Supply Chain Blog

Improve Your Key Account Management Approach with these Vital Tips for Route to Market Success

Posted by Ross Marie on Thu, Jan 31, 2019

Key Account Management (KAM) is how Route to Market (RtM) leaders effectively and efficiently manage the relationship with specific and strategic customers, or customer groupings, to deliver on RtM targets.

 

key-account-management-rtm-3-webCustomers are classified as Key Accounts based on a variety of reasons. For example, it could be because they have a large numbers of retail outlets all branded under the one name. It could be that they operate several bars and restaurants, that are of key importance for delivering your RtM Targets. Your wider organisation may also mandate that specific global customers are treated in a certain way. There could also be dozens of market specific reasons why you might assign a customer(s) as a Key Account.

Regardless of why a customer is assigned to KAM, the important issue is, how they are managed, how the relationship is nourished, how their growth plans are implemented and how they are serviced across our organisation. The central element to KAM is relationship.

Success in KAM Management requires careful consideration, especially if you are either new to the concept of KAM, or if you feel your organisation is not doing it right.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 16 steps of my model. The focus of this post is Step 17 ‘Key Account Management (KAM)’.

Here are some examples of questions you can ask when reviewing, developing or building your Key Account Management (KAM) department or approach:

  1. Based on the RtM Strategy chosen on Step 5 and the Channel Classification in Step 7, what is our desired approach to Key Account Management?
  2. On what basis do we determine that a customer falls into the KAM arena? Is this based on size, current performance, volume, uniformity, number of outlets, ownership of outlets, location of outlets, strategic importance, etc.?
  3. If the customer has a KAM classification in other markets that we or our parent company operate in, does that have a bearing on our local classification?
  4. Will we have different levels of KAM classification? For example, should we assign the label of ‘National Accounts’ to our larger national hypermarket retailers, who have a presence across our market? Or might we assign the label of ‘Key Accounts’ to some regional larger retailers who have multiple stores in one area of our market?
  5. Where does Channel Management fit into KAM? Will we classify our business or customers into Modern Trade and Traditional or General Trade? Will KAM sit into one or both of these channels?
  6. What proportion of our overall business is Key Accounts (as opposed to the Traditional or General Trade)? How to we expect this proportion to develop in the coming years? How will this shape our approach to KAM?
  7. Will there be a RtM manager who has overall responsibility for Key Accounts regardless of which Channel, Area or Region the Key Account is in?
  8. What might this RtM manager have responsibility for? For example, would they manage and be responsible for volume, display, product range, training, strategic approach, relationship, negotiation, reporting, targeting, budgets, etc.)?
  9. Based on our Competitor Analysis in Step 4, how does our competition view KAM? Are there any learnings for us in their approach, or does their approach change our own?
  10. Do we treat all Channels and/or Key Accounts in the same way? For example, will the distributors and cash and carry’s or wholesalers in one region of the country be managed differently than in another? Will this be reflected in the structure? Would the distributors in the North of country be managed by a Key Account Manager who reports to a RtM Manager with responsibility for the North?
  11. Are we clear about the types of individuals who will manage or become Key Account Managers? Do we have specific criteria? What is it? Have we properly weighted the importance of relationship building in looking at individuals?
  12. Where does Key Account Management sit in the organisation structure? What is the relationship between KAM and the RtM field force who potentially manage and call on the individual outlets? How is communication managed between the two? In practice, do they really talk to each other or limit themselves to mandated reporting and communication?
  13. Are we clear about the levels of importance of each channel or Key Account? Have we taken into account all RtM Targets, including strategic importance to us? Have we looked at this importance/power angle from the side of the customer? How important or necessary are we to them? How does this feed into negotiation?
  14. Do we have detailed Key Account Plans for each account? Does this clearly detail what our objectives and targets are for each account? Have we worked with the account in developing these? Have we worked with the internal stakeholders who will and can influence these? Do we simply want engagement with the account, or partnership, or preferred partnership, or exclusivity? Have we looked at previous years plans and taken learnings from them? Do we include what our individual account’s future plans or aspirations are?
  15. Do our Key Account Plans cover all areas of engagement between our two organisations, for example top to top meetings, Key Account reviews, wider RtM team interaction at customer level (e.g. retail or distributor), corporate entertainment/relationship building, order placement, deliveries, feedback on promotions, information sharing (e.g. sales/EPOS data), authority/empowerment, invoicing, seasonality factors, etc.?
  16. What is our approach to negotiating Key Account Agreements? When will they be negotiated? Who will be in the room from our side? Who has the authority to negotiate and to agree?
  17. What happens in the event of a stalemate or breakdown during Key Account agreement negotiation? What will the layers of escalation be? What is our approach to negotiation training?
  18. Do we have a full negotiation strategy per Key Account covering all elements of the agreement and estimated potential scenarios? Has this been agreed and signed off by all stakeholders?
  19. How are we currently rewarding or incentivising Key Accounts? What is the current reward mechanism, e.g. rebate, discount, payment etc.? Is it based on volume or revenue or profit or other RtM targets? What is the potential role of Third Degree Partnerships (3DPs) here?
  20. What role does margin play in our relationship with our Key Accounts? Do we have the control to set it? What are the internal and/or external factors that may affect our ability to set our pricing and margins?
  21. How do we manage and control Key Account investment? Who manages this? How do we determine levels of investment per Key Account?
  22. What payment terms do we operate across our RtM? How do payment terms fit into KAM? Do we have specific payment term targets, by account, by region, by channel, by customer? Do we have the mechanisms in place to facilitate the different forms of electronic payment? Do we have minimum acceptable payment standards? What is our overall approach to payment terms in relation to KAM?
  23. Which of our Channels and Key Accounts are growing? Which are declining? How is this reflected in our overall strategic and individual approach to KAM?
  24. How do we capture learnings across KAM? Do we have a process for capturing success in one account and replicating it in another?
  25. What is our overall approach to KAM? What is our implementation plan for rolling this out?

