RTM Cee

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Email: dave.jordan@enchange.com
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Route to Market - A Down to Earth Review, 2nd Edition by Enchange Limited is

licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Tel: + 44 1403 275576
Introduction
Some call it Route To Market (RTM) while others use
Distribution and there are even others who dont know what
it is. In most cases RTM is the organisation you use to keep
your products on the shelves in Traditional Trade. Whether
you appreciate it or not your RTM network is playing a major
part in your success (or failure!).
In this second edition we keep the realities and the fun but
also show how RTM is incorporated into the fabric of your
business.
RTM Programme Benefits?

Sales Uplift. All RTM programmes result in a sales uplift
for the producer.
Strategic. As an enabler of growth, RTM programmes
can become a key and pivotal strategic thrust of an
organisation.
Risk Mitigation. Poorly performing and vulnerable
Distributors are identified and those considered unable
to be improved or unviable are targeted for
replacement. Sales outlet mapping may also form part
of a risk mitigation strategy.
Target Sales Effort. Distributor assessment, analysis and
categorisation provides invaluable data to target sales
effort. High potential Distributors are identified where a
significant sales uplift is achievable. Areas requiring
critical market share protection are also identified.
Capability Build. RTM programmes build core sales and
Distributor sales capability.
Integration. RTM programmes are often used as a key enabler in integrating the
distributive supply chain into the core operations of the Producer. Indeed many
Enchange clients have used RTM programmes to integrate Distributor operations into
their own S&OP monthly cycle as described in the chart above.
People. RTM programmes always result in a significant improvement in commercial
competency within the Producer. Communication within the Sales function and
cross-functionally improves. Commercial decision making always improves in absolute
terms and increased accountability results as commercial decision making is taken at the
correct level of the sales organisation. Barriers to human efficiency are identified
allowing Producers to review Reward and Compensation schemes.
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Communicate, Communicate, Communicate!

There are many reasons why all sorts of relationships fail even after
several years of partnership. Boredom, infidelity, money problems
etc, etc but look at it a different way and consider what is it that
makes relationships last and prosper?
Lasting relationships tend to be those where both parties know
exactly what is expected of them, how they are monitored and the
resulting reward and/or penalty. If you keep putting the dishes in
the wrong cupboard and nobody tells you this is wrong then the
bedroom is likely to be a frosty environment.
Producer - Distributor relationships really do need hard work and
constant attention. If the chosen Distributor is going to be
responsible for getting your product in front of consumers then
you must take time to find out who they are and what makes them
tick. In even the most basic relationship you have to meet; at the
right level and often. If the only Distributor contact with your
company is at the level of the local sales rep then you are heading
for trouble. Fix routine review meetings in the diary and ensure
attendance at a suitably senior level and most importantly, make
the discussions two-way and listen to each other! Distributors are
actually closer to this business channel than you ever will be so take
the time to use their knowledge for mutual benefit.
Right from the start, work with a Service Level Agreement (SLA)
with your Distributor. This is not a one-way process or your SLA will
simply appear to be a list of your demands. Work on it together and
agree a document that defines the terms and conditions of your
relationship. The SLA must contain measures of how your own
operation will be assessed and measured. How much effort is
wasted arguing with Distributors about what they should and
should not have done while quietly ignoring internal failings?
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Agree a set of relevant KPI's on which to measure the performance

of both parties. If you do not measure performance in a clearly
defined manner how can you possibly hope to evaluate and
improve? Similarly, avoid irrelevant KPI's which inevitably take time
and effort to calculate and lead to frustration. We have all suffered
from repeated Head Office data requests which seem obscure and
rarely generate any useful output. A concise set of KPI's will take all
the pain out of reward and compensation debates and provide
both parties with transparent and mutually agreed operational
objectives.
Finally, share the successes and share the failures; this is part of a
lasting relationship. Ensure a clearly communicated and shared
approach to risk and reward and you have a head start in your
Route To Market effort.
If running an RTM network was easy there would be no space

on the beach as it would be full of Producer Sales Directors.
Leave the Marketing guys to enjoy the beach, I say!
Allowing an ill prepared Sales Rep to visit a client on your behalf is at best a
waste of time and money. The Distributor Sales Reps are actually your face to the
customer so you need to ensure they are skilled and able to do the job. They
need a checklist of how to manage a sales call. A simple but clear sales call
protocol will ensure your Distributor Sales Rep receives a good reception by the
client and has a decent chance of closing a sale.
Does your Distributor have a clear understanding of their

