OPERATING IN A CHAIN ENVIRONMENT

Transcription

1 OPERATING IN A CHAIN ENVIRONMENT COLORADO BEER DISTRIBUTORS ASSOCIATION AUGUST 25, 2017 JOE VERNO JOEVERNO@VERNOCONSULTING.COM WES VERNO WESVERNO@VERNOCONSULTING.COM

2 TOPICS TO BE COVERED COMPARISONS FROM SIMILAR STATES MERCHANDISING SALES MODEL OPTIONS CHAIN C-STORES, DRUG & DISCOUNTS GROCERY CHAIN CALLS AND RESETS MAINTAINING PROFIT ADJUSTING TO THE NEW WORLD

3 COMPARISONS FROM LIKE STATES

4 PAGE 4 % OF TOTAL CE BUSINESS BY CHANNEL

5 PAGE 5 % OF CE SALES BY CHANNEL: CRAFT VS. NON-CRAFT SUPPLIERS Ø Note: All major suppliers craft portfolios are included in the non-craft #s

6 # OF ACTIVE SKUS IN GROCERY PAGE 6 Ø Kroger in Oregon averages total beer SKUs per store. All the way up to 1,000 SKUs in a single store

7 MERCHANDISING

8 PAGE 8 POTENTIAL # OF MERCHANDISERS

9 TIME PER MERCH STOP GROCERY Ø Time to put up a delivery CE / Week minutes / merch stop CE / Week minutes / merch stop 400+ CE / Week minutes / merch stop PAGE 9 Ø Time to fill the shelves on the weekday CE / Week 60 minutes / merch stop CE / Week minutes / merch stop 400+ CE / Week minutes / merch stop Ø Time to fill the shelves on the weekend CE / Week minutes / merch stop CE / Week minutes / merch stop 400+ CE / Week minutes / merch stop

10 MERCH STRUCTURE Ø Strongly recommend dedicated merch management (merch manager, supervisor, leads) Having merchandisers directly report to sales supervisors or managers does NOT work PAGE 10 Ø Typical spans of control: merchandisers : 1 merch supervisor Ø Merch typically reports to sales management Some wholesalers have merch report to operations Ø Need to build in merch relief to fill in vacated routes When merch breaks down, the whole structure breaks down Sr. Relief experienced merchandiser that can cover open routes and train new hires at the same time

11 MERCH SUPERVISOR ROLE Ø Manage merch frequencies Ø Adjust static routes PAGE 11 Ø Train merchandisers Ø Manage overtime Ø Deploy available resources Ø Ensure merch quality at store level is up to standard

12 MERCH TURNOVER Ø Extremely high turnover Ø High amount of call-ins / no-shows Ø Average merch employment: 6 12 months PAGE 12 Reasons for High Merch Turnover Physical difficulty of the job Unreasonable workloads / excessive overtime Disenfranchised out on their own Negative feedback sales rep, sales supervisor, driver, store manager, receiver Covering open routes, having additional stops added to their workload Lack of training on boarding and continual development Lack of supervision Little to no upward mobility Pay

13 STRATEGIES TO REDUCE MERCH TURNOVER Ø 2 weeks of legitimate training during the on-boarding process Ø Reasonable workloads build routes to be 40 hours / week 4 x 10 s have proven to be very successful Ø Active dedicated management / supervision Ø Include in sales meetings and company events Ø Having adequate relief trained, ready to fill open routes Ø Schedule 2 merchandisers on the largest stops For example: 5 or more pallets to be worked Ø Schedule at least 1 day off on the weekends and 2 consecutive days off throughout the week Ø Static merch scheduling avoid adding unscheduled stops to merchandisers Ø Eliminate unnecessary merch stops PAGE 13

14 MERCH WATCH-OUTS Ø Avoid just-in-time hiring, must have an adequate bench ready to go Ø Avoid high merchandising frequencies, especially starting off Much easier to increase than decrease PAGE 14 Ø Avoid merchandising c-stores and independents Ø Avoid on-call weekend merch management. Schedule merch supervisors to physically be in the market on the weekend. Merch managers, supervisors, and/or leads should be scheduled on a least 1 weekend day Ø Ensure proper documentation of merch time required by wage & hour rules

