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The AMA Handbook of Due Diligence by Andrew J. Sherman, William M. Crilly

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14-04 DUE DILIGENCE HANDBOOK
Competitive Distribution Environment - Form 14-09
The second table on Form 14-09, when completed, will provide a view of the competitive environment in which
the entity operates its distribution services. The situation may dictate that the entity engage in off-optimum prac-
tices in order to be competitive. For example, the entity may have to use higher cost expedited transportation
services to compensate for the fact that a competitors distribution center is closer to the customer.
As noted previously, distribution costs can represent a significant portion of a firm’s total expenses. Therefore,
if the entity is at a significant cost disadvantage vis-a-vis its competitors, it may have to accept a lower profit
margin by pricing competitively or settle for a reduced market share if it attempts to maintain a favorable mar-
gin by an increase in prices.
Forms 14-10
Through 14-14
These forms are self explanatory. Therefore, no further comments are required.
WHAT TO LOOK FOR
Is entity at a distribution cost disadvantage vis-a-vis its major competitors?
Is entity at a distribution service disadvantage vis-a-vis its major competitors?
368
PHYSICAL DISTRIBUTION ORGANIZATION
ENTITY Form 14-01
369
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
ORGANIZATION CHART
Organization Reports To: ______________________________________ Total Personnel: _____
RESUMES OF KEY DISTRIBUTION PERSONNEL
ENTITY Form 14-02
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
370
NAME TITLE
COMPENSATION OF KEY DISTRIBUTION PERSONNEL
ENTITY Form 14-03
371
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
NAME / POSITION
(1)
ANNUAL
SALARY
OTHER
COMPENSATION
(2)
BASIS FOR OTHER
COMPENSATION
(3)
$
Notes: (1) Place an asterisk after the name of individuals having employment contracts.
(2) Includes cash bonuses, stock awards, etc. for the most recent annual period.
(3) For example: Total entity profits, departmental or personal goal achievement, etc.
PHYSICAL DISTRIBUTION ACTIVITIES
ENTITY Form 14-04
REF.
PREPARED BY REVIEWED BY
REVISION DATE SECTION PAGE
372
ACTIVITY PRIMARY
RESPONSIBILITY
(1)
PERFORMED
BY:
(2)
Recommend and obtain approval of distribution
objectives.
Establish distribution systems and procedures.
Establish finished goods and spare parts stocking levels
based on Marketing projections.
Factory finished goods warehouse.
Field warehouses.
Establish order processing procedures.
Establish most cost-effective methods of transportation.
From factory warehouse to field warehouses.
From factory and field warehouses to customers.
Warehouse layout.
Internal warehouse materials handling equipment.
Pick and pack and break-bulk procedures.
Shipping document preparation.
Shipping control procedures.
Shipment tracking procedures.
Negotiate transportation rates.
Audit waybills/airbills for compliance with tariffs and
negotiated rates.
Perform periodic finished goods and spare parts
inventories.
Maintain warehouse security.
Prepare performance reports for upper management.
Notes: (1) Place “X” in this column if function performed by Physical Distribution organization.
(2) Enter organization performing this function, if not performed by the Physical Distribution organization.

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