potential universe? Small Distribution and RTM operations can
fall into the trap of being content with a certain level of
business with a consistent list of clients. This is very risky as
competitors will eventually find a way into these clients leaving
your Distributor with insufficient turnover to survive. However,
defining the available universe is your responsibility and this
can be achieved either internally or through an expert 3rd
party agency. Once you know what the potential is, you and
the Distributor have a valuable channel-wise database allowing
you to deploy resources in the appropriate direction.
One simple question to ask is the rate of Distributor Sales Rep turnover. A solid
and reliable business would expect to see 8-12% staff turnover through natural
wastage and external job opportunities. There are examples in CEE where this
number is over 50%. Why? Well, let us first assume they are indeed trained for
the task. How are they being rewarded and is this in line with your own reward
to the Distributor? In these difficult times it is not unusual for Distributors to take
your incentives and divert them away from the rewards offered to the field
teams. This is your money so make you reassure yourself the funds are being
allocated in the way you expect. Nobody is going to stay with a company if
basic cash promises are broken as the market for good Sales Reps remains
competitive, particularly in CEE.
Some Distributor Sales Reps I have seen in Europe are "not fit for
purpose". This is not being disrespectful to the people involved
but it is often a reflection of how Distributors behave and how
their people are rewarded. Perhaps the most common failing is
in the area of training. Not everybody can sell; fact. You cannot
take a person off the street, give them a box of business cards
and set them up as a Sales Rep. Nor is it sufficient to send the
new recruit out with an old hand for a few days. You need to
ensure Distributors have a robust induction plan which includes
professional sales training. This can be delivered internally but
the important point is that it is delivered and it is repeated at
agreed intervals.
To extend your education on your Distributors you must spend some time in the
field with their own Sales Reps. Do not rely on what you are told by your own
staff as their view is likely to be one of two extremes; "they are rubbish and that
is why I do not make my numbers" or "they are wonderful but only because I am
too"! Ensure your visits are unannounced to avoid the inevitable "stage
managing" of what you see and do.
Misconceptions!
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Once you know what the potential

is, you and the Distributor have a
valuable channel-wise database
allowing you to deploy resources in
the appropriate direction.
Why Do They Have So Much Stock?

Make no mistake Mr. Producer, YOU put the
stock there, oh yes you did! Distributors don't
buy stock for a laugh and a giggle. Excess
stock blocks up their warehouses and locks up
their cash.
You might think your Distributors have a

healthy 21 days of cover but in reality they
are operating with a much lower level of
saleable stock. The rest sits in their books
and in your stock cover numbers but it
contributes nothing to sales. In fact, it
negatively affects sales as stock that is in
demand is available at too low levels to
meet customer requirements.
"They have so much stock but my
Customer Service level is rubbish". You
must destock and importantly, it is
NOT A SUPPLY CHAIN PROBLEM!
1. Month, quarter and year-end push.

"Targets have to be met so push as much
stock as possible onto the Distributors."
2. Failed launches. Unrealistic Producer Sales
targets leading to slow moving goods.
3. Old label stock. Perfectly good stock but
the pack with the new artwork is being
sold already and nobody wants this.
4. Old and expired promotions. Funding
support has ended so what do we do with
all these left over promo packs?
5. Returns from customers. Still arguing about
who is to pay for these returns?
6. Producer forecasting errors. Nobody wants
to lose face at Producer HQ so the stock
sits and gathers dust until it expires.
7. Damaged and expired. Damages happen,
get them written off AND destroyed and
get over it. You can avoid expired
goods - see above!
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How to Destock?
Yes, it is difficult. You have already "sold" the stock and paid
out and received sales bonuses based on sales targets.
The fact is that although the stock may have left your
books it has not really been sold. The ownership of the
goods has changed but nobody has consumed your
product. You have not sold as much as you have reported
to HQ!
If you are overstocked then you have to bite the bullet and
do this! Destocking the Distributor network frees up space
and cash and saves money on storage fees. It also
improves your customer service and overall Supply Chain
flexibility.
1. Senior Team Alignment. There will be plenty of
bitching and moaning about destocking particularly
from the people who put it there in the first place.
Ensure you have buy-in of all the senior team or you
will fail. Listen for signs of dissent and stamp it out
quickly. Team. This is not a task for a special project
team. Your best Demand and Supply Planning
Managers must run the destocking process. The task
requires precise attention to detail as not all SKUs will
be overstocked to the same level nor will all Distributor
locations.
2. Setting Cover Levels. At the start of the process you
need to calculate exactly how much cover you really
need to hold at distributors. This is not an arbitrary
number and has to be calculated based on a variety of
lead times and demand factors. The Supply Chain leads
this process and recommends a prudent level of stock
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3.
4.
5.
6.
that meets the requirements of your organisation. This

