--- title: How to Mitigate Risk in FMCG Route to Market Change description: Changing FMCG Distribution Partner (DP) involves risks. Producers who identify those risks, and adapt their approach, can mitigate their potential negative effects. image: https://supplychain.enchange.com/hubfs/rtm-newsletter-risk-management-feature.png --- [Login](https://www.enchange.com/login/) - - - - [![Enchange](https://supplychain.enchange.com/hubfs/Enchange_October2019/Image/logo.png)](https://www.enchange.com/) # Route to Market & Supply Chain Blog # How to Mitigate Risk in FMCG Route to Market Change Posted by Ross Marie on Tue, Mar 14, 2023 - [Tweet](https://twitter.com/share) Moving to a new Distribution Partner (DP) arrangement can be daunting, challenging, stressful, costly, rewarding, and ideally, successful. But no matter what the scenario, there are risks involved. Producers who understand these risks and adapt their approach can significantly mitigate their potential effects. ### Risk Management Our approach to Risk Management has four pillars: 1. **Identification** – map out likely risks considering RtM options, competitive position, county, etc. 2. **Impact** – access the potential impact based on the specific situation in question. 3. **Likelihood** – estimate how likely the risk is to manifest. 4. **Mitigation** – what can be done to avoid, reduce, lessen, or weaken any risk. Here is an example of a Risk & Mitigation Overview. [Click here to see in larger resolution.](https://supplychain.enchange.com/hubfs/risk_mitigation_rtm.png) ![risk_mitigation_rtm](https://supplychain.enchange.com/hs-fs/hubfs/risk_mitigation_rtm.png?width=1920&height=1080&name=risk_mitigation_rtm.png) The key to Risk Management is Mitigation. This is the practice of developing plans and taking actions to reduce threats posed by each risk.   The focus is always on High Impact and High Likelihood areas. But the first step is Risk Identification. ### Risk Identification The identification of risks is very dependent on the specific situation, the planned action or change, the country, a company’s current position, and most likely dozens of other factors. But to get things started, we have provided a list of 30 potential risks that may be involved when changing DP or moving to a new DP. To help with the risk identification process, we split them into stages, in this case Preparation, Negotiation, RtM Execution, Marketing Execution and Partnership. This not only helps with clarifying the thought process, but it also allows us to interrogate our thought process by stage. ### 30 Potential Risks When Moving Distribution Partner? Stage 1 - Preparation 1. Incomplete or poor due diligence 2. Poor or badly thought-out transition plan 3. Lack of understanding or transparency around [Total Cost to Serve](https://www.linkedin.com/pulse/9-steps-skyrocket-fmcg-sales-margin-ross-mari%C3%A9/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D) 4. Misunderstanding or limited knowledge of local culture/environment/trading practices, etc. 5. Unclear or misunderstood [Producer strategy](https://www.linkedin.com/pulse/drive-fmcg-distributor-performance-first-mastering-your-ross-mari%C3%A9/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D) Stage 2 - Negotiation 6. Lack of clarity of HOT’s (Heads of Terms) 7. Unclear and/or inconsistent TT&Cs (Trading Terms & Conditions) 8. No agreed or understood KPIs (Key Performance Indicators) 9. Poorly defined SLA’s (Service Level Agreements) 10. Unrealistic targets set 11. Poor engagement with potential DP’s / existing customers Stage 3 - RtM Execution 12. Loss of volume during RtM change 13. Lose and/or dissatisfy Current Customers (& Key Accounts) 14. Failure to deliver continuity of supply & service 14. Misdefined or understood territories (geographies, [channels](https://www.linkedin.com/pulse/9-step-formula-bulletproof-your-fmcg-channel-strategy-ross-mari%C3%A9/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D), and customers) 16. Bad credit risk management 17. [Poor trade coverage](https://www.linkedin.com/pulse/fmcg-essentials-improve-distributor-sales-rtm-execution-ross-mari%C3%A9/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D) and