Supply Chain Blog

Break Down Departmental Silos Through Functional Integration for Route to Market Success

Posted by Ross Marie on Fri, Feb 15, 2019

The FMCG business is like a team sport. There are sales people sent into the field, to sell more products and beat their targets. There are players put on the sports field, charged with scoring points and winning the game. In both scenarios, if the people behind the scenes don’t do their job, those on the front line can’t deliver. It’s that simple.

functional-integration-rtm

Route to Market (RtM) professionals need inventory to fulfill orders, budgets to execute Key Account agreements, Point of Sale (POS) material to help increase sales, devices to record information, take orders and communicate, vehicles to visit customers, etc. The RtM/Sales or TM&D (Trade Marketing & Distribution) function must have clear and open two-way communication with all the other business functions. Functional Integration is a cornerstone to any successful RtM strategy.

My first lesson in the need for Functional Integration came when I was a Sales Rep for an FMCG multinational in the late 1990’s. The Marketing Department was doing a big push for one specific brand. They sent every rep a large package of POS material with clear instructions to place it in retail. The main POS material was a cash mat. Cash mats are designed to be placed next to the till, on the counter between the retailer and the consumer, and are where the retailer can place notes and coins as part of the consumers change from their order. They protect the retailers counter, make it easier for the consumer to pick up their change and they can provide a great opportunity to communicate with the consumer at the actual point of purchase.

These particular cash mats were beautiful pieces of POS material. They were very high quality, the message they communicated was very clear and they were also very durable. But there was one big problem. They didn’t fit into the available space in the retail stores. There had been no interaction, consultation, or communication between the RtM function and the marketing function during their development. A lot of money could have been saved if there had been proper Functional Integration.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 18 steps of my model. The focus of this post is Step 19 – ‘Functional Integration’.

Here are some examples of questions you can ask under Step 19 – Functional Integration:

  1. Based on the RtM Review in Step 1, what are the other business functions that your RtM, Sales or TM&D department currently interacts with? Have you explicitly identified them?
  2. Are there currently ‘rules of engagement’ for the different interactions with the other functions, or has it just evolved?
  3. For each business function or department, to what extent have we identified the nature of the integration required? For example, what key processes are involved? What are the related process inputs and outputs? Have levels of inter-departmental performance been defined? Are these levels of performance explicit? If so, how has performance been defined? Do internal Service Level Agreements (SLAs) exist, for example?
  4. Based on the new RtM Strategy in Step 5, how will the functional interaction with the RtM department and other functions change? What new rules of engagement need to be established? How will this be measured?
  5. What is the nature of the integration with Supply Chain? How do we feed information into the Supply Chain Department? For example, who decides what the demand will be over the next few months? What are the implications for the Logistics Department? Has the RtM Department fed into these processes?
  6. Do we have an S&OP (Sales & Operational Planning) Process? Has the RtM Department fully bought into this process? Are we represented in it? Is it clear what information we should feed into this process? For example, what is the role of the RtM Department in the Demand Review Process?
  7. Who receives our information on Out of Stocks in the field? What actions are taken based on this? How do we prevent them? What help do we need to do this?
  8. Do we accept product returns from customers? If so, who manages this process and what departments interact with this?
  9. How does the RtM department interact with the Brand Marketing department? Has this process been formalised? How often do representatives from the marketing department attend trade field visits?
  10. Does the RtM Department feed into Point of Sale (POS) material development? If not, why not?
  11. Do we place any promotional trade assents in the field? Who manages this process? Who provides feedback on their applicability and usefulness? Who tracks and manages them as assets of the business? What is our process for this and which function is responsible?
  12. How does the RtM Department interact with the Finance Department? Who sets prices, margins, budgets and discounts within the RtM department? How does Finance fit in with this? How do we currently feed trade information into Finance? How will this change under any new RtM Strategy?
  13. How do we open new accounts with customers? Are any other departments involved? Who sets payments terms? Do we offer credit? Who then sets individual customer credit limits? How does the RtM department feed information into this?
  14. How do we collect payment from our customers? Is it all electronic? Do we accept any other forms of payment? Do we accept cash? What are the processes and procedures for this? Which departments are involved? Do we have a Security or Health & Safety Department or Function? Is this part of HR? How do we interact with them?
  15. How do we interact with the IT department? Do we have a CRM solution or hand-held device that is used to take orders and record market data? Who maintains this? Who feeds them information about its real-world application and actual issues?
  16. How does the RtM Department interact with the HR Department? For example, do we have a system for performance appraisals? Who is responsible for RtM Training & Development? Who manages performance appraisals? How do receive the company policies & procedures? How can or do we feedback on them?
  17. Who manages our company equipment, like cars, phones, tablets, laptops, uniforms, etc? How do we provide feedback on these? To whom?
  18. How does the RtM Department interact with the corporate/public affairs or PR department? For example, how often do they make trade visits? How do we feed information to them? How can they speak publicly or address key issues about our products or communications, without speaking to the department who deals with our customers?
  19. How open are we as a department? Do we have regular conferences and regular meetings? Do we invite other departments? Do we actively manage our relationship with other departments? Do we try to attend other departments key meetings?
  20. What is our plan to on board the other company functions to our new approach to RtM? Have we consulted them throughout the process to accelerate buy in? Have we looked at which specific areas within the 20 Steps to RtM Excellence will impact on which specific functions?
  21. What is the overall strategy to ensure the RtM Function is integrated with all necessary departments and functions across the organisation?

