Mr. MSME,

we know your problems,

we also know the solutions!

STAGNANT

  • SALE IS SLOW And the growth solutions are complex.

  • HIGHER GROWTH IMPLIES MORE CREDIT. Existing distributors are not willing to increase investment

  • COMPETITION FROM MANY MORE NEW ENTRANTS are selling at better price and with longer credits.

  • DISTRIBUTER AND EMPLOYEE LOYALTY IS FEEBLE. Scared of introducting new products.Wary of making fresh investment.

What’s the
way out
of stagnancy?

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    • Create a QUARTERLY, HALF YEARLY & ANNUAL Business Plan
    • DON’T LET DISTRIBUTORS HIJACK YOUR CHANNEL by shifting to a competitor or slowing down your sales by purpose . Adopt a bottom up approach through secondary channel sales
    • Create an independent team for MARKETING COMMUNICATION.
    • Sales and marketing are two different domains with separate expertise. YOU CAN NEVER BECOME BIG WITHOUT THE AIDE OF MARKETING .

    • To beat competitors selling at longer credit and better margin ESTABLISH DIRECT RELATIONSHIP WITH RETAILER.Invest in Secondary Sales

MARKET POTENTIAL

  • WHAT IS THE DEMAND of my product ?

  • HOW DO I JUDGE how much is optimum sales?

  • WHAT’S THE BENCHMARK of good sales ?

  • IS SALES TO BE COUNTED AS TURNOVER in whole or sales per distributor?
9
    • INVEST HEAVILY ON INCREASING SECONDARY SALES under each distributor .
    • Shift your focus from“DISTRIBUTOR SALES” TO “SALES TO RETAILER”
    • Retailer is the KING
    • The last mile sales person who picks the retail order is your
    • And the supply chain manager which ensures 24 hours TAT supply is your PRIME MOVER.
    • The MIS team is your CHANKYA
    • The marketing team which drives sales is your QUEEN
    • TREAT THESE FUNCTIONS INDEPENDENTLY and appoint qualified resources for each department

    • As an enterpreuner , you job is to forge an ALLIANCE BETWEEN THE VARIOUS STAKEHOLDERS.

WHO IS MY CUSTOMER?
RETAILER OR DISTRIBUTOR OR THE PURCHASER ?

    • WHO AM I SELLING TO ? So far we have been comfortable selling to the distributors who took care of the down line consumer chain.

    • I HAVE TRIED TO TAP RETAILERS THROUGH A FIELD FORCE TEAM, BUT DIDN’T SUCCEED.If distributors are taking care of my market expansion why spend on sales force for retail orders?

    • BESIDES, THE SALES IS GROWING WITHOUT ADVERTISING OR FLOATING CONSUMER SCHEMES. What’s the need of communication with the consumers?

What’s the
need of communication with the consumers ?

6
    • Name one brand in any product category which is among the top 10 brands in the country ONLY BY SELLING TO DISTRIBUTORS AND WITH NO RETAIL SALES TEAM !!!
    • HAVE YOU FOLLOWED THE STANDARD OPERATING PROCESS (SOP) for channel distribution ?
    • DO YOU KNOW THE SOP of secondary channel sales ?
    • You do not need secondary channel sales and your distributors are expanding your network through their own effort. Great thought . BUT 5 REASONS WHY large brands have a management team with thousands of field forces with latest sales automation technology to operate the retail market ?
    • Have you identified 5 REASONS WHY YOU FAILED WITH SECONDARY SALES WHILE ESTABLISHED BRANDS SUCCEEDED ?

    • You are a consumer too. DO YOU PREFER A KNOWN BRAND OR UNKNOWN PRODUCT.Can you name a brand which has never done any form of consumer communication.

PEOPLE MANAGEMENT

  • FIGHTING THE BATTLE OF TALENT.Right talent is scarce.And right talent is impossible to retain.But what is right talent?

  • IS GOOD EMPLOYEE THE RIGHT TALENT ?

  • How do I drive GOOD TALENT TO BECOME PRODUCTIVE and become right talent.I cannot trust high end professionals.

  • I am ILL EQUIPPED TO MANAGE EXPENSIVE PROFESSIONALS.