sales data feeds 18. [Poor trade execution](https://www.linkedin.com/pulse/fmcg-essentials-improve-distributor-sales-rtm-execution-ross-mari%C3%A9/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D) & retail activation 19. Lack of commitment or focus 20. [Poor operations](https://www.linkedin.com/pulse/fmcg-distributor-development-drive-excellence-planning-ross-mari%C3%A9/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D) (supply chain, warehouse, S&OP, etc) Stage 4 - Marketing Execution 21. Poor timing, detail, documentation and testing for product importation and registration 22. Poor understanding and execution of portfolio strategy 23. Bad execution of agreed pricing strategy 24. Limited or bad overall Advertising & Promotion (A&P) support Stage 5 - Partnership 25. Poor initial relationship management 26. Lack of focus or dedicated resource by Producer or DP 27. Lack of commercial significance on either side (Producer is 5% of DP, or vice versa) 28. No [Joint Planning](https://www.linkedin.com/pulse/harness-best-fmcg-distributor-execution-joint-business-ross-mari%C3%A9-1e/?lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3BAyRaMWEtS5mGwvr7vRrE3Q%3D%3D) or Investment 29. No commitment around joint reviews 30. Mistrust builds Every situation is different, and this list is designed to get the thought process moving. Whatever the situation is, a very clear Risk Identification process needs to take place and then the focus will be on the High Impact and High Likelihood areas, and the Mitigation required. ## What should you do now? - Download our [8 Steps to Drive FMCG Distributor Excellence Implementation Guide](https://supplychain.enchange.com/8-steps-to-drive-fmcg-distributor-excellence) which will give you the tools necessary to enter a market, to train RtM teams and to improve the performance of your FMCG Distributors. ## Further help and resources - If you need specific help on any RtM issue, please [reach out to us.](https://www.enchange.com/contact-us/) - Use our [20 Steps to Route to Market Excellence model](https://www.enchange.com/services/20-steps-to-route-to-market-excellence/)to guide you on your RtM journey. - Use the [Enchange Supply Chain House](https://www.enchange.com/services/supply-chain-transformation/)to help with your Supply Chain Transformation. - As we always say at [Enchange](https://www.linkedin.com/company/enchange/about/), NOW is the time to be reviewing, building and/or transforming your RtM Strategy and Execution to reap the rewards. Do not wait. Feel free to use our [20 Steps to Route to Market Excellence Implementation Guide](https://supplychain.enchange.com/implementation-guide-to-20-steps-to-route-to-market-excellence)to help you. Tags: [Traditional Trade](https://supplychain.enchange.com/topic/traditional-trade), [RTM](https://supplychain.enchange.com/topic/rtm), [Ross Marie](https://supplychain.enchange.com/topic/ross-marie), [RtM Strategy](https://supplychain.enchange.com/topic/rtm-strategy), [20 Steps to RtM Excellence](https://supplychain.enchange.com/topic/20-steps-to-rtm-excellence) ### Subscribe Here! ## Implementation Guide - 20 Steps to RtM Excellence [![cta-20-steps-implementation-guide-1](https://supplychain.enchange.com/hs-fs/hubfs/cta-20-steps-implementation-guide-1.png?width=336&name=cta-20-steps-implementation-guide-1.png)](https://supplychain.enchange.com/implementation-guide-to-20-steps-to-route-to-market-excellence) ## RtM Distributor Assessment Tool [![rtm-distributin-assessment-tool-enchange](https://supplychain.enchange.com/hs-fs/hubfs/rtm-distributin-assessment-tool-enchange.png?width=336&name=rtm-distributin-assessment-tool-enchange.png)](https://supplychain.enchange.com/analyse-the-performance-of-your-distributors---free-route-to-market-assessment-form) ## Distributor Assessment Guide [![distributor assessment guide-2](https://supplychain.enchange.com/hubfs/Enchange_October2019/Image/distributor%20assessment%20guide-2.webp)](https://supplychain.enchange.com/distributor-assessment-guide) ## 3rd Degree Partnership Guide [![3rd degree partnership download](https://supplychain.enchange.com/hubfs/Enchange_October2019/Image/3rd%20degree%20partnership%20download.webp)](https://supplychain.enchange.com/implementing-third-degree-partnerships-guide) ## Indirect Distribution: FMCG  Distributors vs. Wholesalers [![cta_ditributor-wholesale-download_sidebar](https://supplychain.enchange.com/hs-fs/hubfs/cta_ditributor-wholesale-download_sidebar.png?width=336&name=cta_ditributor-wholesale-download_sidebar.png)](https://supplychain.enchange.com/indirect-distribution-fmcg-distributors-vs.