I hope you find this useful, and any views and comments are most welcome.

Next, I will cover Step 18 ‘Training & Upgrading’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, SKU, Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, S&OP, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Compliance, Information, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Form Lasting Alliances with Key FMCG Customers at Almost Zero Cost, How? - Third Degree Partnerships (3DPs)

Posted by Ross Marie on Mon, Jan 28, 2019

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the detail of the first 15 steps of my model. The focus of this post is Step 16 ‘Third Degree Partnerships (3DPs)’.

Step 16 represents a different concept and approach to motivating your customers to want to deliver on your targets. I hope it is helpful, and I welcome any feedback. So, what are Third Degree Partnerships (3DPs)?

incentives for fmcg customers with third degree partnerships in rtm

Third Degree Partnerships (3DPs) are where a Fast-Moving Consumer Goods (FMCG) company identifies its customers key issues, costs or constraints, and then forms a partnership with a service provider who can solve them for the customer, at a significantly reduced cost.

The benefit for the customer is access to cheaper services. The benefit for the service provider is access to more customers. The benefit for the FMCG company is the ability to use the provision of a 3DP service as if it was a trading term or key account payment to the customer, with almost zero cost.

In short, we identify our customers key issues, we then identify a service provider who can solve them, and we use our size and clout (maybe even our global reach?) to negotiate a much-improved price or access to the service for our customers. We then decide what we want in return for providing our customers with access to this 3DP club.

What would we want in return? Examples include, product listings, exclusivity of some form, increased product range, pricing or other promotions, improved display, minimum volume targets, brand dialogue, use of a new distributor, access to a territory, etc.

Why would you use 3DPs instead of a cash payment or discount? Several potential reasons. For example, maybe you have significant pressure on Route to Market (RtM) budgets and need to spend less in the key account or customer payments area. Maybe you need access to a new strategic channel and the costs of entry would eliminate profitability. Maybe you are facing pressure and need to boost sales but have no budget for promotions. Maybe you are facing significant competition and need a fresh approach to work with certain customers.