is NOT a job for a salesman!
Managing HQ. Destocking causes a loss in sales as the
overstock is managed out of Distributors. Get your
destocking planned well in advance so it can be taken
into the Annual Budget submission. The win-win
position is often to agree to continued sales growth but
be excused from the profit loss.
Duration. Do not try to destock too quickly. Depending
on your SKU complexity and the level of overstock
don't be surprised if it takes 6 months or more to reach
a healthy state.
Manage Factories. Ensure your supplying factories are
aware of the destocking process well in advance and
your demand signals are fully understood.
It is important they know when you will reduce orders
and when you anticipate a return to a stable state.
Monitoring. The Planning team needs to produce a
spreadsheet that allows the stock levels of each SKU to
be tracked. This is best done outside of any ERP as the
calculations are far too complex and decision making
extremely dynamic. The Senior Team should see the
current overstocking status weekly with a detailed
discussion of current issues monthly. Stock levels
should become an important KPI for you.
Yes, it's painful but it is necessary for the health and

integrity of your business. Implementing a rigorous S&OP
process will help keep your stock levels under control.
The Thought That Counts

How many sales have you lost through Distributors not being able to find the right stock at the right time?
You probably do not know the answer to that but I can bet it will
be significant if the Distributor operates in a sub-standard
warehousing operation.
Sadly, this is still the norm in many places. Producers do not
pay sufficient attention to how their valuable and carefully
prepared stock is stored and handled by Distributors.
Please do not misunderstand me. I am not proposing a
cutting edge Warehouse Management System or narrow
aisle reach trucks but a basic level of efficient operational
warehousing is required to support professional producers.
Once the stock is inside the store you need to know where
you put it. If racking is available then the destination
location of each pallet must be recorded. No racking?
Create a simple painted grid on the floor which allows you
to allocate a particular space to a pallet or box or sack of
product. (This also helps to maintain safety in the
warehouse by isolating pedestrian and FLT routes.)
Above all else ensure there is a sensible level of security
and no, I do not mean an internal team staffed with long term
employees considered "part of the furniture". Distributors need to
invest in a professional partner who has the training and authority
to provide security for your stock. The key here is to continually
rotate the security staff and prevent familiarity relationships
developing. Like it or not, but you need to have constant 24/7
checking of what is actually being loaded into trucks.
How many times have you faced large and unexpected stock losses at your
Distributors whether through theft, damage or expiry? Even if they own the
stock it is your lost sales! If you get the security aspect
right then that might not be your biggest concern as
Distributors are notoriously poor at applying stock
rotation or FEFO/FIFO rules. You seldom get close to
this end of the chain so you do not see it....until
someone finds expired product on the shelf. At this
stage it is your reputation at stake irrespective of any
penalty clauses you can apply to the Distributor. Again,
this does not have to be very sophisticated but there
needs to be a basic routine way to monitor stock
age, pen and paper still works!
Finally, stock counting is a formal requirement in any
business but is seldom carried out properly, particularly
in CEE. In any Distributor relationship you need to
ensure cycle counting from day one in addition to the
legally required annual counting. The rotational
checking of a few SKUs per week will reassure both
parties that stock is under control and prevent an unexpected stock loss
which has to be booked at the year end. Again, it is not just the financial
consideration but if customers are ordering SKUs which are not in the
warehouse then it is your lost sales. Ensuring the Distributor applies some
basic warehousing rules can contribute to a significant difference to stock
outs on shelf.
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Hitting The Target

