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Route to Market & Supply Chain Blog

Harness the Best in FMCG Distributor Execution - Joint Business Plans

Posted by Ross Marie on Wed, Oct 20, 2021

Over the last few months, I have shared the proven and successful Enchange approach, to find and develop FMCG Distributor Partners (DPs). We call this the Distributor Partner (DP) Development Programme. We use this Programme to source new DPs, to implement a new FMCG company approach with DPs, to drive and improve their performance and/or, to train our DPs, FMCG RtM and/or Distributor Managers.

It is our step-by-step approach to drive and develop FMCG distributor performance across an Eight-Module Programme.  As part of this journey, I have previously shared the first Seven Modules, across three stages. As a recap:

STAGE ONE: INTERNAL PRODUCER FOCUS

  1. Module 1 - Producer RtM Strategy will ensure that the Producer understands their RtM goals and can communicate them to any DP to translate these RtM goals into DP capabilities/actions.
  2. Module 2 - Model Distributorensures that the Producer knows what good looks like in an ideal or ‘Model DP’. This is the definition of a sustainable industry and geo-specific Best in Class Distribution.

STAGE TWO: DISTRIBUTOR PARTNER FOCUS

  1. Module 3 - Distributor Assessment looks at how to identify and assess our current or potential new DPs, to rank the best options, and then divide them into performance bands for actioning.
  2. Module 4 - Distributor Partnership looks at how to build a joint approach for sales and profit growth by laying foundations upon which the relationship will be successfully built and managed.
  3. Module 5 - Planning & Logisticsshows how to improve DP Operations by focusing on the detailed processes and standards around key activities, including for example, inventory (planning, management, ordering), minimising theft, warehousing, fleet, and customer care.
  4. Module 6 – Finance & Back Office will ensure that our DPs are financially secure, are credit risk aware, and have the financial resources to support sustained growth in our joint business.

STAGE THREE: EXECUTION FOCUS

  1. Module 7 – Sales Management focuses on how to drive DP sales performance, how the DPs can deliver excellence in RtM execution, and how we can help them to do so.

Now we will cover the final part of STAGE THREE: EXECUTION FOCUS, with Module 8 – Execution JBP & JAP. In this article, I will focus on the details of the Joint Business Plan (JBP).

FMCG RtM Excellence in Execution - Joint Business Plan

How Do We Bring All of the Above Together?

We combine all the detailed components of the previous Seven Modules into two jointly built plans. These plans must be easy to understand, be regularly reviewed with the DP and the Producer, with both parties jointly and openly committing to their delivery.

The final Module of the DP Development Programme is anchored by two crucial plans, a Joint Business Plan (JBP) and a Joint Action Plan (JAP). A JBP should be strategic in nature focusing on long term goals, and a JAP should be operational in nature focusing on how to achieve those long-term goals. Let’s get into the detail of the JBP.

What is a Joint Business Plan (JBP)?

A Joint Business Plan (JBP) is a shared strategic document that provides a roadmap to delivering the elements agreed in the Trading Terms & Conditions (TTC) between the Producer and the DP. It is long term focused and should detail the joint ambition, and what each party needs to do to fulfil that ambition.

One of the primary goals of any JBP is to bring clarity for both parties, remove any ambiguity and make sure the key individuals across both organisations understand which party does what, when, where, how and why. This understanding must begin at the top of both organisations.

To build a JBP, we must first understand the characteristics involved.

What are the Characteristics of a JBP?

  1. OUTLOOK: JBP is Strategic and long term in nature, focused on big-ticket items.

  2. TIMELINE: Covers the term of the TTC between the DP / Producer, usually in annual buckets.

  3. MANAGEMENT LEVEL: Agreement should be made at senior level, Producer CEO to DP CEO/Owner.

  4. REVIEWS: Preplanned and diarised every three months, at senior level.

  5. ROLES: The JBP will clearly define the role that the Producer plays, and the role the DP plays, across all business activities, including, for example, demand planning, order capture and fulfilment, demand creation, advertising and promotion, credit management, RtM execution and activation, etc.

  6. TARGETS: JBP should set out the annual key numbers agreed in the TTC, including, for example, volume, profit, share, brands, launches, etc.

  7. INVESTMENTS: There should be clarity on Producer / DP investments, front and back margin, incentives, etc.

  8. DEFINED AREAS: There should be clarity on which areas a DP covers, e.g. nationwide, city-specific, or a certain zone, channels, key accounts, etc.

  9. DATA: There must be clarity on the collation, exchange, management and reporting of data.

  10. SERVICE LEVEL AGREEMENTS (SLA’s): This clearly defines the levels of service both parties expect.

  11. CONTINUOUS IMPROVEMENT: The JBP embodies a philosophy of collaboration and a willingness of both parties to improve, train, and execute better to deliver joint success.

At this point, we should now have an agreed Joint Business Plan, a JBP focusing on long term goals. Now it is over to the Operational Management Team of both parties to develop the JAP, which should be operational in nature focusing on how to deliver the long-term goals of the JBP.

I will cover the definition and characteristics of the JAP in my next post.

What should you do now?

Tags: FMCG, Route to Market, Distribution, RTM, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

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