I hope you find this useful, and any views and comments are most welcome.

Next, I will cover the final step, Step 20 ‘Culture & Leadership’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, SKU, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, S&OP, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Inventory Management & Stock Control, Information, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Improve Your Key Account Management Approach with these Vital Tips for Route to Market Success

Posted by Ross Marie on Thu, Jan 31, 2019

Key Account Management (KAM) is how Route to Market (RtM) leaders effectively and efficiently manage the relationship with specific and strategic customers, or customer groupings, to deliver on RtM targets.

 

key-account-management-rtm-3-webCustomers are classified as Key Accounts based on a variety of reasons. For example, it could be because they have a large numbers of retail outlets all branded under the one name. It could be that they operate several bars and restaurants, that are of key importance for delivering your RtM Targets. Your wider organisation may also mandate that specific global customers are treated in a certain way. There could also be dozens of market specific reasons why you might assign a customer(s) as a Key Account.

Regardless of why a customer is assigned to KAM, the important issue is, how they are managed, how the relationship is nourished, how their growth plans are implemented and how they are serviced across our organisation. The central element to KAM is relationship.

Success in KAM Management requires careful consideration, especially if you are either new to the concept of KAM, or if you feel your organisation is not doing it right.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 16 steps of my model. The focus of this post is Step 17 ‘Key Account Management (KAM)’.

Here are some examples of questions you can ask when reviewing, developing or building your Key Account Management (KAM) department or approach:

  1. Based on the RtM Strategy chosen on Step 5 and the Channel Classification in Step 7, what is our desired approach to Key Account Management?
  2. On what basis do we determine that a customer falls into the KAM arena? Is this based on size, current performance, volume, uniformity, number of outlets, ownership of outlets, location of outlets, strategic importance, etc.?
  3. If the customer has a KAM classification in other markets that we or our parent company operate in, does that have a bearing on our local classification?
  4. Will we have different levels of KAM classification? For example, should we assign the label of ‘National Accounts’ to our larger national hypermarket retailers, who have a presence across our market? Or might we assign the label of ‘Key Accounts’ to some regional larger retailers who have multiple stores in one area of our market?
  5. Where does Channel Management fit into KAM? Will we classify our business or customers into Modern Trade and Traditional or General Trade? Will KAM sit into one or both of these channels?
  6. What proportion of our overall business is Key Accounts (as opposed to the Traditional or General Trade)? How to we expect this proportion to develop in the coming years? How will this shape our approach to KAM?
  7. Will there be a RtM manager who has overall responsibility for Key Accounts regardless of which Channel, Area or Region the Key Account is in?
  8. What might this RtM manager have responsibility for? For example, would they manage and be responsible for volume, display, product range, training, strategic approach, relationship, negotiation, reporting, targeting, budgets, etc.)?
  9. Based on our Competitor Analysis in Step 4, how does our competition view KAM? Are there any learnings for us in their approach, or does their approach change our own?
  10. Do we treat all Channels and/or Key Accounts in the same way? For example, will the distributors and cash and carry’s or wholesalers in one region of the country be managed differently than in another? Will this be reflected in the structure? Would the distributors in the North of country be managed by a Key Account Manager who reports to a RtM Manager with responsibility for the North?
  11. Are we clear about the types of individuals who will manage or become Key Account Managers? Do we have specific criteria? What is it? Have we properly weighted the importance of relationship building in looking at individuals?
  12. Where does Key Account Management sit in the organisation structure? What is the relationship between KAM and the RtM field force who potentially manage and call on the individual outlets? How is communication managed between the two? In practice, do they really talk to each other or limit themselves to mandated reporting and communication?
  13. Are we clear about the levels of importance of each channel or Key Account? Have we taken into account all RtM Targets, including strategic importance to us? Have we looked at this importance/power angle from the side of the customer? How important or necessary are we to them? How does this feed into negotiation?
  14. Do we have detailed Key Account Plans for each account? Does this clearly detail what our objectives and targets are for each account? Have we worked with the account in developing these? Have we worked with the internal stakeholders who will and can influence these? Do we simply want engagement with the account, or partnership, or preferred partnership, or exclusivity? Have we looked at previous years plans and taken learnings from them? Do we include what our individual account’s future plans or aspirations are?
  15. Do our Key Account Plans cover all areas of engagement between our two organisations, for example top to top meetings, Key Account reviews, wider RtM team interaction at customer level (e.g. retail or distributor), corporate entertainment/relationship building, order placement, deliveries, feedback on promotions, information sharing (e.g. sales/EPOS data), authority/empowerment, invoicing, seasonality factors, etc.?
  16. What is our approach to negotiating Key Account Agreements? When will they be negotiated? Who will be in the room from our side? Who has the authority to negotiate and to agree?
  17. What happens in the event of a stalemate or breakdown during Key Account agreement negotiation? What will the layers of escalation be? What is our approach to negotiation training?
  18. Do we have a full negotiation strategy per Key Account covering all elements of the agreement and estimated potential scenarios? Has this been agreed and signed off by all stakeholders?
  19. How are we currently rewarding or incentivising Key Accounts? What is the current reward mechanism, e.g. rebate, discount, payment etc.? Is it based on volume or revenue or profit or other RtM targets? What is the potential role of Third Degree Partnerships (3DPs) here?
  20. What role does margin play in our relationship with our Key Accounts? Do we have the control to set it? What are the internal and/or external factors that may affect our ability to set our pricing and margins?
  21. How do we manage and control Key Account investment? Who manages this? How do we determine levels of investment per Key Account?
  22. What payment terms do we operate across our RtM? How do payment terms fit into KAM? Do we have specific payment term targets, by account, by region, by channel, by customer? Do we have the mechanisms in place to facilitate the different forms of electronic payment? Do we have minimum acceptable payment standards? What is our overall approach to payment terms in relation to KAM?
  23. Which of our Channels and Key Accounts are growing? Which are declining? How is this reflected in our overall strategic and individual approach to KAM?
  24. How do we capture learnings across KAM? Do we have a process for capturing success in one account and replicating it in another?
  25. What is our overall approach to KAM? What is our implementation plan for rolling this out?