"Yes, I know what you said you could sell, but
this is my target!" An all too familiar "demand
discussion" between Producer Sales Rep and
Distributor Manager. The Producer may operate
a tight S&OP process but this commonly falls flat
on its face with this type of interaction with
Distributors.......that is, if they are involved at all! If
your Distributors account for say 30% of your
FMCG business then they need to be an intimate
part of demand creation and measurement or
you are simply giving business away to
competition. McDonalds make most of their sales
inside the restaurant but do you think they
pay less attention to the smaller Drive-In sales
demand?
However simple or complex your business you
need a tool to capture market demand at
Distributor level. (Let us assume the Producer
has a suitable in-house S&OP to consolidate all
demand signals into one number across all
sectors!) The tool does not have to be
sophisticated but it has to be agreed between
the parties as the only reliable indicator of
expected demand for the period. I am not
suggesting that the Distributor presses a button,
sends in his Demand Forecast and that is the
end of debate. It should be the start of a
two-way discussion based on shared data AND
decision making to agree a deliverable sales plan
leading to an internally deliverable supply plan.
Ensure Demand Forecasts are underwritten by staff with direct trade interaction and experience and while no demand
forecast is ever
perfect you will not go
far wrong. Consider how powerful it is to
have a good Demand Forecast with the
stamp of the Distributor AND the
Producers Sales Rep. No double guessing,
no hedging and no pointless debate after
the month end. Sure, there will be
differences to talk about but as market
assumptions are agreed together in
advance then at least you have a basis for
discussion about what went wrong and
how to improve for next month.
As ever, monitoring is important as you
cannot improve what you do not measure.
The Distributor should be monitoring his
demand forecast accuracy at SKU level. Ok,
if you have a few thousand SKUs this
might cause a drain on resources but you

can monitor those key SKUs which drive the
business. "If SKU X is out of stock we do not
worry but if SKU Y is out of stock then it
ripples all the way through my own
business and into the Producer." The earlier
a variation in demand signal (up or down) is
transmitted to the Producer, the better for
all.
Lastly, the old chestnut of promotional
activity. If you really are working in close
collaboration with your Distributor then you
will already be discussing the timing and
effects of trade and consumer promotions.
However, I consider this a rarity in CEE.
Not only should this discussion include
Distributor activity but you need to be
honest and brief them on parallel activity
with Key Accounts and C&C etc. If the
Distributor really is your partner then he
needs to know what else if happening on
his patch which is likely to impact his own
and therefore your sales.
Move on from "you did not sell what you
said you would" to "OUR Demand Forecast
was good last month but let us see how we
can make it even better". This simple mind
shift can add to your bottom line without
the need for investment.
Image credit: HikingArtist.com http://bit.ly/e9ZLnF
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Take a Long Hard Look at Yourself

You have great brands, a fantastic internal Supply Chain, tight
financial control, top class HR and a top notch sales
force - surely a recipe for success? Must be? Sadly, not always.
Blue chip companies with internal operational excellence
continue to flounder when attempting to serve the Traditional
Trade in CEE. Admittedly, this trade channel has reduced in
importance over the past 5 years but it still accounts for a
sizable portion of markets which will return to growth sooner
or later. The high class, shiny international chains will continue
to take share in urban areas but they will not conquer the rural
market in the medium term. Producers need knowledgeable
and reliable RTM partners to reach the smaller outlets.
There is no shortage of operators willing to be Distributors for
big name clients but how many of them are really equipped
and ready to do the job properly? Producers are guilty of
placing their reputations and ultimately profits in the hands of
enthusiastic amateurs. In the sporting definition amateurs do
not get paid for their work and Distributors often do not get
paid by producers when they fail to meet targets. However,
instead of doing something about the short-comings of
Distributors the Producers proudly celebrate securing penalties
or better terms through negotiating against poor
performance. What is the point of doing that? Instead of
carping on about how poor these "partners" are why not get
out there and help them?
You cannot build houses on sand yet Producers expect

Distributors to swiftly dove-tail into their in-house processes, IT,
style, ethics etc. Is it any wonder why so many Distributors
have gone or are close to going under when they are not
considered partners and in some cases are believed to be a
hindrance? Distributors do not deliberately make mistakes that
lead to reduced bonuses. They too are in business to make a
few Euros to take home at the end of the month.
Producers need to look closely at the capability
matrix offered by their Distributors (or potential
Distributors) and in most cases this will not match up
to requirements. Do something about this; build
capability where it lacks and you will reap the
benefits in having proactive partners going that
extra kilometre to make a sale for you. Those
Producers who are in tune with their Distributors
strengths and weaknesses AND do something about
the latter will be in pole position with a Ferrari while
less wise competitors are on second row with a
horse and cart. The Route To Market can be a lot easier than
you expect.
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There is no shortage of operators

willing to be Distributors for big
name clients but how many of them
are really equipped and ready to do
the job properly?
10
Dont Reinvent The Wheel

