快消行业发展分析报告.ppt

ChinaFMCGindustryRTMandWSdevelopmentpractice Bainpresentation draft November2013 Summaryofkeymessages 1 2 FMCGcompaniesfaceaseriesofchallengesinselectingandmanagingRTMmodelswhentheypursuegrowthinChinaSheersizeofopportunity universeofoutlets ManagingpricingisparticularlydifficultinChina becauseChineseshoppersare repertoire andbecauseofcomplexityofmarkets channelsNeedtobalanceexecutioneffectiveness andcosttoservewithincreasingreachMostsuccessfulFMCGcompaniesinChinaneedtobegoodatmanagingmultipleRTMmodelsatthesametimeasasustainablecompetitiveadvantage Thereisno onesizefitsall approachDirectselling controlledmodel CorestrengthofsomeMNCs includingKO fororganizedandevenfragmentedtradebutChineseFMCGplayersincreasinglyadeptatthismodelIndirectselling commonlyutilizedbyChineseFMCGplayersgivenspeed reachandlowercostbutmanymodelswithvaryingrolesandlevelsofcontrolThemostsuccessfulMNCandChineseFMCGstailordirectandindirectsellingmodelstodifferentmarketandchannel customerpriorities withstronginternalcapabilitiesandsystemstomanageconflictsbetweenmodels 3 85 1 2 3 Summaryofkeymessages 2 2 Managinghybridmodels combinationofdirectsellingandindirectselling isadynamicprocess SuccessfulFMCGscontinuouslyevolvetheirmodelsalongwithdifferentstagesofdevelopmentAdapttomarketdynamicse g urbanization industryconsolidation channelmixevolutionOptimizecostswithincreaseinscaleandinternalcapabilities withoutsacrificingcontrolManyFMCGsinvestinbuildingdedicatedinternalcapabilitiesandsystemsforeachmodel Forindirectselling wholesalermanagementcapabilitiesandsystemscriticalbutsoarenetworkofscaled capableandloyalWSManagementtoolsanddetailedplaybookstomanagepricingtransparency marginpool transshipment optimizecosttoserveetc WSrepsdedicatedtorecruiting settingtargets incentives upgrading trainingW S increasingloyaltyandoccasionallyrestructuringFullyintegratedwithsalessystemsFormanyFMCGcompanies thereisalargesizeoftheprizefromsuccessfullymanagingthecomplementaryindirectsellingmodel 3 85 5 6 4 Agenda 11 89 ManagingmultipleRTMmodelsinChinaKeysuccessfactorsformanagingindirectsellingmodelsinChinaSomeimplicationsforKO FMCGcompaniesinChinafaceaseriesofchallengesinselectingandmanagingRTMmodels Sheersizeofopportunity universeofoutletsComplexityofmanagingdifferentmarketsandchannelsDifferentdropsizeandeconomicsManagingpricingisparticularlydifficultinChinaConstantlyevolvingmarketandcompetitivedynamicsLargeandfragmentednetworkofdistributors wholesalerstomanage size capabilitiesvarysignificantlyEvolvinginternalcapabilitiesandcostspressures 3 856 84 1 FMCGcompaniesinChinaneedtobegoodatmanagingmultipleRTMmodelsatthesametime 32 8442 84 Preliminary 2 FullcontroloverPOSdisplayandactivationLargeinitialinvestmentininfrastructureandteamHighercosttoserve ControloverPOSdisplayandactivationDistributorswithrightlogisticcapabilitiesfordropsizeeconomicsRelativelyhighcosttoserve Canhavevaryinglevelsofcontroloverdistributors WS andPOSexecutionQualityofdistributors WScanvaryTypicallylowercosttoserve Example WantWantdevelopedcombinationofindirectanddirectsalesmodelstosustaingrowth Note MostrevenueisfromChinaMainlandSource Companyannualreport Analystreports Literaturesearch WantWantRTMdevelopment 2 67 8576 85 90s QuicklyexpandedacrossChinathroughindirectsalesanddistributionmodelforgeneraltrade sameRTMforsnackfoodonlymanagetier1DTs 25salesofficesinChinaVerylimitedsalesrep onlyresponsibleforcollectingmoneyfromtier1distributors 00 12 05 Growthconstrainedbyvaryingqualityofwholesalersandrelativelyweakinternalsalescapabilities 06 10 Builtupdirectsalesmodelandinternalcapabilities teamsformoderntradeandkeycityGT 300salesoffices 4 5kownsalesrep KAand HeWant directselling indirectdistribution grewto60 ofrevenues BuiltupindirectsalesmodelforE Dwithfocusonincreasingpenetration Preliminary Example WantWantreliedonindirectsalesanddistributionmodeltodrivequickexpansionin90 s Source CompanyAnnualReports ExpertInterviews LiteratureSearches 41 85129 846 84 2 MainlysellthroughW Smarkets 