  • My old employees who have stuck on with me through my growth phase,seems the best bet in times ahead too.But I know my OLD EMPLOYEES CANNOT DELIVER GROWTH.
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  • SET UP A CUTTING EDGE HUMAN RESOURCE DEPARTMENT with people management policies and guidelines and reporting structures in place.

  • Put in place a ROBUST MONTHLY 360 DEGREE MONTHLY APPRAISAL SYSTEM.

  • Create a chart of KRAs FOR EACH EMPLOYEE. Good employee are only those who are right talent . Old employees are right talent so long they are scoring well on the monthly appraisal chart.

  • So good employee and old employee are not relevant to you . Only RIGHT TALENT IS YOUR BEST BET.

POOR RECOVERY

  • For long I have NOT FOUND THE RIGHT PROCESS THROUGH WHICH DISTRIBUTORS PAY ON TIME.Payment delay is the normal process of the channel in any industry.

  • But UNDER THE PRESSURE TO SELL MORE AND FEAR OF SUDDEN DRYING UP OF ORDERS I could never stop supplies to distributors.

  • Today, MY OVERDRAFT LIMIT WITH THE BANK HAS BALLOONED and am looking at ways to improve the recovery process without letting sales get impacted.
2
  • Set up an independent CREDIT MANAGEMENT DEPARTMENT to manage credit rating and control of supply according to credit behaviour of distributors.

  • DELINK COLLECTION FROM SALES. Break the unholy trunk between distributor and sales team who also does collection against new orders.

EXPANSION FEAR

  • I always knew EXPANDING INTO NEW TERRITORIES WAS THE BEST WAY AHEAD TO FIGHT STAGNANT SALES with existing areas.

  • But I was gripped by THE FEAR OF DISTANCE , UNKNOWN LANGUAGES and strangers for distributors .
3
  • HIRE LOCAL TALENTS AT REGIONAL AND STATE LEVEL with a command system controlled by Head office.

  • Put in place DAILY “PERFORMANCE REPORTING”sytem with accountability and analysis of the sales performance by the HR.

  • The forward is a professional HUMAN RESOURCE MANAGEMENT DEPARTMENT.

CREDIT MANAGEMENT

    • I am caught in a WHIRLPOOL OF DEBT.
    • If I don’t extend ADDITIONAL CREDIT TO THE DISTRIBUTOR, sales dropsdrastically.Without credit , turnover never increases.
    • Lower turnover means higher overheads.
    • And when I offer credit to the distributors to fuel sales,I NEED TO INVEST MORE ON WORKING CAPITAL ?

    • Is there another WAY OUT ?
5
  • Aim to be lower channel debt through SKILLFUL CREDIT MANAGEMENT which doesn’t make you zero debt , but controls & reduces debt even while you keep expanding.

  • USE CARROT & STICK POLICY with the distributor to reduce credit period

  • Work on MATCHING PRODUCTION LEVEL TO DEMAND VOLUME through effectivesupply chain management

  • REDUCE RAW MATERIAL HOLDING by 60% and buy raw materials when trade rates are low

  • Make a LIST OF FAST MOVING ITEMS which fetches quick revenue

CONSUMER PULL

  • Well,that’s where most MSMEs brands FAIL TO SUSTAIN THEMSELVES IN GENERAL TRADE.

  • We CAN’T AFFORD to spend on expensive adverstisement.But how else to communicate with consumers ?

  • Motivating retailers to sell more through aggressive schemes is very productive.But DISTRIBUTORS END UP CHEWING UP THE RETAILER’S SCHEMES & retailers corner away the consumer schemes.

  • Is there a WAY OUT TO IMPLEMENT DELIVERANCE of scheme to beneficiaries?
4
  • VISUAL MERCHANDISING AT THE RETAIL STORE LEVEL is the cheapest and quickest way to build brand.

  • Merchandising should include CONSUMER SCHEME, PRODUCT BENEFITS, SALES USPS & BRAND HIGHLIGHTS.

  • Merchandising placement is a specialised and highly skilled job which includes NEGOTIATIONS WITH RETAILERS ABOUT “FREE PLACEMENT” TERM.