Would you use the same Distributor as a
competitor? Impossible, over my dead
body, not in a million years - the usual
knee-jerk objections to any suggestion
of getting too close to a competitive
operation. Such comments are usually
spouted by Marketing colleagues who
are frankly living on agency lunches and
in the past. These colleagues are the
same people who moan and groan
continually about Logistics and
Distribution services without ever
bothering to understand either
discipline.
(Tip. If you want advance warning of new

launches go and look at office windows and
see how many new SKU's are there for all to
see.)
Secondly, in most CEE markets all new products have to be added to price lists well in
advance of the on-shelf date. Once data is on
a price list it is in the public domain and readily available to your competitors.
CEE in particular is a relative desert in

terms of top drawer Distributors so you
might think about thinking the
unthinkable!
vol-
Firstly, you are assuming that Distributors cannot be at least as professional as your own
company. Why? The good Distributors ARE
confidential and take great care to maintain
sensible segregation of duties. All major players
monitor sales and stocks in the market either
in-house or via one of the usual agencies. If you
are worried about going stock-out on a certain
SKU then you had
better make sure your
upstream Supply Chain gets its own act
together via S&OP.
Myth 3. "The Distributor will favour the
competitor in selling situations".
Ok, we are getting to the point. You do not
have to use the same sales force. A dedicated
sales force will ensure your products receive the
desired focus. The Distributor skills and
competencies in organising the network will be
shared but at the sharp end there is dedication.
If you do share the same sales force then the
key point is how you reward them. Make this
competitive and you will get equal exposure
and push.
Myth 1. "Mr. Competitor will find out

about our new product before the
launch date."
If you think your advertising agency can
keep its mouth shut then you are
extremely nave. Whispers about a new
launch or promotion will abound long
before Mrs. Shopper sees it on the shelf.
Myth 2. "Mr. Competitor will know all my

umes and stock levels."
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11
Trust Is Good But Check Is Better

FMCG producers seem far too ready to blame their
Distributors when sales do not go to plan and
targets are not met. However, it is not all their fault
particularly if you are not clear on what is expected of
them.
To assist FMCG Producers to understand the real
state of their Distributors Enchange has developed a
tool to guide an assessment of Distribution
networks . (Get your copy here: http://bit.ly/evlC4b)
The RTM Evaluation Tool has been designed to guide
your evaluation of four key capability areas:
Partnership is the relationship a one way street
or do you actually talk to your Distributors? Do
you treat him as a real partner aligned with your
business objectives?
Planning & Logistics how does the Distributor
Supply Chain stack up? Your Supply Chain maybe
a Rolls Royce but what about his, can it do what
you want it to do?
Sales Management how does the Distributor
take orders and execute them? You would be
surprised at how some major Producers are
poorly represented in front of customers.
Finance & Back-Office how well is the
Distributor organised? What is his financial
health? Does he or she exploit IT or is it still a
paper based system?
The tool is not difficult or complicated and will not take

too long to run through the various questions and
benchmarking statements. The important point is that the
tool is completed as accurately and honestly as possible
and certainly in collaboration with the Distributor.
I recommend you use someone unrelated to the FMCG
Distributor Sales function or even a 3rd party to run the
process to ensure you receive a reflection of reality.
This tool is not intended to be fully comprehensive
however it can be used to provide a reasonable guide to
how your current Distributor network operates. Why not
try it out; you may well be very surprised by the results!
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12
Exactly What Does An FMCG RTM Distribution Assessment Deliver?

In the past week I have met two Sales
Directors from blue-chip FMCG companies
to discuss an assessment review of their RTM
network. Surprisingly, neither Director was
interested and gave a remarkably aligned
reason for this rejection. All this does is raise
Sales In and we know how to do
that already.
No, Nein, La, Nu, He, Nem, Khng
c!!! Whatever language you
choose, this understanding of RTM
evaluation is incorrect. There is no
doubt Sales Directors across the
globe know how to increase Sales
In. There is a plethora of
techniques to get the Distribution
network to take more stock, e.g.
promotions, discounts, extended
credit etc, etc. Unless you are
regularly working with out of
stocks at the Distributor pushing
Sales In does not guarantee one
single extra sale, not one.
Without a focus on Sales Out any stock
pushed into an RTM network is likely just
to sit in warehouses (http://bit.ly/dCH51i)
as there is no obvious consumer demand
for it. The Distributor is sitting on plenty of
valuable stock but without a pull from the