I hope you find this useful, and any views and comments are most welcome.

Next, I will cover Step 18 ‘Training & Upgrading’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, SKU, Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, S&OP, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Compliance, Information, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Beat the FMCG Competition with an Outstanding Distributor Partnership Programme

Posted by Ross Marie on Fri, Jan 18, 2019

A Distributor Partnership Programme, if designed and implemented correctly, can be one of the most powerful tools in the Route to Market (RtM) armory for delivering sales growth.

distributor-partnership-programme-webA Distributor Partnership Programme sets out which individual distributors or distribution network(s) you will work with. It details, ideally within individual simple Distributor Development Plans, how you will work with them, what specific areas they need to improve on, exactly what they need to deliver and what is in it for them. All of this will be done with the back drop of the specific market you operate in, set against agreed timelines, and the programme must map out a win/win for all sides.

The Distributor Partnership Programme works best as part of an overall RtM improvement plan, but at the very least needs to be coupled with Distributor Assessments, which I covered in an earlier post. Once we have assessed what we already have/what is out there, we can then decide who, and on what basis, we want to partner.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 14 steps of my model. The focus of this post is Step 15 ‘Distributor Partnership Programme’.

Here are some examples of questions you can ask under Step 15 ‘Distributor Partnership Programme’:

  1. Based on the RtM Strategy & the 4D Approach chosen in Step 5, what is our DIME approach for our Route to Market?
  2. What is a reasonable expectation of our distributors? Have we defined exactly what this is in terms of process and performance? Have we included sales processes, logistics performance and back office performance? How do we measure this?
  3. Based on the Distributor Assessment in Step 3, how many of our current distributors do we want to continue to work with? What is the minimal size of a viable distributor, including the ability to fund any required investment? What is the optimum number of distributors? What is the current contractual arrangement with our current distributors?
  4. How many of our current distributors are we looking to end our relationship with? Upon what basis can we make such a judgement? What is the current contractual arrangement with them? What is our approach and plan for ending this relationship? Will there be financial or other implications to ending any relationships?
  5. Have we conducted a risk and continuity of supply assessment? Have we included factors such as resource (specifically cost), product supply, politics, competition, timing, future relationship, perception, etc.?
  6. Will we look to engage with any new distributors? What criteria will we use to make these decisions? Who are these new distributors? What is our engagement plan with them?
  7. Are we currently operating on an exclusive distribution system? If not, is that something we have identified as a priority going forward? If not, how will we manage potential conflicts that could arise?
  8. Have we considered the output of our Competitor Analysis in Step 4? What impact will this have on, for example, looking at distributor exclusivity, starting and ending relationships, distributor development plans, etc.?
  9. Based on the Distributor Assessment in Step 3, what does our ideal or model distributor look like? What criteria are we using to create this ideal distributor? Have we taken local geographic, technological, political and economic conditions and nuances into account? What does the Balance Sheet of a Model Distributor look like?
  10. Based our RtM targets identified in Step 5, and looking across all of our distributors, existing and new, what will the Distributor Development Plans of each distributor look like?
  11. Will the Distributor Development Plans include areas of, for example, geographic coverage, number of vehicles, availability of data, inventory levels, reporting, calls per day, steps of the call, route planning, flexibility (e.g. new brand launches), brand distribution criteria, point of sale material placement, planogramming, display, brand dialogue, promotions, pricing, product returns/complaints, retailer engagement, to name a few?
  12. Out of these Distributor Development Plans, do we have a simple specific strategy for each distributor – e.g. defend / increase market share, improve selling processes, develop or expand van selling etc.?
  13. What will our partnership programme look like? What criteria will we use and how will this be measured? Will we categorise distributors into different performance categories? If so, what will these categories look like, how many will we have and how will this be measured?
  14. What will the rewards in the partnership programme be? Will we use a discount system, a rebate system, a prize-based system, a combination of these, etc.?
  15. Have we considered budgetary factors? Will this be self-financing through volume gains? Have we mapped out the success of different scenarios to fully uncover maximum cost exposure?
  16. Will we differentiate distributors based on, for example, size, volume, market share, reach, coverage, reporting, data, access, etc.?
  17. Will this be a national programme? Will we need a pilot in one region for example? Will we allow geographic nuances and differences to be considered? Will here be any effect on headcount in the RtM team to support the programme? Will we need specific Distributor Development roles, or will these activities be accommodated in BAU?
  18. What will the training programme be for our key account and RtM team? What is our roll out plan for this?
  19. Have we developed new SLAs or key account agreements to take account of the above?
  20. All Distributor Programmes should increase sales and market sharer, so what expectations do we have for our programme?
  21. Based on all the above, what is the implementation & engagement plan for the Distributor Partnership Programme?

