26-27 октября 2013, Москва 8 Международная Конференция Ассоциации Практиков ТОС – TOCPA www.tocpractice.com Development of a Mafia Offer “New Goods” Evgeniy Yudin, CJSC Lybimy Kray, Russia October 2013
26-27 2013,
8
TOCPAwww.tocpractice.com
Development of a Mafia Offer
New Goods
Evgeniy Yudin, CJSC Lybimy Kray, Russia
October 2013
Evgeniy Yudin
8 TOCPA
+7(921) 997 09 26
Purchasing director of CJSC Lybimy Kray.Evgeniy has been using TOC since 2011. TOCimplementation focus areas are inventory managementand mafia offer development.
Education:-Saint-Petersburg Institute of Trade with major inTechnology and Organization of Catering Companies.
IMISP, Managers re-training program.
TOC areas:- Essence of production management solutions- Inventory management in distribution and retail- Mafia offer development
8 TOCPA
Current situation
The Company produces pastry goods
The Company sells the goods both through
distributors and directly to large retail chains
across Russia.
The client base consists of more than 100
clients.
The Company spends too much resources for
development, production and promotion of
new goods.
The sales volume of new goods grows
insignificantly
8 TOCPA
TOC tool
Current reality
Understand the
Problem
WHAT to Change?
Cloud
UDE
Current
Reality Tree
Future reality
Solution
WHAT to Change To?
Cloud
UDE
Future
Reality Tree
Negative
Branch
Transition
Implement the Solution
HOW to cause the
change?
6 layers
Plan
implementa
tion
Prerequisite
Tree
8 TOCPA
Steps of mafia offer development
1 Develop the profiles of client groups
2 Formulate typical UDEs
3 Development of UDE clouds
4 Clouds consolidation and identification of assumptions
5 Identification of competitive ability criteria
6 Formulation of a mafia offer
7 Making sure the mafia offer is effective
8 Development of Test questions to verify existence of clients problems9 Detailed sales process development for the mafia offer
10 Trainings of sales managers to sell the mafia offer
8 TOCPA
Develop the clients group profiles1
The client suffers from
Value of new goods is not clear, we do not know how to sell it.
Low sales of new goods at points of sales.
New goods eat shell space of fast selling SKUs.
Level of returned new goods from points of sales raised , as they are not always good.
Often there are goods with expiring good before date at our warehouses.
Unequal demand at points of sales.
It is impossible to calculate the optimal inventory, as the order volume that is placed by different retail
chains may differ.
I would like to solve it by
Having a presentation describing
clear value of new goods.
Reducing the range of new goods
in order to increase sales of
other SKUs.
Having an opportunity to
compensate returned goods
from points of sales at the
suppliers expense.
Promoting the new goods
extensively at the manufacturers
expense.
8 TOCPA
Formulation of the typical problems2
UDE 1: Most of new goods are not attractive to the customer.
UDE 2: Too often there is a surplus and shortage of new goods.
UDE 3: There are more returned new goods than goods of existing range.
UDE 4: points of sales do not want to expand the range of goods,
especially by introducing new goods.
UDE 5: Turnover of new goods is smaller than that of existing goods.
UDE 6: Sales of new goods do not increase total sales.
UDE 7: Sales of new goods do not increase profits under the contract.
8 TOCPA
Formulation of the typical problems2
UDE 3
There are more returned new goods than goods
of existing range
,
UDE 1
Most of new goods arenot attractive to the
customer
UDE 5
Turnover of new goods is smaller
than that of existing goods
UDE 6
Sales of new goods do not
increase total sales.
UDE 4
points of sales do not want to expand the range of goods, especially by
introducing new goods
UDE 7
Sales of new goods do not increase
profits under the contract
UDE 2
Too often there is a surplus and
shortage of new goods
Increase sales
8 TOCPA
Building of UDE clouds 3
Control cost
A
Increase profit
UDE 3: There are more returned new goods than goods of existing range.
D
Reduce range of goods
D`
Increase range of goods
B-D1: It is necessary to allocated a pallet place for each SKUs storage that increases
need of storage facilities.
B-D2: Many of items increases order batching time that leads to increased number
of warehouse employees.
B-D3: A large number of items increases the period of replenishment order forming
and the number of procurement department employees.
B-D4: sales manager, as a rule, deals with the range of 800-1000 SKUs and ignores
the rest goods and after a certain number of new items they do not add anything
to the turnover of the company.
8 TOCPA
Building of UDE clouds 3
Increase sales
Control cost
A
Increase profit
UDE 3: There are more returned new goods than goods of existing range.
D
Reduce range of goods
D`
Increase range of goods
C-D1: It is more likely that the points of sale will be placing
orders for more items if we would have a wider range of
goods.
-D2: It is more convenient for the points of sale to work
with a smaller number of items (replenish the full range of
goods from one distributor).
C-D3: The wider is our range presented at the points of
sale, the less shelf space remains for the goods of our
competitors.