25salesofficeinChinaVerylimitedWantWantownsalespeopleOnlyresponsibletocollectmoneyfromT1DTsNovisibilityonT2DTsorbelow WantWant T1Distributors T2DT WS Indirectselling indirectdistribution 95 ofsales MostlyGToutlets Selling Delivery Preliminary Example WantWantbuiltupdirectsalesmodelforMTandkeycitiesfrom2006 2010 Source CompanyAnnualReports ExpertInterviews LiteratureSearches 64 8568 8583 8487 84122 84 2 GlobalandnationalKAretailers WantWant KAsales T1Distributors HeWant sales T2DT WS Directselling distribution 20 ofsales Directselling indirectdistribution 40 ofsales Indirectselling indirectdistribution 40 ofsales RegionalandlocalMT keycityGT Fragmentedtrade Directlysellsanddeliversto 20global nationalKAsManagedby 200WantWantKAsalesDeliverybyowndeliveryfleetorthrough3rdpartylogisticsproviders HeWant modelcovers 1Mretailoutletsin2008Established 300salesoffices4 5KWantWantownsalespeopleand10 15KDSRsforboth HeWant DTmgmt in2008 15KDT WSnationwidewithmonthlysalesrangingfromafewthousandsto100MRMB Selling Delivery Preliminary Example WantWantthenbuiltupE Dindirectsalesmodeltoacceleratebeveragesstartingin 12 Source CompanyAnnualReports ExpertInterviews LiteratureSearches 40 8541 8517 8418 8458 8579 84 2 Global national selectiveregionalKAretailers WantWant KAsales RetailT1Distributors HeWant sales T2DT WS Directselling distribution 20 ofsales Directselling indirectdistribution 35 ofsales Indirectselling indirectdistribution 35 ofsales RegionalandlocalMT Generaltrade ExtendKAcoveragetolargestregionalMTchains 200WantWantKAsalesDeliverybyowndeliveryfleetorthrough3rdpartylogisticsproviders Expandedtoover350salesofficesinChinaStabilized ofownsalespeopleandincrease ofDSRandin storepush girlsIntroduced LiangWant projecttostrengthenin storeexecutionStreamdownto 8KhighqualityDT WSnationwide onlyasmall throughT2DT Selling Delivery FocusonE Doutlets E DT1Distributors Indirectselling Indirectdistribution 10 ofsales StartedtorecruitE DdedicatedDTswithterritoryexclusivitySupportedDTswithsegmentedentrytoolkitfordifferentE Dtypes layout promoplan etc T2DT WS Preliminary Example WrigleyasanMNCcompanyadeptatmanagingindirectanddirectsellingmodels 3 8510 84 2 RTMmodel ofcities Product brandportfolio Channelmix PhaseI DEVELOPINGREPEATABLEMODEL 93 02 PhaseII Horizontalgrowth 02 11 PhaseIII Verticalgrowth since 11 Preliminary FMCGstendtousedifferentRTMmodelstailoredtodifferentmarketandchannelpriorities dynamics 6 8511 84 3 4 Geographic Geographicandchannelpriorities Channels DifferentmixofRTMmodels drivenbyNatureofcategoryMarketscale share therebycost economics InternalcapabilitiesContinuouslyevolveRTMmodelsalongwithdifferentstagesofdevelopmentAdapttomarketdynamicsOptimizecostswithincreaseinscaleandinternalcapabilities withoutsacrificingcontrol Illustrative andotherconsiderations Example WrigleytailorsitsRTMmodelswithdifferentialfocusonkeycitiesandTT Carrefour Wal Mart Auchan RT Mart Lotus MetroCLiteratureSearches Keycities 50keyandprovincialcities Bcities 200prefecturecities C Dcities rural smallerprefecturecities counties towns Global6KA 10 sales OtherMT 40 sales TT 50 sales Directselling distribution Mixofdirectandindirectselling Indirectdistribution Indirectselling distribution Wrigleycovers 3MoutletsinChinaandhavevisibilityon 800Koutletswheretheir 2 000salesrepsand3 400DSRssellintoCentralizedsalesdatabaseofthese 800Koutlets andT1distributorsFocusontop50cities withstrongsalespresenceinmarket Outletreachandflexibility 3 4 Whitespace nocontrol Developedmarket greaterlevelofcontrol 54 8460 84 Stage2 Stage1 Contract conditionality Compensationmodel Nocontract purelytransactional Basic2partycontract subjecttorenewaleachyear Markup rebatesonvol target Markup rebatesonvol target conditions LevelofPOScontrol visits InfrequentvisitbyDSRs Notknown ILLUSTRATIVE CategoryexclusiveContractwithsalestarget highlevelexecutionKPI Floorpricemarkup Visibility tracking Onlysalestowholesaler POSvisibilitythroughroutecoverageAuditsonwholesaler VisitedbyDSRsandsomebysales Markup Rebatesbasedonvol target productavailability Annualcontract subjecttobasicconditions Trackingof2ndtierWSutilizedbywholesaler Trackingof2ndtierWSandPOScovered MorefrequentvisitbyDSRs Fragmentedtrade Indirectsellingmodelevolutionwithincreasinglocalscale Example WrigleycontinuouslyevolvesitsRTMmodelwithlocalscaletoassertgreatercontrol 3 4 Example BeverageCo evolvesfromindirectsellingmodeltodirectmodelasitslocalmarketshareincreases Marketentry Indirectsellingwithlittlecontrol Developingstage Evolvestowardsdirectselling Stronghold Directselling strongcontrol moderatecost Ontrade TT FMCGco MasterWS T2WS FMCGco MasterWS NewChannel Ontrade1 Ontrade2 TT Territory1 Ontrade1 Ontrade2 TT Territory2 FMCGco Territory1 T1WS T2WS Salesplanning Salestargetplanning Salestacticplanning Salesrepmanagement Distribution warehousing Ordering Invoicing Post salesservices Channeldevelopment Channelmaintenance Salestargetplanning Salestacticplanning Salesrepmanagement Distribution warehousing Ordering Invoicing Post salesservices Channeldevelopment Channelmaintenance Salestargetplanning Salestacticplanning Salesrepmanagement Distribution warehousing Ordering Invoicing Post salesservices Channeldevelopment Channelmaintenance Channelmgmt Logistics Source Bainexperience WSincharge FMCGco incharge ofsalesrep 5percityinearlystage keyroleistodevelopWS 30 50percityinmaturestage ofoutletsvs ofsalesrep 200 1 keyroleistomanageandsuperviseT1WS ofWS 1 2 10 20 10 30percity ofoutletsvs ofsalesrep 40 50 1 keyroleistovisitoutlets manageactivationandW Smanagement Ontrade TT Territory3 T1WS T2WS Ontrade TT T1WS T2WS T1WS 2 5 T2WS Ontrade TT Ontrade TT T1WS T2WS Ontrade TT Territory2 T2WS 3 4 W Sfocusedonlyonnewchannel Agenda 11 89 ManagingmultipleRTMmodelsinChinaKeysuccessfactorsformanagingindirectsellingmodelsinChinaSomeimplicationsforKO Somekeyconsiderationsforrolesandtypeofindirectsellinganddistributionmodel 5 Dowehaveresources capabilities andrelationshipnetworktoattractexclusive financiallycapabledistributors Attractivereturns grossandnetmargins salesturnover tradeterms logisticscostas oftotalcost etc BrandstrengthKnowledgetransfer businessandinfrastructuresetup systems etc Aretherelarge loyalandscalabledistributorswithincompany sexistingdistributornetwork Ifyes howmanyandwherearetheylocated Alternatively aretherenon FMCGcompanydistributorswhicharelargeenoughandnon boundedbyexclusivearrangementsavailabletoworkwithcompany Dowehavethecapabilitiestomanagethecomplexityofhavinglargenumberofdistributors Dowehavetheresources capabilities andrelationship trusttogrowourdistributornetworkandmanagetheirdailyoperations Salesforcetraining daily weeklyplanningmeetings performancetracking etc WhataretherolesofdifferentRTMmodelsbygeography channelandstageofdevelopment Howtomanageindirectanddirectsellingmodelsatthesametime Abilitytogettheeconomicsrighttoattractdistributors Availabilityofscaled scalabledistributors Capabilities Capabilitytomanagemultiplemodels 4 855 856 858 85 5 FlywheelofW Smgmt capabilities systemthatovertimeresultinnetworkofscaled capableandloyalWS 34 84 Optimization restructuring Fullyintegrated Cost to serve optimization WholesaleManagementcapabilities system Wholesalerdevelopment Performancetargets Recruitment Performancemgt Scaleandloyaltymgt KPIs scorecard Pricemgt Marginpoolmgt Productportfolio Territorydefinitionandroles Example1 WrigleyhasdevelopedaleadingW Smgmt system 5 Pricingtransparency control Advanceddistributordatabase SalesInformationmgmtsystem Systematictrackingmechanismtoensuretransparencyandcontrolovertradepricing DNAprogram since2004tominimizeimpactfromtransshipmentandcounterfeitgoods throughbarcodetracking Severepunishmentsifdistributorsbreaktherules Tier1DTsautomaticallylinkedintonationaldistributordatabase fromordertocash Sales inventory wholesalercapabilityCustomerhotlineforallwholesalersOrderplacementandfulfillmentInventorymanagementandreplenishmenthistoryFreight deliverystatus Salessystemthatlinksdistributorinformationwithsales routeplansTracksell inondailybasis