I hope you find this useful, as always views and comments are welcome. Next, I will cover Step 16 ‘Third Degree Partnerships (3DPs)’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, SKU, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, Logistics Management, Sales, Distribution, RTM Assessment Tool, Inventory Management & Stock Control, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Realise Route to Market Excellence with a First-Class Trade Incentive Programme

Posted by Ross Marie on Wed, Dec 19, 2018

What are Trade Incentive Programmes (TIPs)? TIPs are the mechanisms that you put in place to incentivise and encourage your trade partners (e.g. retail, distributor, cash & carry, wholesale, Horeca) to engage with and deliver on your Trade Marketing & Distribution (TM&D) and/or Route to Market (RtM) objectives.

trade-incentive-programme-for-rtm-success

TIPs can include what may traditionally be associated with key account agreements, like sales volume discounts, or sales volume rebates. But they should also encompass so much more.

Whilst sales volume may be one of the most important KPIs, incentivising on it alone, or being too reliant upon it, may be counterproductive in the long term. For example, we may encourage certain customers to forward buy, thus bringing sales from next month or next period into this one, and therefore costing us more now, in terms of higher incentives, poor productivity and increased overall supply chain costs.

But focusing our TIPs on the individual trade marketing objectives (the building blocks of sales volume), can really help us to engage with and become partners of the FMCG trade, both with the owners, and in many cases more importantly, their staff.

A well thought out TIP can start to create real trade partnership with our company, encouraging and motivating those who want to work with us for mutual success, rather than customers who simply expect a discount.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 12 steps of my model. The focus of this post is Step 13 ‘Trade Incentive Programme (TIPs)’.

Here are some examples of questions you can ask under Step 13 ‘Trade Incentive Programme (TIPs)’:

  1. Based on the RtM Review in Step 1, what are the current TIPs we have in place? What have their results been?
  2. To what extent does our TIP accurately reflect and support our channel strategy?
  3. Who are the current TIPs focused on? Who within the trade are they incentivising?
  4. Are the current TIPs focused on, for example, the owners of a retail chain, on the managers or operators of the retail stores or do they focus on the staff?
  5. Do we operate different TIPs based on whether the outlet is owner operated or managed by the owner’s staff?
  6. Do we have a different TIP approach based on channel? If so, what is that approach and how do they differ?
  7. What are the current TIPs trying to deliver? Are they based on volume, on achieving a target, on running promotions, on brand knowledge, on brand range, on product presentation, on pricing, on display, on exclusivity, on anything else?
  8. What incentives do we offer in these TIPs? Have we had the same incentives in place for a long time? Have we asked the target audience if they have any views on our incentives?
  9. What TIPs do our competition use? To what extent have they achieved success with them? Is there anything we can learn from their TIPs?
  10. How are our TIPs measured? What does success look like? How do we measure their usage by the TM&D team, their implementation, their success? Do we use mystery shopper programmes?
  11. Do we receive data from our trade partners on the implementation and results of TIPs? Is the receiving of data a condition of the current TIP?
  12. Who coordinates TIPs? Is there a centralised approach? Do we have a policy and an agreed process for TIPs? Do we have a key accounts department? Do they have control or oversite of TIPs or do they keep focus to key account agreements and trading terms? Where do these cross over and how is this managed?
  13. Who implements TIPs? Is it done centrally at HQ, is it done by channel, by key account, by region?
  14. Can a trade marketing representative or territory manager implement and run TIPs in their own patch? If so, who coordinates that approach?
  15. Are TIPs used to create and foster a culture of empowerment across our TM&D/RtM teams? Are we capturing the learning from TIP successes in one geography to allow us to roll this out to others?
  16. Do we have the ability to test market our TIPs in specific geographies?
  17. Who holds the budget for TIPs? How is it controlled and managed? Is it one central budget or, for example, split up by geography or by channel?
  18. Can a TIP be run at a local level in a modern trade outlet where there is a central key account approach? If not, then why not? If yes, then how is this managed? What is the link to key accounts? Is there an agreed process and communication set up?
  19. How does the above inform our approach to future TIPs? What is our overall approach to TIPs and their management?
  20. What will our TIP training needs be and how will this be translated into our training programme?

I hope you find this useful, as always views and comments are welcome. Next, I will cover Step 14 ‘Technology’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, Sales, Distribution, RTM Assessment Tool, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Empowering Sales People with the Right Trade Tool Kit Can be Spectacular

Posted by Ross Marie on Fri, Dec 14, 2018

Firstly, what are Trade Tool Kits? They are the specific commercial tools and materials that we provide to our Trade Marketing & Distribution/Route to Market (RtM) teams to help get their jobs done and to deliver on their targets. They are the trade incentive schemes, CRM systems, planograms, promotions, budgets, pricing initiatives, trade samples, etc. that they will implement, create, manage and report on.

fmcg-sales-toolkit-web

They are shared across the Trade Marketing & Distribution Team (TM&D Team). The TM&D Team in this case can include the Trade Marketing, Distribution, Sales, Merchandising, Promotions, Horeca, Events, Key Account, Customer Service and Telemarketing Representatives.