trade all this extra pushed stock is wasted.
One of the key drivers for a push strategy is
the alignment of Sales In targets with Sales
Team bonus payments. Once the stock has
moved out of Producer hands it is
considered a sale and this is
simply not true. Nothing is sold
until a consumer has handed
over their hard cash at the till.
The beauty of an RTM
Assessment is that it addresses
how to achieve a sales uplift
and every assessment I have
been involved with has
achieved such an uplift! If you
get close to your Distributors
and develop a lasting
relationship you will be able to
get more out of the market
even in a recession.
Partnership treat them as equals as they are
an integral part of your business. Hold
regular meetings and ensure the discussion
is a real two-way process.
Planning & Logistics do not assume they
know how to aggregate demand by SKU. If
their forecast is more accurate then this
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13
ripples right back to you own factories and

procurement activities.
Sales/Order Management provide training
to ensure your face to the customer is
professional and competent. Ensure orders
are captured promptly AND that stock is
available.
Finance & Back Office is the Distributor
financially sound and capital efficient? Do
they recruit and retain the right calibre of
people and are they rewarded sensibly?
This is just a snapshot of a comprehensive
RTM assessment review and more can be
found here (http://bit.ly/bJCuyw)
If you have struggled to make your 2010
numbers (http://bit.ly/gxkYHR) you might find
that Q1 2011 presents an extremely difficult
start to the year. A thorough review of your
RTM Distribution network could be just what
you need to make up ground in the following
months.
Uplift in real sales is there

for the taking!
How does RTM dovetail with S&OP?
Successful organisations have implemented

Sales & Operational Planning (S&OP):
S&OP
is a collaborative cross-functional
process that engages all functions to produce
an integrated set of operational plans that all
are committed to support and turn into
reality
The plans cover a sufficient time horizon to
enable resource planning & support the
annual & strategic planning processes.
The purpose is to balance demand & supply
across the supply chain.
S&OP is performed periodically usually
monthly but can be weekly in a short shelf
life business.
S&OP aligns regular, e.g. weekly & monthly
operational plans to high level business &
strategic plans.
At its core is a single set of numbers for the
business.
S&OP uses standardised processes, calendars
of events, meetings and KPIs.
Part of the challenge of RTM for Producers is

integrating the operations of Distributors with
those of their own organisation. In particular is
integration of S&OP.
Organisations face this challenge once RTM is
established and Distributors have started to
operate in a standardised manner.
improvements in customer service levels

and in particular real sales revenue uplifts
for the Producer and Distributors.
Diagrammatically the process of S&OP
integration with Distributors can be
represented as shown below:
The benefits of integration can be far reaching

in terms of reduced
supply chain costs,
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14
What do we have to do and how do we do it?

Trying to get the best out of Distributors in
some developing and emerging markets is
particularly challenging. The traditional
non-key account trade is largely unstructured
and characterised by numerous players many
of whom are opportunists and uninterested
in developing a professional business.
So how does a Producer (Manufacturer) deal
with this state of affairs? Invariably it boils
down to
What do we have to do?
&
How do we do it?
Enchange has been working in Central &
Eastern Europe since 1996 including work
on RTM programmes.
Although every
market is very distinctive and offers its own
specific challenges, there are similarities with
how to approach RTM Programmes and get
the best results.
We offer the following 11 Critical Success
Factors for RTM Programmes:
1. Model Distributor. Define this in terms of
size (e.g. minimum volume / turnover),
processes (front office & back office) and
financials (balance sheet, P&L, cash flow).
It is worth considering the world from the
view of a Distributor shareholder and ask

what (financially) the business must look
like in order that they are encouraged to
invest in assets, systems and people?
Distributors can be graded according to
compliance with a predefined set of
standards (e.g. gold, silver, bronze). With a
reliable audit process, they can then be
rewarded according to demonstration and
maintenance of these standards.
Enchange has developed a series of
distributor assessment tools; a Lite version
is free to download http://bit.ly/evlC4b.
2. Data. RTM programmes should capture
Distributor key data including Point of Sale
(POS) data. The minimum is POS contact
details. Ideally it would include sales/stock
out of the Distributor AND POS sales/stock
data. Data availability improves supply
chain demand visibility, enables stock
replenishment and reduces distribution risk
in the event a Distributor fails. With a
manageable number of Distributors, the
producer can help implement the same
system in each Distributor.
This is
ambitious in many markets and should
only be attempted if there is a strong
business case to do so. Often a data
capture process is sufficient.
3. P r oc es s
D es ign
&
Int eg r at io n .
New standardised Distributor processes
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15
raise the possibility of process integration

