Supply Chain Blog

Essential Competitor Analysis Tips to Improve Route to Market Strategy and Execution in FMCG

Posted by Ross Marie on Thu, Oct 18, 2018

Over the last number of weeks, I have been writing a blog series on my 20 Steps to Route to Market Excellence model. You can read more about the the steps I have already discussed here. My goal is to provoke business leaders in the Fast Moving Consumer Goods (FMCG) community to really think about every element of their RtM, and to question and analyse the decisions they will make (building) or have already made (reviewing). Is my RtM Strategy and Execution as good as it could be?

The 20 Steps are split into 4 phases, Assessment, Strategy, Design and Implementation. This blog focuses on Step 4, ‘Competitor Analysis’, which is the last step in the Assessment Phase, and is the last step to take before consideration of your approach to RtM strategy.

competitor_analysis_enchangeBusiness leaders today fully understand the need for competitor analysis. It is a cornerstone of any business strategy, but as with all elements of RtM strategy, it is all about the detail. Understanding what your competitors are doing, why they are doing it, how they are doing it, what their results are, and why you are different, is key to any effective sales and distribution or RtM strategy.

Below are some of the questions you should ask under Step 4 – Competitor Analysis. An important consideration is the availability of open source, legally available and reliable data and information – e.g. internal company data, field force knowledge, trade publications, industry reports, trade visits, etc.:

  1. How are our direct competitors executing their RtM Strategy? What is their DIME approach to distribution (Direct, Indirect, Mix & Everything in between)?
  2. What are the differences between their RtM and ours?
  3. What are the differences in their performance and ours? What is their brand distribution, volume & share vs ours?
  4. What are the factors that we believe are behind that?
  5. How are other non-competing organisations, still in our sector, executing their RtM strategy?
  6. How is that different to mine and why?
  7. Are there elements from competitors’ operations that we should look to evaluate, either positive or negative?
  8. Are there lessons to be learnt or mistakes to be avoided?
  9. Looking across the 20 Steps, ask yourself, what is their approach to the 4D’s (Distribution, Display, Dialogue, Digital)
  10. How does the competition classify their outlets, or their channels? Do they use the traditional norms, or do they target specific avenues?
  11. How do they set up their territories and what is their trade structure and FTE’s?
  12. Do they get sales data from the trade and what metrics do they measure? Do we know how they target their field force?
  13. Do they have specific planograms and trade promotions? Are they active in POS placement?
  14. Do they have a trade incentive and /or engagement programme?
  15. What is their order capture method? How are they using technology in the field?
  16. How are they leveraging Digital (with regards to sales channels, order capture, engagement, promotions, trade incentives, trade marketing, etc.)?
  17. What do we know about competitor distributor activities? Who are they partnering with? Has this changed in the last 5 years? What is their distribution effectiveness?
  18. Do we see evidence of their successful initiatives in one area being rolled out to other territories?
  19. How do they manage key accounts? What is their overall relationship with the trade?

There are many questions you could ask here, and I would encourage you to think about which are the most relevant for your markets and industries. Give Competitor Analysis the importance it deserves to gain a well-rounded, in-depth knowledge of your competition and feed this into your RtM strategy.

I hope you find this helpful, and I appreciate your views and comments below. I will pick this up again next week, with Step 5 RtM Strategy & the 4D Approach. Please subscribe to the blog, you can do so on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, promotions, RTM, retail, RTM Assessment Tool, Distribution, Sales, Route to Market, FMCG

Distributor Assessment Essentials to Deliver Sales Growth and Improve RtM Strategy

Posted by Ross Marie on Fri, Oct 12, 2018

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.

fmcg-distributotor-assessmentThe 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:

  1. What is my current method of distribution?
  2. Is my distribution all ‘direct’ to my customers via my own owned or contracted distribution network?
  3. 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.?
  4. Is my distribution a mix of the above?
  5. Is this the way it has always been for us or did we change and if so why?
  6. Is my current point of sale coverage a function of my distribution model, or of my route to market strategy?
  7. What are the total number of distributors in my market?
  8. What is their coverage map? How many, if any, am I using? Why is this?
  9. 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?
  10. How regularly am I assessing the distribution network or the distributors?
  11. 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.
  12. 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?
  13. Where are the gaps in performance vs my ideal distribution network?
  14. What are the current levels of brand and SKU availability at the distributors retail level? What are the levels of out of stock?
  15. Is POS material available and visible at retail level? Are planograms being adhered to? What are the overall levels of display in retail?
  16. Is there an awareness of my brands at a retail level? Are trade engagement programs being run at retail level?
  17. 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.

Please subscribe to the blog, on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, retail, Logistics Service Provider, RTM Assessment Tool, Distribution, Performance Improvement, Traditional Trade, Route to Market, FMCG, SKU

Your Guide to Consumer & Market Mapping to Improve RtM Strategy for Sales Growth

Posted by Ross Marie on Thu, Oct 04, 2018

Welcome to Step 2 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 second step is ‘Consumer & Market Mapping’.  This is where you will review how you are currently reaching all the potential places from which your consumers are buying, to maximise sales growth.

consumer-market-mapping-rtmIn the consumer goods business, buying trends, brand distribution, product availability for consumers, and reach, are things managers live and die by. The measurement of these are also critical as they can be a key factor in understanding poor performance or in delivering success. For example, you may have a first-class Route to Market model for retail right across your market, but what if your consumers are moving to digital channels? Or your internal availability/brand distribution measure may show 95%+ on your system, but what if your RtM doesn’t cover all available points of sale?

