Welcome to Step 3 of the 20 Steps to Route to Market Excellence. You can read more about the overall model and the steps I have already discussed here.
The third step is ‘Distributor Assessment’. Whether you are looking to build a RtM strategy from scratch or review your existing sales and trade marketing execution, assessing the current and/or available methods of distribution is crucial. Distribution in FMCG is typically complex, with many layers, levels and combinations. There may also be local geographic nuances, and/or historical challenges to deal with. You may own and control every element of the distribution network, known as Direct Distribution. You might contract out the distribution to 3rd parties who then distribute on your behalf, also falling into the Direct Distribution category. You may sell to distributors who then distribute on to retailers themselves (or via other intermediary wholesalers or cash & carry’s), known as Indirect Distribution. You may have a mix of any of these methods which effects both the level of control, and the complexity involved.
No matter what is in place now, you must evaluate every step in the current method of distribution, from an independent point of view, and consider the possible alternative methods for getting your products to retail.
Here are just some examples of questions you can ask under Step 3 – Distributor Assessment:
- What is my current method of distribution?
- Is my distribution all ‘direct’ to my customers via my own owned or contracted distribution network?
- Is my distribution all ‘indirect’ to my customers through distributors that work either exclusively or non-exclusively for me? What are the layers of distributors, sub-distributors, wholesalers, cash & carry's, etc.?
- Is my distribution a mix of the above?
- Is this the way it has always been for us or did we change and if so why?
- Is my current point of sale coverage a function of my distribution model, or of my route to market strategy?
- What are the total number of distributors in my market?
- What is their coverage map? How many, if any, am I using? Why is this?
- How are my direct and indirect competitors servicing the marketplace? What is their distribution model? How do we feel is it performing for them? Is there anything we can learn from them?
- How regularly am I assessing the distribution network or the distributors?
- Do I have a distributor assessment tool to conduct the assessment? Feel free to gain inspiration from our Distributor Assessment Guide and Distributor Assessment Tool available for download.
- After conducting visits, and using my distributor assessment tool, what is the current performance of my distribution network and /or each one of my distributors?
- Where are the gaps in performance vs my ideal distribution network?
- What are the current levels of brand and SKU availability at the distributors retail level? What are the levels of out of stock?
- Is POS material available and visible at retail level? Are planograms being adhered to? What are the overall levels of display in retail?
- Is there an awareness of my brands at a retail level? Are trade engagement programs being run at retail level?
- What are the current service levels of my distributors? How does this compare to our contract and our KPIs?
Regardless of which method we choose to assess our distributors by, one fact will not change. We must get out into the field, see the distributor and retail environments first hand, and assess effectiveness of what is really happening, not what we believe is happening. Information, reports, and monitoring tools are essential in RtM execution, but nothing replaces actual field work.
I hope you find this helpful, and I appreciate your views and comments below. I will be continuing my series on the 20 Steps to Route to Market Excellence, with Step 4 Competitor Analysis in my next post.
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