Much of the focus of Trade Tool Kits will be around providing “stuff” that the TM&D Team can “put” in the field to increase sales. But Trade Tool Kits can be so much more. They can effectively harness the creative power of every member of the TM&D Team by empowering them to look at, and examine, what they believe might work for their customers in their geography. Trade Tool Kits can be used to foster a culture where we believe in our TM&D Team and want them to contribute. I have seen this first hand and it can be amazing. This does not take away from the ABCs of what a Sales Rep should and must do, but maybe they can do more?

In summary, Trade Tool Kits can be the difference between an average TM&D Team and a Great one.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 11 steps of my model. The focus of this post is Step 12, ‘Trade Tool Kit’.

Here are some examples of questions you can ask under Step 12, ‘Trade Tool Kit’:

  1. Based on the RtM Review in Step 1, what are the current Trade Tool Kits we have in place?
  2. Are the TM&D team empowered to conduct their own promotions & trade incentive programmes?
  3. Does the TM&D team have a specific budget for in field promotions or events? How is the monitored and measured? Has training been given? How is success captured and replicated?
  4. Can the TM&D team run local territory incentives with selected customers? Do they have guidelines or training for this?
  5. Does the TM&D team launch, manage and/or implement pricing initiatives? If so, what controls are in place for this? Can they be done on a territory/area or regional basis or is this a national implementation? What materials are provided to the TM&D team for this and how are they managed and tracked?
  6. Do we differentiate trade engagement with owners from trade engagement with staff or operators? Do we see any difference? Have we trained our TM&D team on trade engagement?
  7. What Point of Sale (POS) material does the TM&D team have to place? Do they have guidelines on placement, duration, how to record placement, how to record effectiveness? Are we in regular contact with colleagues in Marketing to refresh and provide feedback on POS material?
  8. Does the TM&D team have or use planograms? Have they been trained on these? How to they monitor or record instore display? How often are they updated?
  9. What is the order capture method? Do they use an electronic method? What tools have the TM&D team been given to monitor their accounts? Are these tools well understood?
  10. Does the TM&D team have a CRM solution? Is this common across all roles? Does management have real time access to the CRM tool, its data, and its ability to set and monitor tasks?
  11. Does the TM&D team have laptops or tablets for use in the field? Does the TM&D team have access to customer data with the ability to conduct business and performance reviews? Have they been trained to do this? Is this a role requirement, is it encouraged, or does it fall out of scope?
  12. Does more than one member of the TM&D team share responsibility for a customer or group of customers? If so, what are the rules or guidelines in place for this? How does this effect the use of trade tool kits?
  13. Who in the TM&D team deals with customer complaints? How do we capture and monitor complaints? Can we report on resolution?
  14. Who in the TM&D team opens new accounts? Is there a clear process and system for this?
  15. How do credit limits get set for each customer? What tools are in place to monitor and inform the TM&D team?
  16. Does the TM&D team get involved in invoicing or payment collection? Do we accept cash? If so, what is our process for this and how effective are controls? Do we provide tools for this?
  17. Do we provide product samples to the TM&D team? Is this on a regular basis? How are they monitored or controlled? Are the TM&D team given additional samples at any time, e.g. around specific promotions or brand launches or events? If so, how are these monitored?
  18. Does the TM&D team accept, manage or control product returns? If so, what is the system in place and what are the tools for doing this? What is its effectiveness?
  19. Do the TM&D team place promotional assets and /or merchandising material in the field, e.g. display units, fridges, coolers, electronic displays, branded furniture or items, etc.? If so, how are they managed, tracked and recorded?
  20. What is your overall approach to trade tool kit management?

I hope you find this useful, any views and comments are welcome. Next week I will cover Step 13 ‘Trade Incentive Programme (TIPs)’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, Sales, Distribution, RTM Assessment Tool, Order to Cash, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Take Ownership of Channel Classification for a Killer Route to Market Strategy

Posted by Ross Marie on Fri, Nov 09, 2018

Let’s start at the beginning. When we talk about Channels, we are referring to channels of distribution to get products from a manufacturer to a consumer or customer. There are many ways to achieve distribution, e.g. direct to consumers (e.g. online, mail order), through retailers, through wholesalers then retailers, through wholesalers then cash & carry’s and then retailers, through other types of intermediaries/agents, and the list goes on and on.

channel-classificationFor consumer goods, when we discuss Channel Classification, we are talking about identifying all potential and possible routes to the consumer, and dividing them up into homogeneous groupings, often based on physical format. The main benefit of doing this is so that we can effectively manage, resource and measure performance of these channels to achieve our RtM goals.

For example, an FMCG company may service the retail outlets across a country through 3 main channels, Grocery, Convenience and Horeca (Hotels, Restaurants & Cafe's/Catering). The channels may be further split into sub-channels – e.g. Grocery could be split into Discounter, Hypermarket, Supermarket, etc. This is mainly based on the format of the stores and who owns them. Channel Classification does not generally take into account outlet specific criteria such as volume, location, consumer profile, footfall, opening hours, engagement opportunity etc., for this we need to look at Outlet Classification.

Channels of distribution can vary significantly depending on sector. For the soft drinks, confectionery or tobacco industries, the “Vending Channel” could be a significant source of revenue and focus but may not even be on the radar for other sectors.