15 PAGE 15 MERCH SERVICE POLICY EXAMPLE

16 SALES MODEL OPTIONS CHAIN C-STORE, DRUG & DISCOUNT ACCOUNTS CHAIN GROCERY

17 RESOURCE UTILIZATION DOCTORS, PAS, NURSES Ø How do doctors leverage themselves and maximize their revenue? Ø Physicians Assistants PAs are not doctors but have enough training to handle a lot of patients needs that a nurse is not qualified to provide. PAGE 17 Ø Nurses Spend most time with patients Do all the tasks that can be done that do not require a doctor or PA

18 WHY CONSIDER ALTERNATIVE MODELS Ø Sales reps spend 5% of their time doing $50/hour work and 95% of their time doing $20/hour work Sales rep average 4 6 minutes in front of a decision maker in grocery stores PAGE 18 Ø Control sales costs Ø Enables you to be more scalable Ø Work load increasing faster than sales trends Ø Stop everyone from working one or two levels down Ø Provide upward mobility

19 STORE LEVEL DECISION MAKING Ø All accounts have some level of store level influence Ø The degree of store level influence will be a major factor in the new sales model options you choose. Space Distribution Primary and secondary displays Pricing influence Promotions PAGE 19

20 NON-GROCERY CHAINS C-STORE DRUG & DISCOUNT STORES

21 CHAIN C-STORES Ø Factors that will impact service levels in C-Stores: Back stock capacity Shelf / cooler holding power # of SKUs If the account stocks their own shelves PAGE 21 Ø During the transition, you need to analyze each store to determine the best solution to service the account. Options to consider: Pre-sell Monday Delivery Tuesday Pre-sell Monday Deliver Thursday Pre-sell 2x/week Deliver 2x/week Pre-sell 2x/week Deliver 1x/week Pre-sell 1x/week Deliver 1x/week Merch 1x/week

22 TIME TO SELL EXAMPLES Ø Chain C-Stores 100+ CE / Week minutes / sales call CE / Week minutes / sales call Less than 50 CE / Week minutes / sales call PAGE 22 Ø Drug & Discount Stores All volume minutes

23 PAGE 23 OFF PREMISE SERVICE POLICY EXAMPLE

24 LOW IMPACT C-STORE, DRUG & DISCOUNT ACCOUNTS Which Accounts? Ø Large # of outlets to service Ø Sales rep has little to no impact at the store level PAGE 24 Ø Call takes longer than volume warrants Ø Store won t consistently stock their own shelves Ø Replenishment and merchandising are main functions

25 LOW IMPACT C-STORE, DRUG & DISCOUNT ACCOUNTS Solution Ø Create Drug & Discount sales route In between a merchandiser and a regular off premise sales rep PAGE 25 Ø Must have account density for this model to be effective Ø Insulates your better sales reps from wasting their time in low impact accounts Ø Retailers like that rep is dedicated to their account type Ø Lower cost of sales

26 LOW IMPACT C-STORE, DRUG & DISCOUNT ACCOUNTS Consider Different Frequencies and Call Patterns Ø Sell on Monday, deliver on Thursday Account gets shelves filled twice, spread out through the week PAGE 26 Ø Every other week delivery service Ø Sell this week, deliver next week Ø Driver makes delivery this week and takes the order for next week

27 GROCERY STORES

28 GROCERY MANAGER INTERVIEW RESULTS Ø Findings from when Verno interviewed 90 grocery store managers / decision makers in an established chain market: Store managers did not know who was the merchandiser, who was the sales rep, and who was the sales supervisor PAGE 28 Store managers felt that the sales reps were avoiding them Store managers wanted to know what s new and what competitors were doing differently Best merchandisers in the eye of the store managers were the ones that are trained and required the least amount of direction from the store managers.