Think of 3DPs as a type of rewards club for our customers. They may require time to set up but have little associated cost for us as FMCG leaders, provided we do the ground work.

Here are some examples of questions you can ask under Step 16 ‘Third Degree Partnerships (3DPs)’:

  1. Based on the Channel Classification in Step 7, what are the different segments of customers in our market?
  2. Looking at each customer segment, which are the most appropriate or suitable for 3DPs? Where will 3DPs have the most potential value or be the most valued?
  3. Would there be a greater applicability in the less organised General Trade versus the more organised Modern Trade, for example?
  4. Do we feel providing our Horeca owners with access to reduced cost services will be as beneficial as providing reduced cost services to international retailers?
  5. Could the customers in question get access to these reduced cost services themselves? If so, why have they not done so? Is there still a value in these services?
  6. Is there any specific channel in which we are under-performing? What are the reasons for this? What are the defining characteristics of the channel? Could a 3DP help us here?
  7. Have we included and looked at the specific geographic issues, challenges and nuances within our specific market, to map out our local customers’ challenges? For example, the islands of Indonesia, the congestion in Bangkok, the vast geography of African countries, the severe temperatures in Russia, to name a few?
  8. Considering each customer segment, what are the customers’ key issues, costs or constraints? In other words, what are the problems our customers are facing for which we could provide solutions?
  9. Looking at each of these key issues, costs or constraints, can we identify service providers who can solve these?
  10. Are these potential service providers local to the market? Is there a potential for us to bring in external suppliers to the market? Would we want to do that? Does that create more issues for us in setting up the 3DP or does it make the 3DP more powerful?
  11. Can bringing in external service providers as part of a 3DP create barriers to entry for our competition and barriers to exit from the 3DP for our customers?
  12. Are there particular services that we, as an FMCG company, benefit from, that we can in turn provide to our customers through 3DPs? Can we use our size and scale to negotiate a package or price and offer access to our customers in return for something?
  13. What services might we offer as a 3DP? For more inspiration, download our Implementing Third Degree Partnerships (3DPs) in Route to Market Guide here.
  14. Have we prioritised the potential services that we may offer as part of our 3DPs? Have we ensured that the 3DP programme will not reduce focus from achieving our RtM targets but instead assist with them?
  15. Have we looked at why we would use a 3DP instead of another incentive? Have we detailed what we would ask for in return for access to a 3DP?
  16. How will the 3DP programme be managed? Will key accounts manage the programme? Will we require additional resources in the RtM function to do this? Must this be done on a national level or will we allow regional implementation?
  17. Have we involved our legal colleagues in the contracting process to make sure there is no exposure for us from the services provided by the service provider(s)?
  18. Have we conducted a risk assessment to look at any specific local or other issues that may affect the 3DP programme?
  19. Taking all the above into account, what would the overall 3DP programme look like?

I hope you find this useful, and as I said, views and comments are most welcome.

Next, I will cover Step 17 ‘Key Account Management (KAM)’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

 

3rd degree partnership download

 

Tags: Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Doing Business in Africa, Communication, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Beat the FMCG Competition with an Outstanding Distributor Partnership Programme

Posted by Ross Marie on Fri, Jan 18, 2019

A Distributor Partnership Programme, if designed and implemented correctly, can be one of the most powerful tools in the Route to Market (RtM) armory for delivering sales growth.

distributor-partnership-programme-webA Distributor Partnership Programme sets out which individual distributors or distribution network(s) you will work with. It details, ideally within individual simple Distributor Development Plans, how you will work with them, what specific areas they need to improve on, exactly what they need to deliver and what is in it for them. All of this will be done with the back drop of the specific market you operate in, set against agreed timelines, and the programme must map out a win/win for all sides.

The Distributor Partnership Programme works best as part of an overall RtM improvement plan, but at the very least needs to be coupled with Distributor Assessments, which I covered in an earlier post. Once we have assessed what we already have/what is out there, we can then decide who, and on what basis, we want to partner.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 14 steps of my model. The focus of this post is Step 15 ‘Distributor Partnership Programme’.