This is where Step 2 of the 20 Steps model comes in. Here are some examples of questions you can ask under Step 2 – Consumer & Market Mapping:

  1. What are the current buying trends of my consumers?
  2. How have these trends shifted in recent years and do we expect them to change soon?
  3. What are the market specific geographic challenges and realities that we need to be aware of?
  4. What are the current number of available points of sale in my market?
  5. Do we have this data available? If so, at what level of detail and how is it maintained?
  6. Do we need to conduct an ‘Every Dealer Survey’ to map all the points of sale? What are the constraints involved? Could we do this internally or do we need to look externally?
  7. What is the split between direct vs indirect points of sale?
  8. How many points of sale are we reaching?
  9. What are the gaps and why has this happened? Was this a strategic decision or natural development?
  10. To what extent are there any specific ‘cost to serve’ issues?
  11. To what extent is the picture similar for our direct competitors and can we learn from them?
  12. What about the picture for other companies who do not compete with us in our sector?
  13. What is the population spread of consumers in relation to our coverage of points of sale?
  14. What percentage (best estimate) of the target consumers are we reaching?
  15. What are the key battlegrounds and must win areas for the market?
  16. Where are our gaps in relation to this and how are we going to bridge them?
As with each of the 20 Steps, the key is getting into the detail, getting behind the data and understanding the actual reality of your company’s marketplace and not just your own historical view of it.

Getting these foundation steps right in the Assessment phase of the 20 Steps to RtM Excellence can be the difference between beating or missing those sales targets.

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 3 Distributor Assessment in my next post.

Please subscribe to the blog, you can do so on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

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

Fashion Retailers: Is inventory eating into your profits? (It is…)

Posted by Dave Jordan on Wed, Aug 31, 2016

I touched on the problem of expanding UK waistlines a few blogs ago and the topic popped up again recently when I was out and about shopping for clothes – no, not me. This is not as regular an event as it may be for senior management but due to the imminent arrival of a few dry and summery days, I was in need of new shorts and T-shirts.

Nothing special or posy, just bog-standard items that do not have some sort of advertising logo blazoned across for which I receive no payment.  Similarly, I was keen to avoid those that look like someone has been assaulted by an ultimate, all-topping, deep-pan, soft-cheese pizza. Oh, and no fashionable rips and tears, either. Plain and simple and in one “quiet” colour; that’s me.

Fashion_retail_inventory_supply_chain_analytics.jpgIf I look at the internet – it’s all true there isn’t it? – then I am about the top end of average as long as it is not Christmas, Easter or holiday time. As everyone knows, bathroom scales do not work accurately during those periods and clothes shopping then is silly anyway. There started my rare shop for T-shirts and shorts in the medium/large size range. Should be relatively simple I thought as I started to dodge the bodies of the newly pedestrianised high street throng.

Alas, no BHS, no Austin Reed and now not even an Old Guys Rule to replenish my summer wardrobe but plenty of retail options remained. With a spring in my step I activated the soft hiss of the sliding doors and there I was in one of the largest clothes retailers in the game. No names mentioned in case it jinxes the chain and we lose another big name!

The choice in style and colour was good and the racks were very well stocked with lines and lines of T-shirts and shorts. Then the problem hit me. Although I was looking for M or L sizes the only items available were extra small, small, extra-large, XXL and even XXXL! (Don’t get me started on why extra small and XXXL must be the same price.) This was not an isolated case and after checking I realised this was true for the gaudy coloured stuff and the “stylish” pre-damaged items. What is going on?

This may only be a sample of 1 but this major UK chain with several international franchise locations is probably operating with several hundred thousands of Euros hanging on racks with only a small chance of being sold anytime soon. Sizes which fit a large proportion of the population are out of stock (OOS) presenting a huge lost sales problem. And it is not just T-shirts and shorts; have a look at hugely expensive suits, coats and shoes. The same may also be true of the ladies’ fashions but I decided against browsing those racks.

In FMCG, if your Heinz beans are OOS then you pick up HP or an own label offering in the same outlet and it does not really impact on the retailer or the consumer. Not so in clothing retail where alternative options are dotted around the adjacent shopping centres. Seeing multiple Mr. Averages walk out of your store due to OOS while a host of other sizes hang around is just plain daft.

How long does that working capital flap about in the stores eating into your profits? Inevitably, the seasons change and with that the styles adjust. New designs and new ranges are introduced but where do you put them? Eventually, to create space you have to withdraw the S/XXXL stock and either marginally discount it internally or more heavily with a third party.

The problem is not only about having too few top sellers but also about how you plan for the success of the entire size range and avoid over-stocking profit guzzlers. Nobody has a functioning crystal ball but you can apply some clever supply chain analytics to ensure your store inventory is designed for success and not for failure.

Image courtesy of mapichai at freedigitalphotos.net

Tags: Supply Chain Analytics, CEO, retail, Integrated Business Planning, Inventory Management & Stock Control