-wholesalers) ## 8 Steps to Drive Distributor Excellence ![cta-8-steps-distributor-excellence](https://supplychain.enchange.com/hs-fs/hubfs/cta-8-steps-distributor-excellence.png?width=336&name=cta-8-steps-distributor-excellence.png)   [![awrad](https://supplychain.enchange.com/hubfs/Enchange_October2019/Image/Supply-Chain-transparent_216px.png)](http://blog.feedspot.com/supply_chain_blogs/) ### Connect with Enchange Online ### Posts by Topics - [Dave Jordan (432)](https://supplychain.enchange.com/topic/dave-jordan) - [FMCG (386)](https://supplychain.enchange.com/topic/fmcg) - [Supply Chain (249)](https://supplychain.enchange.com/topic/supply-chain) - [S&OP (226)](https://supplychain.enchange.com/topic/sop) - [Route to Market (202)](https://supplychain.enchange.com/topic/route-to-market) - [Forecasting & Demand Planning (177)](https://supplychain.enchange.com/topic/forecasting-demand-planning) - [Performance Improvement (175)](https://supplychain.enchange.com/topic/performance-improvement) - [Distribution (141)](https://supplychain.enchange.com/topic/distribution) - [Traditional Trade (114)](https://supplychain.enchange.com/topic/traditional-trade) - [Sales (112)](https://supplychain.enchange.com/topic/sales) - [CEO (111)](https://supplychain.enchange.com/topic/ceo) - [Inventory Management & Stock Control (105)](https://supplychain.enchange.com/topic/inventory-management-stock-control) - [Humour (94)](https://supplychain.enchange.com/topic/humour) - [Brewing & Beverages (88)](https://supplychain.enchange.com/topic/brewing-beverages) - [Michael Thompson (88)](https://supplychain.enchange.com/topic/michael-thompson) - [Pharma (84)](https://supplychain.enchange.com/topic/pharma) - [RTM Assessment Tool (83)](https://supplychain.enchange.com/topic/rtm-assessment-tool) - [RTM (77)](https://supplychain.enchange.com/topic/rtm) - [RtM Strategy (74)](https://supplychain.enchange.com/topic/rtm-strategy) - [Logistics Management (71)](https://supplychain.enchange.com/topic/logistics-management) - [CEE (67)](https://supplychain.enchange.com/topic/cee) - [Ross Marie (64)](https://supplychain.enchange.com/topic/ross-marie) - [20 Steps to RtM Excellence (63)](https://supplychain.enchange.com/topic/20-steps-to-rtm-excellence) - [Customer service (63)](https://supplychain.enchange.com/topic/customer-service) - [KPI (61)](https://supplychain.enchange.com/topic/kpi) - [SKU (57)](https://supplychain.enchange.com/topic/sku) - [Logistics Service Provider (48)](https://supplychain.enchange.com/topic/logistics-service-provider) - [Cost Reduction (37)](https://supplychain.enchange.com/topic/cost-reduction) - [Retail (37)](https://supplychain.enchange.com/topic/retail) - [Supply Chain House (36)](https://supplychain.enchange.com/topic/supply-chain-house) - [supply chain excellence (35)](https://supplychain.enchange.com/topic/supply-chain-excellence) - [Doing Business in Africa (31)](https://supplychain.enchange.com/topic/doing-business-in-africa) - [ERP/SAP (30)](https://supplychain.enchange.com/topic/erp-sap) - [Supply Chain Analytics (30)](https://supplychain.enchange.com/topic/supply-chain-analytics) - [Christmas (28)](https://supplychain.enchange.com/topic/christmas) - [Integrated Business Planning (28)](https://supplychain.enchange.com/topic/integrated-business-planning) - [The ABC of RtM (27)](https://supplychain.enchange.com/topic/the-abc-of-rtm) - [Interim Management (22)](https://supplychain.enchange.com/topic/interim-management) - [Promotions (22)](https://supplychain.enchange.com/topic/promotions) - [Manufacturing Footprint (18)](https://supplychain.enchange.com/topic/manufacturing-footprint) - [IT (12)](https://supplychain.enchange.com/topic/it) - [3PL (10)](https://supplychain.enchange.com/topic/3pl) - [Information (10)](https://supplychain.enchange.com/topic/information) - [Order to Cash (10)](https://supplychain.enchange.com/topic/order-to-cash) - [Logistica Management (9)](https://supplychain.enchange.com/topic/logistica-management) - [Mergers & Acquisitions (9)](https://supplychain.enchange.com/topic/mergers-acquisitions) - [Telecoms (9)](https://supplychain.enchange.com/topic/telecoms) - [4PL (6)](https://supplychain.enchange.com/topic/4pl) - [Compliance (6)](https://supplychain.enchange.com/topic/compliance) - [ERP (6)](https://supplychain.enchange.com/topic/erp) - [Transportation (6)](https://supplychain.enchange.com/topic/transportation) - [3PLP (5)](https://supplychain.enchange.com/topic/3plp) - [Communication (5)](https://supplychain.enchange.com/topic/communication) - [Sourcing (5)](https://supplychain.enchange.com/topic/sourcing) - [Keith Marshall (4)](https://supplychain.enchange.com/topic/keith-marshall) - [Outsourcing (4)](https://supplychain.enchange.com/topic/outsourcing) - [Spare Parts (4)](https://supplychain.enchange.com/topic/spare-parts) - [Stefan Cucu (4)](https://supplychain.enchange.com/topic/stefan-cucu) - [Vietnam (4)](https://supplychain.enchange.com/topic/vietnam) - [covid19 (4)](https://supplychain.enchange.com/topic/covid19) - [Balanced Scorecard (3)](https://supplychain.enchange.com/topic/balanced-scorecard) - [DIY (3)](https://supplychain.enchange.com/topic/diy) - [DRS (3)](https://supplychain.enchange.com/topic/drs) - [Digital (3)](https://supplychain.enchange.com/topic/digital) - [Production Planning (3)](https://supplychain.enchange.com/topic/production-planning) - [Ratib Ratib (3)](https://supplychain.enchange.com/topic/ratib-ratib) - [Recovery (3)](https://supplychain.enchange.com/topic/recovery) - [SUPPLY PLANNING (3)](https://supplychain.enchange.com/topic/supply-planning) - [Andy Dixon (2)](https://supplychain.enchange.com/topic/andy-dixon) - [IBP (2)](https://supplychain.enchange.com/topic/ibp) - [Low Carbon (2)](https://supplychain.enchange.com/topic/low-carbon) - [Planning (2)](https://supplychain.enchange.com/topic/planning) - [Private Equity (2)](https://supplychain.enchange.com/topic/private-equity) - [Supply Chain Strategy (2)](https://supplychain.enchange.com/topic/supply-chain-strategy) - [WMS (2)](https://supplychain.enchange.com/topic/wms) - [Warehousing (2)](https://supplychain.enchange.com/topic/warehousing) - [Wholesale (2)](https://supplychain.enchange.com/topic/wholesale) - [Agrochemicals (1)](https://supplychain.enchange.com/topic/agrochemicals) - [Aristide Kouame (1)](https://supplychain.enchange.com/topic/aristide-kouame) - [CONSULTING (1)](https://supplychain.enchange.com/topic/consulting) - [Deposit Recovery Scheme (1)](https://supplychain.enchange.com/topic/deposit-recovery-scheme) - [Dianna Vorpagel (1)](https://supplychain.enchange.com/topic/dianna-vorpagel) - [Dumisani Siziba (1)](https://supplychain.enchange.com/topic/dumisani-siziba) - [Food (1)](https://supplychain.enchange.com/topic/food) - [HR (1)](https://supplychain.enchange.com/topic/hr) - [INNOVATION (1)](https://supplychain.enchange.com/topic/innovation) - [Make (1)](https://supplychain.enchange.com/topic/make) - [Manufacturing (1)](https://supplychain.enchange.com/topic/manufacturing) - [Refillable PET (1)](https://supplychain.enchange.com/topic/refillable-pet) - [Scheduling (1)](https://supplychain.enchange.com/topic/scheduling) - [WASTE (1)](https://supplychain.enchange.com/topic/waste) - [finance (1)](https://supplychain.enchange.com/topic/finance) - [procurement (1)](https://supplychain.enchange.com/topic/procurement) [See all](https://supplychain.enchange.com/how-to-mitigate-risk-in-fmcg-route-to-market-change#) Enchange Registered office: 2 Piries Place, Horsham, West Sussex, RH12 1EH, UK.   Enchange Limited is a company registered in England and Wales with company number 2862912.  Enchange VAT number: 528 7834 08                                                                                   ©2019 Enchange Ltd. All rights reserved [Privacy Policy](https://www.enchange.com/privacy-policy) [Cookies](https://www.enchange.com/cookie-policy/)