Here are some examples of questions you can ask when looking at Channel Classification:

  1. What are all the potential and possible channels of distribution that you can use to get product to your consumers or customers?
  2. How do you currently segment your universe and classify channels and sub-channels?
  3. Which channels do you currently focus on?
  4. Which channels and sub-channels do you not focus on or are you not present in? What is the reason for this?
  5. Are you measuring the performance of your current channels and sub-channels?
  6. What is the current channel performance based on volume, share, brand distribution, display, range, TM&D opportunities, etc.?
  7. Which channels have the most growth potential?
  8. How does the previously reviewed Consumer Behaviour & Trends impact on future channels?
  9. To what extent are you using or focusing on the more ‘traditional’ channels in your industry? For Example: Modern Trade, Traditional Trade, General Trade, Online, Digital, Direct Sales, Key Accounts, Wholesale, Cash & Carry, Warehouse, Grocery, Discounter, Convenience, Mom & Pop, Pharmacy, Organised, Independent, Horeca, Nightlife, Hypermarket, Supermarket, Petrol, Kiosks, Open Windows, Street Vendor, Self Service, Counter Stores, Vending, On Trade, Off Trade, etc.
  10. Are there any potential niche or alternative channels you could be targeting?
  11. Are you looking at direct to consumer options, e.g. mail order, telesales, online? Are these relevant in your field?
  12. What approach are you taking to digital and e-Channels?
  13. Will you look to target specific activities or resources at the different potential channels?
  14. How will you resource each channel in future with people and money vs how you currently operate?
  15. Will you have channel managers and how will responsibility be shared if channels cut across regional geography splits?
  16. Which channels offer the best growth potential?
  17. Which channels offer the best access to current and/or potential customers or consumers?
  18. Which channels offer the best TM&D opportunities?
  19. Based on your Competitor Analysis (Step 4 of the 20 Steps Model), how does your current and potential future set up compare?
  20. What are the agreed target channels, resource requirements and training needs?

This post is part of my blog series on the 20 Steps to Route to Market Excellence model. The model is designed to give FMCG managers a step by step guide to building or reviewing their RtM strategy to maximise growth opportunities. This post focuses on Step 7 ‘Channel Classification’. You can read about the previous steps here.

I hope you find this useful, and I welcome any views and comments below. Next week I will cover Step 8 ‘Territory Planning’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, Brewing & Beverages, FMCG, Route to Market, Traditional Trade, Sales, Distribution, RTM Assessment Tool, Retail, RTM, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

10 Top Tips To Tip-Top Customer Service in FMCG, Drinks & Pharma

Posted by Dave Jordan on Mon, Aug 06, 2018

Do FMCG, Drinks & Pharma Companies delude themselves on Customer Service? I think some may well be doing this and may or may not know it! Whatever service related KPI you measure, the KPI is designed to asses how you are performing both internally and at a retailer or outlet level, against peers.

Customer service improvementThere are many ways of measuring the performance including OTIF, CSLM, CCF and CCFOT amongst many others. Essentially you are measuring how much of the right stuff you delivered to the right place at the right time. Importantly, it is not value based – you might measure that internally for monthly progress monitoring and sales bonuses but it is irrelevant for service measures.

Common errors in Customer Service measurement and management:

1. Service should be measured per SKU thus avoiding the possibility of hiding poor performance in one area with exceptional performance in another. Measuring by SKU allows you to hold the right people accountable and ensure resources are appropriately applied.

2. Are you measuring against what the customer ordered or what your team said he could order? This is a common error particularly when order capture is in the hands of staff rewarded via value based sales incentives - “We don’t have that but you can have some extra of this”. You need to see the raw, unconstrained demand from your customers to really understand what they asked for and what they actually received. There is no problem with substituting products with customer agreement as this maintains the relationship and should result in sales but this must be a visible process.

3. Yes, of course the customer may ask for unreasonable amounts of a certain standard SKU or promotion pack but hiding the “data blip” is not the answer. Addressing the issue with some collaborative planning would help both parties. For some reason they asked for a huge shipment; find out why and be more ably prepared to service the demand next time.

4. Use an ERP that automatically allows you to allocate reason codes for service failures and get them investigated promptly. Focus on the big wins using the 80/20 principle; don’t spend too much time finding out why you did not deliver 5 boxes of washing powder and do spend time on the failure to deliver large volumes of high value beauty products.

5. Get your service level on the agenda of the top table in the company. Your service level is a function of every single person in the company and is a reflection of how well you are performing in the market. This means the Marketing guy and the HR guy and others must be involved. Celebrate successes widely and noisily.

6. Do you have a Customer Service department led by a talented individual who is graded as highly as peers within the company? CS is a very important function and it should enjoy equality of importance within the business. Also, CS is not just about taking orders and printing invoices as customers deserve the opportunity to talk to a real human being (avoid answer phones!) about their problems and concerns. Small issues in invoice accuracy which can delay payments of thousands of Euros can be sorted out by knowledgeable and concerned staff motivated to help.

7. Make the CS measure highly visible around the company – everyone should be aware of the overall CS their company is offering to customers. Don’t fall into the trap of accepting low or “sand-bagged” targets – you are likely to achieve them and that gets you precisely nowhere. If you deliver to Retailer platforms you might wish to check where your measure is recorded.