Here are some examples of questions you can ask under Step 15 ‘Distributor Partnership Programme’:

  1. Based on the RtM Strategy & the 4D Approach chosen in Step 5, what is our DIME approach for our Route to Market?
  2. What is a reasonable expectation of our distributors? Have we defined exactly what this is in terms of process and performance? Have we included sales processes, logistics performance and back office performance? How do we measure this?
  3. Based on the Distributor Assessment in Step 3, how many of our current distributors do we want to continue to work with? What is the minimal size of a viable distributor, including the ability to fund any required investment? What is the optimum number of distributors? What is the current contractual arrangement with our current distributors?
  4. How many of our current distributors are we looking to end our relationship with? Upon what basis can we make such a judgement? What is the current contractual arrangement with them? What is our approach and plan for ending this relationship? Will there be financial or other implications to ending any relationships?
  5. Have we conducted a risk and continuity of supply assessment? Have we included factors such as resource (specifically cost), product supply, politics, competition, timing, future relationship, perception, etc.?
  6. Will we look to engage with any new distributors? What criteria will we use to make these decisions? Who are these new distributors? What is our engagement plan with them?
  7. Are we currently operating on an exclusive distribution system? If not, is that something we have identified as a priority going forward? If not, how will we manage potential conflicts that could arise?
  8. Have we considered the output of our Competitor Analysis in Step 4? What impact will this have on, for example, looking at distributor exclusivity, starting and ending relationships, distributor development plans, etc.?
  9. Based on the Distributor Assessment in Step 3, what does our ideal or model distributor look like? What criteria are we using to create this ideal distributor? Have we taken local geographic, technological, political and economic conditions and nuances into account? What does the Balance Sheet of a Model Distributor look like?
  10. Based our RtM targets identified in Step 5, and looking across all of our distributors, existing and new, what will the Distributor Development Plans of each distributor look like?
  11. Will the Distributor Development Plans include areas of, for example, geographic coverage, number of vehicles, availability of data, inventory levels, reporting, calls per day, steps of the call, route planning, flexibility (e.g. new brand launches), brand distribution criteria, point of sale material placement, planogramming, display, brand dialogue, promotions, pricing, product returns/complaints, retailer engagement, to name a few?
  12. Out of these Distributor Development Plans, do we have a simple specific strategy for each distributor – e.g. defend / increase market share, improve selling processes, develop or expand van selling etc.?
  13. What will our partnership programme look like? What criteria will we use and how will this be measured? Will we categorise distributors into different performance categories? If so, what will these categories look like, how many will we have and how will this be measured?
  14. What will the rewards in the partnership programme be? Will we use a discount system, a rebate system, a prize-based system, a combination of these, etc.?
  15. Have we considered budgetary factors? Will this be self-financing through volume gains? Have we mapped out the success of different scenarios to fully uncover maximum cost exposure?
  16. Will we differentiate distributors based on, for example, size, volume, market share, reach, coverage, reporting, data, access, etc.?
  17. Will this be a national programme? Will we need a pilot in one region for example? Will we allow geographic nuances and differences to be considered? Will here be any effect on headcount in the RtM team to support the programme? Will we need specific Distributor Development roles, or will these activities be accommodated in BAU?
  18. What will the training programme be for our key account and RtM team? What is our roll out plan for this?
  19. Have we developed new SLAs or key account agreements to take account of the above?
  20. All Distributor Programmes should increase sales and market sharer, so what expectations do we have for our programme?
  21. Based on all the above, what is the implementation & engagement plan for the Distributor Partnership Programme?

I hope you find this useful, as always views and comments are welcome. Next, I will cover Step 16 ‘Third Degree Partnerships (3DPs)’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, SKU, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, Logistics Management, Sales, Distribution, RTM Assessment Tool, Inventory Management & Stock Control, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

How to Master Technology in Route to Market Strategy to Save Resources and Fuel Sales

Posted by Ross Marie on Fri, Jan 11, 2019

When we discuss Technology in terms of Route to Market (RtM) Strategy we are looking at our overall approach to and use of Technology at every stage of our RtM Strategy and Execution.

rtm-technology-webThis includes, for example, the hand-held system we take orders on, the ERP system the company uses, the tracking method we have for targeting the RtM team, the way we measure and track our key account agreements, how we optimise our route planning, and everything else across the RtM space.