29 GROCERY SALES MODEL OPTIONS 1. Traditional Sales Model 2. Jr. Sales Rep PAGE Super Merchandisers 4. Merch in Front of the Sales Rep 5. Inventory in Front of the Sales Rep

30 OPTION 1: TRADITIONAL SALES MODEL Ø Sales Order Day Regular sales rep merchandises the account and takes the order Ø Delivery Day Driver drops off the product Merchandiser works the store and puts up the order PAGE 30 Ø Non-Order or Delivery Day Merchandiser pulls up the store

31 OPTION 2: JR. SALES REP Model Description Ø Convert the grocery sales position into a beginner sales route by replacing the regular sales rep with a Jr. Sales Rep Ø The Jr. Sales Rep position is a level above the merchandiser but not at the same level as the regular sales rep PAGE 31 How It Works Ø Jr. Sales Rep works the store, takes inventory, and writes the order on sales order days only Ø Merchandisers put up orders on delivery days and pull up the store on nonorder or delivery days Ø Sales supervisor assists with execution if needed

32 OPTION 2: JR. SALES REP Who Should Use This Model? Ø Little decision making at store level Ø Want to utilize best sales reps in accounts they can impact Ø Want to reduce their sales costs Ø Willing to make a gradual change Ø Able to train and retain Jr. Sales Reps Ø Want to create another step in the sales career ladder PAGE 32

33 OPTION 2: JR. SALES REP Implementation and Execution Difficulty: LOW Challenges of Implementation and Execution: Ø Training Jr. Sales Reps on handhelds and how to take a good order Ø Susceptible to higher turnover Ø May take multiple years to implement When a regular sales rep in another channel turns over, move the grocery sales rep to open impact route and backfill grocery route with a Jr. Sales Rep PAGE 33

34 OPTION 3: SUPER MERCHANDISER Model Description Ø Super merchandiser acts as primary replenishment sales rep and primary merchandiser in his/her accounts PAGE 34 How It Works Ø Super merchandiser works the store, takes the inventory, and writes the replenishment order on sales order day and puts up orders on delivery days Ø Super merchandiser visits each of his/her accounts every day Ø ASM or Sr. sales rep makes store level sales calls for programs and additional displays over the top of super merchandiser

35 OPTION 3: SUPER MERCHANDISER Who Should Use This Model? Ø Little decision making at store level Ø Willing to decrease the number of regular sales reps Ø Has low merchandiser and super merchandiser turnover Ø Wants single point of accountability in the account Ø Wants to utilize best sales reps in accounts they can impact Ø Wants to create another step in the sales career ladder Ø Wants to increase service and lower costs in grocery accounts PAGE 35

36 OPTION 3: SUPER MERCHANDISER Implementation and Execution Difficulty: MODERATE Challenges of Implementation and Execution: Ø Training super merchandisers on handhelds and how to take a good order Ø High number of super merchandisers needed Ø Susceptible to higher turnover PAGE 36

37 OPTION 4: MERCH IN FRONT OF SALES REP Model Description Ø Merchandiser works the store on the order day before the regular sales rep to reduce the amount of time the regular sales rep spends in the account, enabling the regular sales rep to sell to more accounts/day PAGE 37 How It Works Ø Merchandiser works the store before the sales rep makes the call Ø Sales rep takes the inventory, writes the replenishment order, and makes the sales call Ø Merchandisers put up orders on delivery days and pull up stores on nonorder day

38 OPTION 4: MERCH IN FRONT OF SALES REP Who Should Use This Model? Ø Still significant decision making at the store level Enough to warrant keeping a high cost sales rep in the account Ø Believe sales rep s relationship at store level adds significant value and is worth the cost Ø Willing to decrease the number of regular sales reps Ø Wants each sales rep to call on more accounts Ø Wants to lower costs in the grocery sales channel Ø Able to train and retain merchandisers PAGE 38

39 OPTION 4: MERCH IN FRONT OF SALES REP Implementation and Execution Difficulty: MODERATE Challenges of Implementation and Execution: Ø Sequencing the merchandisers to work all or most of the accounts before the sales rep gets to the account Sales reps workload will be built on the assumption that they will be spending less time in the account. If the merchandiser does not fill the shelves in front of the sales rep, then the rep will not be able to complete his/her route. PAGE 39

40 OPTION 5: INVENTORY IN FRONT OF SALES REP Model Description Ø Merchandiser works the store and takes the inventory on the sales order day before the regular sales rep to reduce the amount of time the regular sales rep spends in the account. This enables the regular sales rep to sell more accounts/day. PAGE 40 How It Works Ø Merchandiser works the store and takes the inventory before the sales rep makes the call Ø Sales rep uses the inventory taken by the merchandiser to write the replenishment order and make the sales call Ø Merchandisers put up orders on delivery days and pull up stores on nonorder day

41 OPTION 5: INVENTORY IN FRONT OF SALES REP Who Should Use This Model? Ø Some or significant decision making at the store level Ø Able to train and retain merchandisers Ø Willing to decrease the number of regular sales reps Ø Wants each sales rep to call on more accounts Ø Wants to lower costs in the grocery sales channel PAGE 41

42 OPTION 5: INVENTORY IN FRONT OF SALES REP Implementation and Execution Difficulty: HIGH Challenges of Implementation and Execution: Ø Sequencing the merchandiser to work the account and take the inventory before the sales rep gets to the account to write the order Ø Training the merchandisers on the handhelds to take the inventory Ø High number of merchandisers that need to be trained Ø Must adhere to process 100% for accuracy and efficiency purposes Ø Susceptible to high turnover in trained merchandiser positions PAGE 42

43 CHAIN CALLS AND RESETS

44 KEY ACCOUNT MANAGEMENT Ø Do not let the breweries be the only ones that own the relationships with the chains Ø Chains will still rely upon the wholesaler to represent the remainder of the portfolio Consider wholesalers can share the cost of a Key Account Manager for the whole state PAGE 44 Ø If the suppliers make the chain calls, they may make placements and decisions that are not in the wholesalers best interest

45 RESETS Ø Chain reset seasons Fall and Spring All hands on deck to complete chain resets on their timeline KAM needs to help manage when chains resets are scheduled PAGE 45 Ø Don t let the chains cause you to lose focus on the independents Ø Space is the most important key to winning in the market Ø Reset Manpower Forecast Tool available on our website:

46 MAINTAINING PROFIT ADJUSTING TO THE NEW WORLD

47 POTENTIAL PROFIT PRESSURE Incremental Costs Ø Merchandising staffing Ø Incremental delivery stops and time Margin Deterioration Ø Aggressive chain pricing Ø More quantity discounts PAGE 47 Ø Incremental sales stops and time Ø Key account management & reset manpower Ø Craft suppliers may use price to gain/maintain share Ø Increased OOC Ø Bad debt from dying off premise accounts

48 NEED TO MANAGE COSTS THROUGHOUT THE ENTIRE COMPANY Ø Manage service frequencies to all accounts Consider higher case minimums Need to save stops in current accounts to support increase in stops to chain accounts Ø Introduce lower cost sales methods (i.e. Jr. Sales Rep) Ø Increase the amount of accounts on tel-sell Ø Reduce marketing spending Ø Flatten organization structure reduce layers Ø Increase spans of control Ø Increase bulk delivery Ø Eliminate SKUs Ø Balance volume across the days of the week Ø Reduce OOC PAGE 48

49 VERNO S BEER BRIEF Relevant Back Issues of VBB Ø Delivery Route Cost Reduction Ø Routing Project Checklist Ø Managing Merch Frequency Ø Managing Resets Ø Super Merch Sales Models Ø Drug & Discount Sales Strategies Ø Service Policy Strategy Ø Go-To-Market Self Test Annual Subscription - $600 9 Issues per Year 3 Managers per Subscription Personal Accounts on back issues Wholesaler tools Job descriptions KOI Measurements Industry Presentations PAGE 49