  • REPLACEMENT OF MERCHANDISING MATERIAL on monthly cycle keeps the brand alive from the stores where product is sold.

LAST MILE DELIVERY

  • Retailer’s ORDERS REMAIN LARGELY UNFULFILLED.

  • How to make my DISTRIBUTORS ACHIEVE 100% ORDER FULFILMENT ?
3
  • STRENGTHEN THE PRIMARY SALES process

  • DELINK PRIMARY SALES PERSONNEL from secondary sales

  • INTEGRATE MIS WITH PRIMARY SALES for non delivery reports.

MANAGEMENT INFORMATION SYSTEM

  • I have OFTEN HEARD OF THIS NEW TERM , MIS . What is it actually ? How does it work ?

  • New process like MIS adds to my cost but don’t know HOW IS MIS DIFFERENT FROM MY EXISTING BACKEND COORDINATORS.

  • Backend COORDINATORS ARE LIASONING WITH DISTRIBUTORS ON PAYMENT,order and supply.

  • I Would like to know HOW MIS PROCESS IS AN UPGRADATION OF MY EXISTING BACKEND ?
2
  • MIS IS DIVIDED INTO 3 BROAD FUNCTIONS : Voice calling, Analytics, backend collection

  • RESOURCES IN EACH OF THESE DIVISIONS HAVE SEPARATE KRAs which needs close monitoring on day to day basis

SUPPLY CHAIN

      • I have MULTIPLE SKUs AND DISTRIBUTORS CANNOT STOCK ALL OF THAT leading to loss of sales.And I have no way to connect demand to stock

      • WITHOUT CREDIT,DISTRIBUTORS ARE NOT WILLING TO OPERATE.Timetaken to reach supplies to distributor to far flung parts of the country is enough to kill retail orders.

      • INVESTING IN WAREHOUSE IS EXPENSIVE.Stockist is not willing to extend credit to distributors.

      • Beyond my core geography, I AM STRUGGLING.

      • So either SOME SKUs ARE OVERFLOODING STOCKIST POINT or various other SKUsare in short supply.
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    • EXPAND YOUR STOCK POINT through shared but professionally managed stock points in key cities.

    • REDUCE DELIVERY TIME by implementing supply chain turn around time through implementation of FIFO & TAT.

    • INTEGRATE ” REAL TIME STOCK AVAILABILITY SOFTWARE”  through integration of factory with all warehouses and sales team with warehouses and distributors with sales team.

VENDOR MANAGEMENT

  • RAW MATERIAL QUALITY IS INCONSISTENT. Vendor stops supply suddenly .

  • VENDOR CAN’T MATCH UP TO MY INCREASED REQUIREMENTS and ocassionallydemands advance payment.

  • VENDORS KEEPING INCREASING PRICE and I am at their mercy.
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  • BROADEN the procurement base.

  • Put in place a professional “NEW VENDOR EMPANALMENT” PROCESS managed through a professional team on your payroll.

  • JOIN NEW AGE IT B2B IT PLATFORMS for vendor search and registration

  • Create an extensive VALUE ENGINEERING PROCESS through professional consultants.

SALES AUTOMATION

  • I want to UPGRADE TO A SOFTWARE based order booking process.The large brands are doing it already.

  • But HOW TO INTEGRATE MY SKUs TO THE FIELD SALES SOFTWARE and that in turn to the stock point and further how to map the orders booked by sales person to the distributor point and link it to the distributor billing to the retailer ?

  • The PROCESS SEEMS A MAZE .

  • But I know for sure,that if I can implement it , it’s a game changer.All the above problems HAVE ONLY ONE CURE : ADVANCE IT SOLUTIONS.

  • I NEED SOMEONE TO EDUCATE AND GUIDE ME through the process and interface with an IT firm on my behalf to execute the software integration.
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  • Stock,warehouse, sales, billing the four pillars of SUPPLY CHAIN MANAGEMENT HAS DIRECT BEARING ON PROFITABILITY & MARGINS.

  • Improved margins & higher profits require PROCESS AUTOMATION.

  • INVEST IN AUTOMATION & invest in manpower to manage automation.

  • A BRILLIANT SOFTWARE WITHOUT A HUMAN HANDS doesn’t succeed.