is what your organization knows. If you can’t measure it then you really don’t know what direction you are heading.
Albero: There is no better way to improve your company than by comparing your results with your peers. We have made significant changes over the years and have driven top-line and bottom-line results through participation in this survey.
TMJ: How do you feel that MHEDA members benefit from the DSC data?
Gelsimino: The benefit of this is increased profitability at your organization. If done properly, you will implement changes that have an extremely positive impact. Some of my best ideas were borrowed from fellow MHEDA members. This is the core concept of networking and the value of MHEDA in general.
Albero: The data gives you targets to compare to your actual results. We always thought we ran a great dealership. When we started comparing our results to the industry, we realized that we were great in many areas. We also were not so great in many areas. Over the years we would pick a few areas that we were below the industry average and determine how we could improve our company. Year after year, we would improve more and more categories. Now, I am happy to know that we are a great company.
TMJ: What metrics from the DSC do you feel have been most valuable to you?
Gelsimino: The most valuable metrics to me are:
• Debt to equity
• Return on assets
• Revenue per employee (entirely, per technician, per parts employee, per sales rep, etc.)
• Gross profit per employee (same breakdown)
• PM completion
• Effective billing rate
• And many more
Albero: A few that are valuable to our company are:
• Ratio of technician to admin support
• Service revenue per technician
• Absorption rate
• Parts sales per parts employee
• Return on assets
• Debt to equity
• Payroll as a percent of margin
• Market share awareness
• PM completion percentage
• Calculated tech revenue per hour
• Parts revenue per technician
• Vehicle recovery percentage
• Rental utilization
TMJ: How does the data from the DSC Report affect the decision-making at your company?
Gelsimino: Everyone should have a strategic plan, even if it’s not perfectly written down. Based on that strategic plan, you would then determine which benchmarks you would use to best measure your progress toward your plan.
Albero: All decisions we make revolve around the ratios and goals that we set from the DSC Report. When you have comparable industry data and use them in your decision-making process, good things happen.
TMJ: You mentioned you share this data with your team. What advice do you have for other MHEDA members on an effective way to do this?
Gelsimino: My advice is to move slowly when sharing this information with your team. Make sure you are very comfortable with the numbers, what all is in the numbers and how it relates to your business. Nothing is worse than displaying numbers in a group setting to have someone point out something that isn’t right. This can be damaging to your momentum. The end goal is to have the entire organization aligned with these metrics and be laser-focused on hitting these benchmarks and KPIs month after month.
Albero: We not only share our financial data compared to the budget with our team, but we also share actual results with the DSC model every month. This has been a game-changer for us as all managers see where we are and where we need to get to in order to be best in industry.
TMJ: Members shouldn’t be intimidated by this data. What’s your advice if they feel hesitant to participate?
Gelsimino: The advice that I have is that you must do this. You should also take the results and discuss them with your MHEDA-NET groups and other dealers that you interact with. This is a highly confidential process whose value, if properly measured, is worth the price of admission to MHEDA for the entire year. Some people say that they don’t have time to fill out the input sheet. I would say that you don’t have time not to. It is educational for people filling it out and pulling the data the first time. Regardless of company size, this is a must-do annually, and the MHEDA team will assist anywhere needed.
Albero: You would be surprised at how little it takes to complete this survey. You will be more surprised by what you learn from it and how you can find more answers on how to tweak a few things each year with not much effort. After a few years, you will be amazed at the difference in performance. If you could change your bottom-line net income by over 5,000% by simply taking less than one hour of time to fill out a survey, would it
be worth it? We said yes and that is what we achieved in a few short years.
For more information on the DSC Report, visit MHEDA’s website at mheda.org/dsc.