The key in many cases will be minimising the number of systems we use, facilitating their integration, ensuring their simplicity and allowing them to minimise human intervention.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 13 steps of my model. The purpose of my blog series is to stimulate your thought processes around RtM, and to allow a moment to think and to ask some key questions. The focus of this post is Step 14 ‘Technology’.

Here are some examples of questions you can ask under Step 14 ‘Technology’:

  1. Based on the RtM Review in Step 1, what is our current approach to and use of Technology across our Route to Market?
  2. What is the Systems Landscape operating across our RtM function? To what extent are the systems integrated?
  3. Do we use an ERP system? Is this linked to any other RtM systems? How does this integration work? Have we adopted systems that are no longer fit for purpose?
  4. Do we get distributor, customer or third-party sales data? If so, what do we do with this? Is this fed into our own RtM system? Can we measure and report on this? What manual intervention is involved?
  5. What is our use of spreadsheets across the RtM function, including strategy, execution, monitoring and reporting? How many different departments are using them? Have we looked at this aspect in the past and what view did we take at the time? To what extent are we managing the risks associated with spreadsheet usage?
  6. What is the current order capture method? Do we use a CRM? Do we use a hand held, tablet or phone? If so, what is their current ease of use and performance? How integrated is the order capture method into the overall company system(s)?
  7. What systems for we use to monitor the performance of our RtM representatives? For example, do we know how many calls they are doing per day, what their location is at any given time, what their stock levels are, etc.?
  8. Do we track our distribution and RtM vehicles electronically? If so, what do we do with the data?
  9. Do we have a solution for setting and monitoring our RtM targets? Is this automated and integrated into our overall RtM system?
  10. How do we measure product display across our retail, Horeca and customer network? Is there a technology solution for this?
  11. How do we track, monitor and report on compliance to customer agreements, whether they are national trading terms with key accounts, of single store contracts?
  12. Do we have any connectivity constraints in our marketplace? Does our RtM team have access to mobile/cellular data across the country or does connectivity wait until the end of the day? How does this impact on our approach to Technology?
  13. Do we use RtM data analytics across our RtM? If so, what do we do with the data? If not, have we looked at this in the past? What are our next steps for RtM data analytics?
  14. Do we have a solution for capturing cost to serve data across the RtM? Is this a simple automated process or does it require manual intervention? If so why? What are we doing with this information?
  15. To what extent do we use technology to set up sales territories and look at route planning? If not, why not? If we do use Technology here, what have the results been?
  16. What is the current amount of time our RtM team spends using technology? Is this what we want and expect? Is this the best use of the RtM team’s time or have we over complicated any process?
  17. Do we use social media and other form of digital marketing for RtM? Does it form an integrated part of our RtM strategy or has it been deployed in silo from other RtM initiatives? What have we used it for and what have the results been? Who in the organisation uses social media for RtM? Do we have a clear strategy and guidelines in place for the use of digital tools?
  18. Do we train our RtM team on all aspects of Technology that we use in RtM strategy and execution? Is it very clear which aspects of Technology are ‘in scope’ and ‘out of scope’ for certain roles/departments?
  19. Does our RtM team currently employ workarounds due to current system set up?
  20. What are the current technology gaps in our RtM? Where are the manual processes that need to be automated? On the other hand, are their examples where we are over complicating an area or issue for the sake of technology?
  21. Given all the above, what is our overall Technology plan across the RtM, Sales and/or Trade Marketing and Distribution function?

I hope you find this useful, as always views and comments are welcome. Next, I will cover Step 15 ‘Distributor Partnership Programme’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: SKU, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Information, Retail, RTM, Promotions, ERP, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence