CRM Development: Food Processing & Distribution
Navigator Consulting implemented a comprehensive CRM analysis of a leading Cyprus food importer 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 on their deliveries in Cyprus (Nicosia and Limassol), 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 in Cyprus were below break-even profitability when overhead costs were taken into account. This is because there was no minimum order size or customer service conditions by client or order type.
We recommended differentiating delivery and sales operations, focusing on specific customer segments and investing in productivity. This included the use of staggered delivery scheduling in Cyprus, 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 Cyprus region
Allocation of overhead costs per Cyprus 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 in Cyprus
3. Salesforce & Customer Analysis
Customer sales visits and order-taking
Delivery shadowing: observation of large-vehicle deliveries and shelf-stocking in Cyprus supermarkets
Strategic segmentation of Cyprus 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 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 in Cyprus.
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.
Please contact us for consultancy support in analysing the profitability of your operations as well as developing analytical and tactical CRM.
Cyprus Food Processing & Distribution Firm
Date of Engagement:
February - May 2006
Countries of Operation:
Industry & Manufacturing, Food Processing