CRM Development: Food Processing & Distribution
NAVIGATOR implemented a comprehensive CRM analysis of a leading Cypriot food processing and distribution firm. The objective was to determine which clients were truly profitable, and how to structure sales and distribution activities and processes as a result.
We developed an exhaustive analysis and dynamic model of net customer profitability, including the distribution of corporate overheads using a proprietary methodology.
We shadowed sales and distribution staff, viewing first-hand how they interacted with customers, implemented weekly delivery routes, and stocked supermarket shelves.
Our analysis showed that a significant share of clients were below break-even profitability.
We recommended differentiating delivery and sales operations, focusing on specific customer segments and investing in productivity. This included the use of staggered delivery scheduling, minimum order sizes and conditions, and a different performance incentive structure.
Project work included:
1. Cost Centre Analysis
- Detailed analysis of 2005-2006 expenditure
- Re-consolidation of costs by region
- Allocation of overhead costs per region
- Allocation of overhead costs per customer
- Calculation of net customer profitability
- Calculation of minimum order volume and break-even
2. Warehouse Observation and Analysis
- Observation of stock-picking software and methods
- Analysis of dry, chilled and frozen picking methods
- Analysis of vehicle load capacity and route planning
3. Salesforce & Customer Analysis
- Customer sales visits and order-taking
- Delivery shadowing: observation of large-vehicle deliveries and shelf-stocking in supermarkets
- Strategic segmentation of customers by attractiveness and potential
4. Strategic recommendations
- Salesforce differentiation and key account planning
- Minimum order and delivery conditions per customer segment
- Distribution and shelf-stocking targets and incentives for the delivery force
- New sales incentives and organisation for the salesforce
- Recommendations for salesforce development and training
Total Asset Productivity (TAP) is a metric developed by Navigator to measure the service productivity of assets and labour, measured as a discrete profit centre. This takes a mission-oriented approach towards allocating overhead expenses and determining the true profitability of assets and business functions.
An analysis of delivery and distribution staff showed that 95% of staff systematically worked from 1-3 hours more per day. Their minimum-wage pay created a negative incentive: work slower and longer hours, maximizing the daily income. Yet the supplier needs productivity, expressed by the number of deliveries made per day by vehicle-driver teams. Reversing a cost-based incentive to focus on productivity and investing in better distribution equipment and employee retention and training, although counter-intuitive, leads to higher profitability and higher stock turnover.
All information relating to this client, collected by NAVIGATOR Consulting Group Ltd. during this corporate training project is strictly confidential and will not be released by NAVIGATOR Consulting Group Ltd. to any third parties. This information appears here as an indication of NAVIGATOR’s consultancy capabilities in this field.