8. Make cross functional visits to customers - they need to see people other than sales reps. Not every day, of course but an annual review with all interested parties present can smooth relationships and assist in times of difficulty.

9. Agree Service Level Agreements to ensure both parties know exactly what is expected as providers or receivers of service. The SLA should contain a few KPIs which allow you to understand the current state and drivers of CS.

10. Celebrate successes both internally and when appropriate, with customers. You need to maintain a rigorous approach to business principles but an above the board dinner does no harm.

Customer Service = Satisfied Customers = Sales = Pay/Bonus = Growth = Satisfied & Retained Staff

 

Tags: Customer service, Brewing & Beverages, FMCG, Logistics Service Provider, Dave Jordan, Pharma, KPI, Logistics Management

FMCG Co-packing and Re-packing Management

Posted by Dave Jordan on Mon, Jul 30, 2018
Whether you call it co-packing or re-packing this involves the further manipulation of a previously finished and complete SKU. Look around the shelves and the evidence of extra expense and work is displayed by special stickers, multi-packs and banded promotions amongst many others. The impact this has on your Supply Chain is potentially huge.

Wincanton_Copacking_SmallI will park the question of the value (or waste) of these activities for another day but where is the best place to carry out such operations? When you consider that some blue-chip FMCG producers co-pack/re-pack a majority of the volume coming out of their factory gates you realise this is not a small issue. How many products carry the original bar code into consumer’s houses? Not many!

The best location for these operations?

1. At the producing factory? From an operating company (OPCO) perspective this provides the least complexity downstream in the chain. For factories seeking higher and higher efficiency and asset utilisation this can be nightmare for cost and complexity. Even if the factory is part of the same company many will refuse to entertain “abnormal” requests from sister operating companies.

If an SKU requires a label that can be applied online without affecting speed then you might be ok. However, anything like banding together 2 different SKUs is unlikely to get a positive response. In any event, the 2 promotion-bound SKUs may be produced in different factories, countries and even continents.

2. At the OPCO warehouse? The stock is certainly closer to the final market destination so this makes sense but there are drawbacks to what providers call “added value services”. Seldom is a third party logistics provider (3PLP) set up to operate what is essentially a mini factory. If promotional volumes are low then you can deal with them on an ad hoc basis but where levels are higher you need a factory mentality and facilities and this is not common in 3PLPs.

Stock control is vital and a good quality WMS with added value functionality is a must. Knowing what product is where requires meticulous attention to master data detail. What goes into a re-packing location will come out with a completely different bar code – chaos prevails otherwise.

You are essentially locked into your 3PLP and he may well take advantage of that when it comes to pricing the work. Get this wrong and you will suffer unexpected and rising costs, stock “shrinkage” and a resultant drop in Customer Service Level.

3. At a specialist 3rd party? They do exist and if they are set up well and sensibly staffed this can work. You can expect a professional service and a well managed operation. Quality and flexibility will be higher and costs can be keen as the assets are not dedicated to a single company. Such a 3rd party is likely to have a wider portfolio of promotional options available and will invest in plant against a sound business case.

Of course, the downsides frighten potential clients away. You have the added cost and hassle of moving stock in and out of your logistical 3PLP and the associated longer lead times.

4. At the point of purchase (POP)? No, not as crazy as this might sound. If you can manage to get the same unadulterated SKU from the factory gate to the shelf then you are very lucky and secondly, you probably operate a slick chain.

Obviously, you will not be able to carry out the full menu of promotion assembly and display but this route does provide a tactical advantage that can catch competitors napping. An unannounced special price sticker or “buy 1 get 1 free” (BOGOF) promotion can pay dividends. You need the cooperation of the retailer but when there is mutual benefit, why not?

A blend of all 4 sounds like quite a unique opportunity. What do you think?

CTA 3PLs in CEE 0.03 Small resized 600

Image credit: Wincanton

Tags: Customer service, FMCG, Logistics Service Provider, Dave Jordan, Manufacturing Footprint, Logistics Management

FMCG – Hunker down and find Supply Chain Analytics

Posted by Dave Jordan on Wed, Jun 06, 2018

Have you ever “hunkered down”? I remember being asked to hunker down during a business game training course many years ago and I had no idea what I was supposed to do. Eventually I had to ask as failing to follow the hunker downwards request appeared to be causing a bit of a problem for the American presenter.

This hunkering failure occurred during one of the many versions of the Beer Game in which I have taken part or delivered over the years. Anyone who has been involved with supply chain activities will probably have taken part in the Beer Game, or the Moussy Game as it is sometimes known in dry countries of the Middle East.

What does the beer game do? The rules are relatively simple and in summary, the overall objective is to meet consumer demand for cases of beer in a complex, extended supply chain while controlling unplanned expense on back orders and inventory. The game involves four overlapping and inter-dependent supply chains, i.e. source, make, distribution, and a retail outlet. There is a cost penalty for holding excess stock and any backlog unfulfilled orders.

Players rely on colleagues in the other departments to do the right things at the right time for the business but frustration soon surfaces. Usually, things do not go well and players feel frustrated because they are not getting the results they expect. Assumptions are made about consumer demand and erratic patterns emerge as backlogs mount and/or massive unnecessary inventory accumulates. It was at this stage in the game I was invited to “hunker down……….”.