with the producer/manufacturer,
particularly if a stock replenishment model
is to be implemented. In particular there is
the opportunity to capture more reliable
sales forecasting data (from sales out of
Distributor) and integrating this data with
the Sales & Operational Planning (S&OP)
processes of the producer.
Once
implemented this will drive dramatic
improvements in customer service and
significantly reduce inventory along the
length of the outbound supply chain.
4. Order capture.
Insist on a standard
process including electronic order capture
where possible. As a minimum, insist on
the capture of data on a standard order
form.
5. Key Performance Indicators (KPIs). At
each stage of the programme, the
producer/manufacturer must decide upon
the desired outcomes. This is not always
an immediate increase in sales, e.g.
movement to a stock replenishment
model can lead to a one-off decline in
sales to Distributors as the trade destocks.
Jointly decide upon the desired
performance of the Distributors (sales,
Continued on next page....
What do we have to do and how do we do it?

promotions, stock, returns, service levels,
forecasting accuracy, etc) and implement the
appropriate supporting KPIs. Keep KPIs to a
manageable number (max 10) and consider
using a Balanced Scorecard approach.
6. Distributor Contracts. Align these to the KPIs
and include Service Level Agreements (SLAs).
Be clear about expected performance levels
and visibility, implementation of the RTM
programme, information and data exchange,
etc. Include an agreed review & monitoring
process and be clear about expected
performance improvement by the end of the
defined period.
7. Roles. Most RTM programmes involve a
significant change in roles for the Logistics/
Supply Chain and Sales Departments.
For example, the role of Sales can change
from a traditional selling role to one of
support for Distributor partners, i.e. Customer
Development. If a stock replenishment model
is implemented, the key selling activity moves
to the point of sale under the auspices of the
Distributor with the role of the producer/
manufacturer Sales Department being one of
support and training. It is not unusual for this
change to be resisted by Sales as it can be
perceived as a loss of power within the Sales
Organisation.
8. Keep it Simple (KISS). The KISS principle
should apply. If the change is too difficult to
Continued from previous page....
easily explain to the Distributors, the chances

are that the programme will stall or fail.
9. Timing. At each key stage of the programme,
aim to use any low season for design,
piloting, briefing and training. Ideally, rollouts
should have taken place before volumes pick
up in any high season.
10.Pilot. Whatever the design, it will likely be a
major change that should be piloted with
selected Distributors.
It is wise not to
over-commit to elements of the design (i.e.
create wriggle room) in the event that significant changes are needed for rollout.
11.Change Management.
Most RTM
programmes involve significant change.
Ensure that as a minimum, the following are
addressed in some way:
a) Create a change management strategy
(start with readiness assessments of
Distributors; a strategy map can also
greatly help);
b) Engage senior managers as sponsors of
the change;
c) Communication that develops a
compelling message and awareness of the
need for change;
d) Involve people (producer & Distributors)
through the transition e.g., by workshops
in the design and implementation stages;
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16
e) Education & Training to support the

change especially within the
Distributors;
f) Measurement & Reward - methods to
gauge progress (e.g. KPIs), reward
appropriate behaviours (e.g. bonuses)
and visible reinforcement (e.g. award
schemes - Distributor / employee of
the month) to sustain the change.
Most of all keep in mind why you are doing
this. When correctly implemented, RTM
programmes always deliver an increase in
sales revenue and often at significant levels.
After all that The Fun Bit Top 10 RTM Hits
Straight in at number 10 is Queen with

One Vision Work with Distributors that
have a clearly defined strategy in place.
If they know what they are aiming at and
have made the effort to define this they are
likely to be more able to support your
objectives.
At number 9 this week is Two Hearts from
Phil Collins You need to establish a
relationship with your Distributor. If you
have both organisations believing in just
one mind your interaction will be
smoother and a firm basis for success.
Depeche Mode and I Just Cant Get
Enough stay at number 8 There is
nothing worse than having orders you
cannot fulfil due to being out of stock.
Spend some quality time with the Distributor

to understand the actual baseline market
demand without promotions and new
launches etc.
An old favourite at number 7 is Adam and
the Ants with Stand and Deliver Perhaps
not considered the most important aspect of
Distributor performance. However, if you do
not know where your stock is or how to get
it to shops cost effectively then this will
hinder your ambitions.
On a similar theme Space Oddity by David
Bowie sits at number 6 You may be
surprised at the low quality of some of your
Distributor storage facilities. Foods and drinks
need to be stored in clean and tidy
conditions and possibly temperature
controlled. If not food and drink then your
stock may be of high unit value and so theft
is what you need to avoid.
At 5 is Status Quo with Whatever You Want
Do you know how your Distributor
representatives take orders on your
behalf? You should try being a fly on the
wall one day and see for yourself. You may
not be too happy with what you see!
Sitting at number 4 this week is the Peter Pan
of Pop Cliff Richard with Move It - Once you
have secured an order you need to be sure
this is processed in a timely fashion.
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This weeks top 10 looks at FMCG Route To

