Control the Numbers — Nordveld's Margin-and-Reward Redesign

A four-round, advanced management-accounting and control-systems simulation set inside Nordveld Industrial Supplies B.V., a Rotterdam-based B2B distributor of bearings, seals, fasteners and fluid-power parts — €410M revenue, 6.5% operating margin (€26.6M), 720 staff including a 95-strong field sales force, serving 3,400 active business customers across the Benelux and western Germany. A new private-equity owner has set a board target of lifting operating margin from 6.5% to 9% in two years and hired you as Group Controller to make the numbers tell the truth and change behaviour. The catch: Nordveld manages margin only at the gross level by product line, the sales force is paid 80% on revenue and 20% on gross margin, cost-to-serve is invisible to reps, and a first-cut analysis shows the bottom 20% of the top-200 accounts are unprofitable at the operating level, destroying ~€6.5M a year masked by gross-margin reporting. Built on Michael Corbey's management-accounting and control framework, the simulation drills four disciplines. Round 1 — Diagnose: run a customer-profitability / cost-to-serve analysis, build the whale curve, locate the loss-making tail, identify the few cost-to-serve drivers (order frequency, expedited freight, returns) that explain most of the leak, and show how revenue-based commission rewards the wrong customers. Round 2 — Measure: replace 40+ scattered volume metrics with a focused 6–8 KPI scorecard across financial, customer, process and learning perspectives, each with a target, the behaviour it should drive and its gaming risk — and resist the operations team's gameable 'orders shipped' KPI (Goodhart's law). Round 3 — Pay & Reallocate: re-base sales variable pay from revenue toward customer profitability with a transition mechanism, and segment the loss-making tail into reprice / redesign / develop / exit using customer lifetime value — spending a €1.2M change budget on retraining, a rep transition guarantee and pricing-system changes, all while a repriced mid-tail customer threatens to leave. Round 4 — Recover & Defend: time advances one to two quarters and you present to the PE board whether the new control system durably changed behaviour, with the realized operating margin, a goal-congruence score, the CLV of retained accounts, the revenue trend and budget variance. The scoring rewards loading true cost-to-serve, a focused causally-linked scorecard, a phased pay re-base, CLV-aware portfolio surgery and fixing the information system: month-end close and allocation — and measurably punishes the five classic errors: firing the whole tail and under-absorbing fixed cost, re-basing pay overnight and triggering rep flight, building gameable volume KPIs, keeping 40 metrics that focus no one, and repricing without fixing slow closes and arbitrary allocation. Final KPIs track operating margin (% toward the 9% target), the goal-congruence score (/100), retained-customer CLV and budget variance against the €1.2M.