Does that sound like your own supply chain – not the hunkering bit? Frustration is common between departments who all aim to do the right thing but only have the necessary data and information to do the right thing for their specific area of responsibility at that specific time. Even after careful consideration and informed debate, the real effect of an adjustment can only be seen in the future.

supply_chain_analytics_fmcg_inventory_performance.jpgIF - a big if -  nothing else changes and all assumptions are correct and accurate then there is a chance the desired effect will develop as predicted. However, life is not like that and certainly not supply chain life.

 

What can happen?

1. New launches kick-in and are successful, or perhaps not.

2. Competition by definition is designed to try and disrupt your plans.

3. The weather turns out rather different to the forecast and nobody wants beer.

4. The economy takes a turn up or down, again.

5. Factories, 3PLPs and distributors all suffer performance variability.

6. Customers and consumers change their needs and habits.

Etc., etc., etc., this list really is endless. Absolutely anything can happen to turn apparently sensible decisions into foolish, future forecast failure.

Hey, what about all that expensive IT we have? Doesn’t that help us understand what is going on and what is going to happen? No, not necessarily. Common supply chain IT tells us what has happened, what is happening, where and when but not precisely why an event happened or what will happen.

Subtle differences perhaps but to up your game you need to hunker down with Supply Chain Analytics to gain a full unexpurgated understanding of how changes you make today will impact the future and more importantly, how you can change that future.

Yes, you can change the future with a classy analytics tool.

Image courtesy of Enchange at Enchange.com

Tags: Customer service, FMCG, CEO, Inventory Management & Stock Control, Supply Chain Analytics, IT

An FMCG Success Story; Focus on customers and enjoy the consumer benefits

Posted by Dave Jordan on Mon, May 28, 2018

Once upon a time there was an FMCG company that I will refer to as “Foresight”. “Foresight” had spent many years and many Euros creating a slick inbound Supply Chain.

  • Top class global, regional and collaborative buying
  • Flexible manufacturing network
  • A state of the art ERP
  • Rigorous S&OP as the key business process

Slick inbound Supply ChainWith all those important boxes ticked they must be successful.....but they were not; not even close. In their peer group they were not number 1, top and bottom line growth was getting harder and harder. Throw in difficult economic conditions and the consumption of their product offering plummeted – double digit style. A large FMCG business and quite a few personal reputations were not looking pretty.

The problem was a surprising lack of focus at the customer end of the Supply Chain. Both International Key Accounts(IKA) and the Traditional Trade (TT) were being poorly serviced.

A lot of hard work upstream was being wasted through inefficiency and actually, ignorance. The situation had existed for a number of years but as the same malaise was common in the industry nobody could see the benefit or indeed the need for “getting ones act together”. “Last amongst equals” was hardly a motivating and compelling business proposition for an international big name.

Seeking external expert assistance “Foresight” started out on an adventure that would change the way they approached business at the customer end of the chain.

Customer Service.   This was something “Foresight” thought it was already good at providing but critical aspects were lacking:

  1. Customer Service responsibilities were fragmented and lacked clear and unambiguous leadership.
  2. “Customer Service personnel” had received no training in the subject - nobody really wanted to take responsibility.
  3. “Customer Service” was actually limited to invoice preparation. Proactive interaction with customers and problem solution were not in job descriptions.

This hardly projected an image of a caring “Foresight” and this was a huge risk considering the increasing power of the retailers…. 

Route To Market (RTM). “This is under control for TT and it seems to work”, however RTM was in the Sales black box and that box needed opening and shaking upside down vigorously!

  1. The Distributor RTM network had been in place for several years and was decaying. “Foresight” salesman interaction with Distributors was far from an open win-win relationship.
  2. Several Distributors were simply incapable and/or ill equipped to represent such a major company. Some actually did not wish to be involved.
  3. “Foresight” did not know on whom they could rely in their network or how large and obvious opportunities could be targeted.

In-house Sales bonuses were linked to sell-in and the remaining steps to the consumer were ignored at “Foresight” level and left in the hands of some indifferent distributors.

The cures were not simple or quick but they were effective and the payback was fast and sustained.

Customer Service Centre“Foresight” now operates a centralised Customer Service department looking after customer needs in a standardised and caring manner. Phone calls are answered by someone who wants to help and the customer is not passed from pillar to post trying to find someone interested in their problem. Retailers now see CS staff face to face as they proactively take steps to understand the needs of both sides of the partnership. The Retailer office was once “sales only” and off bounds to other departments but not now and the benefit is clear and significant.

In RTM, “Foresight” carried out a comprehensive assessment of their distributor network making evaluations of all aspects of each distributor’s organisation. The strengths and weaknesses of each partner are now known and understood. “Foresight” now knows where there is receiver capacity to take more responsibility and a leading role in market deployment. Similarly, they also know to tread carefully with a number of distributors who are struggling financially or simply not equipped to meet expectations. “Foresight's” efforts are now focused on those areas providing maximum opportunity and reward. The “one size fits all” approach has gone and distributors are managed as important partners.

In combination these changes have transformed the business and success has been quick to materialise.  “Foresight” enjoys a leading position in its sector while competitors scrap around trying to find growth that is clearly there but they cannot reach.

For “Foresight” at least, they really are able to live happily ever after!

 

Tags: Customer service, Brewing & Beverages, FMCG, Route to Market, Dave Jordan, Performance Improvement, Distribution