bykeySKUTrackdistributorKPIsandperformanceTracktransshipment counterfeitandothercomplaints issueswithplanstointervenePlanstolinkintoSAPsystemsovertime 10 8415 8516 8517 85 Logisticscapabilities Smallvans electric poweredbicyclestoenhanceproductivity6 sidedstandtostoreanddisplayproductsEasiertotransportEarnamoreprominentdisplayspotattheoutlet e g nexttocashregister EasytospotwhenstockislowtopromptreplenishmentorderKPIs SalestargetsIn storedisplayrequirementsOn timepaymentcollectionDTsalesreps Onaverage eachDSR SRcancover 20 30outletsperday 300 500outletscoveredpermonthMonthlysalary 2 000RMB inclusiveofbase commission Example1 WrigleyhasovertimedevelopedandtrainedbroadnetworkofDTsandDSRs 5 TypicalprofileofWWYdistributorcoveringTT 11 84 Includesrevisitsofthesameoutletswithinamonth Example2 WantWanthasdevelopedadedicatedsystemtomanageits8KwholesalersinChina 5 Preliminary Source Companyannualreports Literaturesearches SystematicallymanageW Sperformance withgreatersupportofgoodperforming scaledW S ClearW SsegmentationcriteriabasedonperformanceTransparenttoalltheW SthroughdedicatedW SwebsiteCriteriaincl marketsharewithintheterritory volume revenuetarget in storeexecution etc Systematicprocessoftargetsetting tracking evaluationAtnational regionalandlocallevelTieincentives bonus rebatesorupgrading withtheperformancerating Wereviewthewholesalerperformancedatabaseeachyeartoratethemandrewardthemaccordingly Thenextyearweengagemorewiththehighperformers Theobjectiveistoconvertthemintoourdistributionpartners Chairman CEO WantWantChinaHoldings Specialfinancingsupport trainings talentdevelopforhighperformanceW SDedicatedwebsitetointeractwithwholesalers In2013 wewillcontinueprovidingvalueadditionservicestowholesalersthatcontributehighrevenuetoourbusinesstoincreasetheirloyalty Chairman CEO WantWantChinaHoldings 4 8414 8916 85 Example2 anddevelopedtoolsfordirectsalesforcethatarealsobeingtransferredtoW S 5 Dailysalesreportcard Morningbriefingschedule Keyfeatures Visualrepre sentation Source HeWant ProjectTrainingMaterials DatarequirementperoutletissimpleandnotexcessiveRequirementsinclude ofSKUson shelf ofSKUsreceivedbytheoutletthatday ofpreviouslyun introducedSKUsreceivedbytheoutletthatday valueofnewsalesorder Planneddown to the minuteReport outsonpreviousday shighlightsEmphasisonthebroaderteamandcompany notontheindividualthroughrecitationofcompanyvaluesandgroupexercisesAlotsingingandslogans 11 8512 8514 84 Preliminary Developbusinesspartnertoreachfullpotential Terminateormanage downside Investtodevelopthecapability Example3 SnackFoodCo usespre agreedcriteriaandtoolstoassessandupgrade restructureDTs Source Bainexperience High Low Low Top10wholesaler ContributionandcommitmenttoSnackfoodco Capabilityandpotential Financialstrength 25 Logisticscapabilities 25 Warehousefacilities 25 Distributioncoverage 10 Systemcompatibility 5 Servicinglevels etc 10 Sales 40 Historicalsalesgrowth 20 Est Snackfoodco shareofwallet 20 Yearsofcooperationandexclusivity 20 33 84 5 Engage High Source Bainexperience Terminateormanage downside Engage Developbusinesspartnertoreachfullpotential Investtodevelopthecapability Best in classlogisticproviderin4keyandT1citiesPotentiallyexpandintosurroundingT2 3citiesandprovidein storeservicing ProvidegooddeliveryserviceinT1and2 3cities Best in classlogisticsproviderin4keyandT1citiesPotentiallyexpandintoT2 3citiesandprovidein storeservicing Providebasiclogisticsandin storeservicingintailT2 3cities Expectedroles Dev support Moreflexiblecredittermsorfavorablefinancialtreatmentbasedoninputcriteria E g fundingofinvestmentonwarehouse trucks etc DevelophighlycustomizedjointbusinessplanEnhancestrategicrelationshipandalignmentEnsureeffectiveinfosharing TailoredtrainingandinvestmenttoimprovecapabilitiesE g ARcollection deliveryrouteoptimizationCloselymonitorandensureeffectiveinfosharing Motivatebusinessgrowthwithmoreflexiblecredittermsorfavorablefinancialtreatment EngageW Sthroughtop to topmeetings strategicalignment etc Providemorefavorabletermstostrengt