Market Distribution - how do you get your
product onto shelves?
17
You should check how long an order takes

to be processed and acted upon.
Another old favourite secures number 3
this week and its Abba with Money,
Money, Money Your Distributors need
cash flow plus a modest profit to survive or
it is not worth them being in business.
Take care when setting your trading terms
or you could cause problems which can
lead to financial collapse.
Near the top at number 2 is The Jags from
the 70s with (Ive Got Your Number)
Written On The Back Of My Hand Hard
to believe but some FMCG Distributors still
take hand written orders on any available
piece of paper. If you want to ensure
accurate order capture and prompt
processing then you need to invest in
some sort of data collection IT. This does
not have to be directly on line but of
course, that would be even better.
Finally, at the top is Reward by Teardrop
Explodes The Distributor is not a charity
and needs a reasonable return on
investment. Review your support spend
and ask if it is really fair and motivational.
Similarly, take time to ensure the
Distributor is treating his staff in exactly the
same way as they are actually a key part of
your route onto the shelf.
And Finally...
Love them or hate them Distributors are here to stay. You might as well stop getting frustrated and start working
with them. There are good Distributors out there; you just need to find them and constantly develop them. Good
luck!
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18
About The Author
Enchange Supply Chain Consultancy
Dave Jordan is the Enchange in-house CEE Logistics and

Distribution expert. He lives in Bucharest, Romania. He mainly
blogs about the characteristics, drivers, challenges and best
practices of Logistics and Distribution operations in the CEE
region.
Enchange is an international supply chain consultancy founded in 1993.

Working in Europe, Africa & the Middle East, Enchange has delivered in
excess of 500 projects for more than 100 clients in over 60 countries.
We have been working with some of the foremost FMCG, Pharmaceuticals
and Telecommunications companies in Central & Eastern Europe (CEE)
since 1996. During that time we have developed an approach to supply
chain performance improvement designed specifically for the challenges
faced by organisations in the region.
To learn more about Dave please visit his profile at:

http://supplychain.enchange.com/our-bloggers/dave-jordan/
To contact Dave:
dave.jordan@enchange.com
http://ro.linkedin.com/in/daveajordan
We have two product and service offerings that are both relevant to the
current needs of and can add considerable financial benefits to
organisations in CEE. They are:
Route to Market (RTM) to improve Distributor performance and

generate a sustainable uplift in sales.
Integrated Supply Chain Planning to reduce costs, raise efficiency and
improve customer service levels.
For our latest news and views, sometimes light hearted, on supply chain
issues, please visit the Enchange Supply Chain Blog at
http://supplychain.enchange.com/blog
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Route to Market - A Down to Earth Review, 2nd Edition by Enchange Limited is

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RTM Programme Benefits?

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Communicate, Communicate, Communicate!

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Agree a set of relevant KPI's on which to measure the performance

If running an RTM network was easy there would be no space

Does your Distributor have a clear understanding of their

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Once you know what the potential

Why Do They Have So Much Stock?

You might think your Distributors have a

1. Month, quarter and year-end push.

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that meets the requirements of your organisation. This

Yes, it's painful but it is necessary for the health and

The Thought That Counts

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Hitting The Target

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might cause a drain on resources but you

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Take a Long Hard Look at Yourself

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You cannot build houses on sand yet Producers expect

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There is no shortage of operators

Dont Reinvent The Wheel

(Tip. If you want advance warning of new

CEE in particular is a relative desert in

Myth 1. "Mr. Competitor will find out

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Myth 2. "Mr. Competitor will know all my

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Trust Is Good But Check Is Better

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The tool is not difficult or complicated and will not take

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Exactly What Does An FMCG RTM Distribution Assessment Deliver?

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valuable stock but without a pull from the

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ripples right back to you own factories and

Uplift in real sales is there

How does RTM dovetail with S&OP?

Successful organisations have implemented

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Part of the challenge of RTM for Producers is

improvements in customer service levels

The benefits of integration can be far reaching