In the past week I have met two Sales Directors from blue-chip FMCG companies to discuss an assessment review of their RTM network. Surprisingly, neither Director was interested and gave a remarkably aligned reason for this rejection. “All this does is raise Sales In and we know how to do that already”.
No, Nein, La, Nu, He, Nem, Không có!!! Whatever language you choose, this understanding of RTM evaluation is incorrect. There is no doubt Sales Directors across the globe know how to increase Sales In. There is a plethora of techniques to get the Distribution network to take more stock, e.g. promotions, discounts, extended credit etc, etc. Unless you are regularly working with “out of stocks” at the Distributor pushing Sales In does not guarantee one single extra sale, not one.
Without a focus on Sales Out any stock pushed into an RTM network is likely just to sit in warehouses as there is no obvious consumer demand for it. The Distributor is sitting on plenty of valuable stock but without a pull from the trade all this extra pushed stock is wasted. One of the key drivers for a push strategy is the alignment of Sales In targets with Sales Team bonus payments. Once the stock has moved out of Producer hands it is considered a “sale” and this is simply not true. Nothing is sold until a consumer has handed over their hard cash at the till.
The beauty of an RTM Assessment is that it addresses how to achieve a sales uplift and every assessment I have been involved with has achieved such an uplift! If you get close to your Distributors and develop a lasting relationship you will be able to get more out of the market – even in a recession.
Partnership – treat them as equals as they are an integral part of your business. Hold regular meetings and ensure the discussion is a real two-way process.
Planning & Logistics – do not assume they know how to aggregate demand by sku. If their forecast is more accurate then this ripples right back to you own factories and procurement activities.
Sales/Order Management – provide training to ensure your face to the customer is professional and competent. Ensure orders are captured promptly AND that stock is available.
Finance & Back Office – is the Distributor financially sound and capital efficient? Do they recruit and retain the right calibre of people and are they rewarded sensibly?
This is just a snapshot of a comprehensive RTM assessment review and more can be found here.
If you have struggled to make your 2010 numbers you might find that Q1 2011 presents an extremely difficult start to the year. A thorough review of your RTM Distribution network could be just what you need to make up ground in the following months.
Uplift in real sales is there for the taking!