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Route to Market & Supply Chain Blog

The 8 Step Guide to Drive FMCG Distributor Excellence

Posted by Ross Marie on Wed, Feb 08, 2023

How do we take a Sales or RtM Strategy (Plan) and transform it to Operational Execution?

This is a question we are often asked, and one that many are facing right now. We are at the start of a new year; we have some grand sales and distribution plans, and we need to figure out how to achieve them. There is no one correct direction to take, but for me, I like to break it down into a much easier to handle, step by step approach.

I recommend this approach in all areas of RtM Strategy, whether transforming your entire approach, or specifically looking at one area.

Here we will focus on the challenge of how to improve the performance of FMCG Distributors. You can use this approach to train FMCG RtM or Distributor Managers, to drive and improve the performance of individual distributors and to implement a new FMCG company approach to Distributor Partner (DP) development.

We call this approach the Distributor Partner (DP) Development Programme.

The programme has eight modules:

  1. Producer RtM Strategy - Ability to translate Producer RtM goals into localised DP capabilities and actions.
  2. Model Distributor - Understand and define what Geo-specific Best-in-Class distribution looks like.
  3. Distributor Assessment - Ability to identify and rank the best DPs.
  4. Distributor Partnership - How to build a joint approach for sales and profit growth.
  5. Planning & Logistics - How to improve DP operations.
  6. Finance & Back Office - Understand credit risk & financial health of DPs.
  7. Sales Management - How to drive DP sales performance.
  8. Execution - Part 1 Joint Business Plan (JBP) and Part 2 Joint Action Plan (JAP) - How to harness the best in DP execution.


Module 1 - Producer RtM Strategy

We must have the ability to translate all Producer RtM goals into localised DP capabilities and actions. To do this, it is essential to understand all elements of the producer RtM Strategy before we can choose or manage FMCG DPs. We must understand exactly where we want to play, how we are going to play there, and what exactly success will look like for all parties involved.

Module 2 - Model Distributor

A Model Distributor is the definitive picture of what an ideal distribution partner could look like for your organisation, in your industry and target market. The desired outcome of this module is a clear understanding and definition of what Industry and geo-specific Best in Class distribution looks like. To define your Model Distributor, you must understand the general principle of what excellence in distribution looks like, taking into account your geography and your specific industry requirements and sensitivities.

Module 3 - Distributor Assessment

Distributor Assessments provide the ability to identify and rank the best DPs. Distributor Assessments tend to be conducted at two levels, Macro (usually conducted first, taking a top line market view of DPs you are not partnered with) and Micro (often conducted after Macro, involving detailed assessments of DPs, including current and potential future partners).

A distributor assessment is typically a process that includes creating the assessment, conducting the assessment, ranking each DP in order of their assessment scores, and then finally assigning each DP into different performance bands based on their rankings. You will need to decide on the number and category of levels, for example - Basic, Intermediate and Leading Edge. Ideally the assessment should incorporate best practice in a market or international best practice.

Module 4 - Distributor Partnership

Building Distributor Partnerships is all about open and honest collaboration to clearly set out the joint approach to building sales and profit growth for the long term. In this module, we lay the foundation upon which the DP relationship will be built and successfully managed from.

To get the most out of Distributor Partnerships we must adhere to the following: have transparent Trading Terms & Conditions, be consistent, have jointly agreed targets and make joint investments for growth. Clearly define the coverage areas and the relationship management rules, agree data management expectations, put a service level agreement in place, have clear customer service guidelines and be open, adaptable & flexible.

Module 5- Planning & Logistics

To improve DP Planning & Logistics we are focusing on the detailed processes and standards around activities such as, inventory planning, management, and ordering, including minimising theft. We are focusing on fleet management, OTIF performance (On Time In Full delivery), routing, and how producer products are received and stored in warehouses, to name a few. The specific areas to focus on will depend on the results of the DP Assessments in Module 3.

Module 6 - Finance & Back Office

Put simply, we must ensure that our DPs are financially secure and have the financial resources to support growth in our business. We simply cannot afford to partner with financially vulnerable enterprises. Here we are focusing on the building blocks of FMCG DP success. We need to have a partner with a good business planning process, one who sets targets and is used to achieving and exceeding them. We need to have a partner who can measure and assess credit risk, a DP who is in strong financial health, and has the resources to invest for growth. We need a partner who measures and reviews performance and shares this data. To do all this, any partner needs to have the right systems in place to capture, measure, drill down and analyse the data.

Module 7 - Sales Management

https://supplychain.enchange.com/fmcg-essentials-to-improve-distributor-sales-rtm-executionNow we need to look externally at how the DPs can deliver exellence in RtM execution and how we can help them to do so. The specific areas that we will focus on for each DP will very much depend on what was found out during the DP Assessments. The characteristics of a DP with Excellence in Sales Execution should include a well-trained Field Team, which must have an appropriate structure, decent staff retention, a good reward programme and an ability to gain new business. They must have an effective Trade Toolkit, equipped for outlet activation, for example, and with clear rules in place.

The DP should understand their outlets universe, ideally by conducting a Trade Census, segment the outlets based on Producer agreed criteria, and divide them into effective sales territories, with appropriate routes and call frequency. DPs must have Scorecards in place measuring KPIs for each DP sales rep/territory, which support the overall key strategic, tactical, and operational requirements of the Producer, including investment and margin (front & back). The DPs must demonstrate a drive for Continuous Improvement, through participation in, and delivery of, relevant training programmes, as well as a desire for sharing of data and market intelligence.

Module 8 – Part 1 Joint Business Plan (JBP) and Part 2 Joint Action Plan (JAP)

Now we must bring all the above together as we commence execution. We combine 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 these 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.

The JBP and JAP represent the gold standard of RtM execution. These are the standards that we should aim for as RtM practitioners. However, we don’t always live in a gold standard world. Having worked in Asia, Africa, the US, Eastern Europe and across Western Europe, I can say that no two distributors are the same. 

However, having brought dozens of DPs and clients through this Distributor Partner (DP) Development Programme, no matter what base they have started from, no matter where they are in the world, there is always an improvement in sales, execution, relationship, etc., that can be achieved. That improvement is nearly always significant. Regardless, it is always worth doing and normally pays back tenfold. 

If you believe that this programme is too detailed or covers too many areas, remember this, for RtM Excellence, it is better to be 80% improved than 100% I just didn’t try.

What should you do now?

Further help and resources


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

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