Every Entrepreneur and Sales Head we work with wants to know how our Distribution Management System can help them push more products through the chain. We have been working on how can we use secondary & tertiary inventory data for this objective. The important factors which affect the secondary & tertiary inventory in business are –
1. Production planning
Most of the best-performing products see stockouts in their peak seasons. For another, these brands mistime the ending of the season; these again end up with stockouts or over-stocking, which carries over till the next season, sometimes with the product expiring before then. Every sales rep working with a seasonal product would agree on how they have to start the season with returns.
At a retail store, the volatility of demand is exaggerated once at the distributor and further at the manufacturer. This phenomenon, called the “Bullwhip Effect”, is a nightmare for any supply chain personnel. Having regular and correct stock data from the retail level, even for a representative sample, would not only help identify the problem patterns in hindsight but also forecast crises in time.
2. Launch of new product
A new product launch is similar to investing in a startup. You get a feeling that you have a blockbuster in hand, but you know that most of the launched products fail, and you have no idea how to figure out the fate of your product.
The product that failed in the market is a smaller problem, unaware of when the sales have stopped growing and started going down is a bigger problem. Not using the historic sales data for predicting the product cycle, and everyone believes more in qualitative research or management insight and experience, which is not really data-driven.
In a business, one cannot completely eliminate the uncertainty associated with the launch using analytics, but it can be definitely reduced. Establishing correlations between products that had similar product life-cycle (PLC) curves, a Machine Learning algorithm can improve predictions and significantly reduce Mean Absolute Error, which could mean lakhs in saved costs.
Read More – 8 Ways To Improve Distributor Sales Performance
3. Sales push optimization
While dealing with a full-grown market, getting even a 5% sales increase in like-on-like markets can be a challenging task. Our solution expert with one of our customers started a bottom 10 campaign, where instead of focusing on the best accounts, we would focus on the most undercovered accounts. As a result, these were accounts which had minimum company sales and store area ratios.
With planned and targeted efforts of sales supervisors, sales executives, distributors, merchandisers, auditors and promoters on only these targeted accounts, we improved overall sales by 4% within a couple of weeks.
4. Distributor and sales team evaluation
The implementation of the complete strategy of trade marketing is dependent on the channel partner and the team. In every company, a lot of effort is put into selecting and hiring the right employees and partners, with paying additional fees to the hiring consultant. And once the connection is established among them, the entire focus shifts to retaining them, rather than evaluating their performance. It is essential to evaluate them frequently and manage their churn to suit your objectives.
SalesBabu DMS solution gives out an individual balanced score for partners as well as employees. The score is designed to include multiple objectives from both Marketing and Sales. These objectives of the organization can always be captured in pure data form, which can be drawn either from analytics or primary data captured by the field executives & auditors.
In the person being evaluated the subjective assessments create less distress. Allow them to work on their own strategies to improve their score and set benchmarks for the future as well. These scores or underlying variables are proportionally accumulated by the company to create evaluation scores for their supervisors and further ups as well.
5. Marketing planning
Investing more in Trade or Consumer Marketing is a question that can easily create a war between the Sales & Marketing departments. Promoters from both sides can have long-time arguments on the cost and efficacy of them both. The number of factors on which the sales number depends would easily be in 3 -4 digits. So how do we come to know if it is an issue of trade marketing (PUSH) or consumer marketing (PULL)?
With one of our clients, our team deciphered this seemingly unsolvable puzzle by a simple metric, ‘Ds – days of stock in a retail outlet’. If the number Ds was greater than the benchmark, it needed more Pull (consumer marketing). If the number Ds was less than the benchmark, it needed more Push (Trade marketing). SalesBabu aggregated these numbers and the company had a readymade strategy for everyone including the territory, region, and team.
6. Inventory optimization
All agree to inventory optimization, as long as it involves stocking more products at the distributor and retailer ends. This load-the-market psychology is driven by two key thoughts: First, the more quantity of stocks are loaded on the channel partner, they are more likely to push that product further down: and second, the individual KRA’s of the sales team is determined by sales numbers alone.
While the sales role push in a competitive market cannot be null, there is a cost associated with having old stocks on shelves, returns, expiry and associated retailer anxiety. Thus, particularly for a mature and demanded brand, it is critical that inventory is optimized at each level and outlet. And with many brands and retailers and both numbers changing rapidly, there is no ideal number that can be pre-decided.