C-D4: The wide range of goods allows satisfying tastes of
a wider range of customers
Increase sales
Control cost
A
Increase profit
UDE 3: There are more returned new goods than goods of existing range.
D
Reduce range of goods
D`
Increase range of goods
8 TOCPA
A-B: Each spent
ruble reduces
our profit
A-C: Each
additionally sold
SKU brings profit
D-D`:
We do not know whether
the product will be
successful, but we do not
want to lose the planned
profit
We do not know how to
draw the line between
successful and
unsuccessful items.
Building of UDE clouds 3
8 TOCPA
Clouds consolidation and identification of assumptions4
A
D
D`
A
D
D`
A
D
D`Summarized
Increase sales
Summarized
Control cost
Summarized A
Have a profitable
business
Summarized D
Not to increase the
range of goods
Summarized D`
Increase the range
of goods
C-D`: It is convenient to have a wide range of
goods for both the client and customer
C-D: Product range expansion increases
complexity of business processes and costsA-B Each spent ruble
reduces our profit
A-C: Each sold SKU
brings additional
turnover
D-D`:
1. We do not know
how to identify
success of a
product.
2. We do not know
which inventory
level of new
goods should be
maintained.
8 TOCPA
Identification of competitiveness criteria5
Key competences.
Know-how, design, technologies that
allows to produce marketable goods .
Delivery reliability.
Product availability.
Flexibility in response to changing market
needs and demand.
Control cost
Increase sales
8 TOCPA
Formulation of mafia offer6
D`
D
A
Have a profitable
business
Solutions/injection:
1. We offer goods, sales of which will
be at level of top selling by the
supplier in the same price range.
2. We offer a clear program of work
on new goods and carefully follow it
(value of new goods, presentation,
budget, deadlines, promotion and
etc.).
3. We provide a warranty, terms and
conditions of risk compensation for
unsuccessful new goods.
8 TOCPA
Convincing in the effectiveness of the mafia offer7
We shall
Increase sales
We shall
Control cost
A
We want
To have a profitable
business
D
We feel pressure
Not to increase
range of goods
D`
We feel pressure
To increase
range of goods
Our work methods result from the compromise between the pressure to increase or
reduce the range of goods
We do not know how to identify if the
product is successful
We do not know which inventory level
of new goods should be kept.
Assumption C-D`
It is convenient to
have a wide range
of goods for both
the client and
customer
Assumption A-
Each spent ruble
reduces our profit
Assumption A-C
Each sold SKU brings
additional turnover
Assumption-D
Working with the
existing range of
goods does not
require attraction
of additional
resources
15
8 TOCPA
Convincing in the effectiveness of the mafia offer7
2
,
1
6
7
3
,
,
,
,
,
-
5
,
4
,
8 TOCPA
Convincing in the effectiveness of the mafia offer7
,
,
,
( , ,
, ,
..)
7
6
4
,
5
,
2
,
1
3
8 TOCPA
Convincing in the effectiveness of the mafia offer7
Solutions/injection
Our mafia offer include:
1. We offer the goods, sales ofwhich will be at level of top selling
by the supplier of the item in the
same price range.
2. We offer a clear program of workon new goods and carefully follow
it (value of new goods,
presentation, budget, deadline,
promotion and etc.).
3. We provide a warranty, termsand conditions of risk
compensation for unsuccessful new
goods.
UDE 1: Most of new goods are not
attractive to the customer.V
UDE 2: Too often there is a
surplus and shortage of goodsV
UDE 3: There are more returned
new goods than goods of existing
range.
V
UDE 4: Points of sale do not want
to expand the range of goods,
especially on account of new
goods.
V
UDE 5: Turnover of new goods is
less than of existing goods .V
UDE 6: Sales of new goods do not
increase total sales.V
UDE 7: Sales of new goods do not
increase profits under the contract V
8 TOCPA
Test questions development to identify clients problems8
Test questions :
Do you have returned new
goods?
What are your financial
expenses on returned goods?
Are there any cases, when new
goods are returned almost
completely?
Are there mass returns of new
goods?
UDE:
UDE 3. There are more returned
new goods than goods of
existing range.
8 TOCPA
Detailed sales process development for the mafia offer 9
8 TOCPA
Detailed sales process development for the mafia offer 9
Offers product in demand
Training and motivation of sales
representatives
Provides sales support program
Compensates returns
Covers points of sales
Motivates sales representatives
Ensures new goods availability at the
warehouse
Reports on sales
Lybimy Kray Distributor
8 TOCPA
Detailed sales process development for the mafia offer 9
8 TOCPA
Detailed sales process development for the mafia offer 9
8 TOCPA
Trainings of sales personnel to sell the mafia offer10
A dialogue of a sales person based
on 6 layers of resistance to change
was developed.
Draft cooperation agreement was
developed.
Developed the calculation tool
Calculation of potential sales of
new goods in the region.
Printed a guideline brochure Mafia
offer for new goods.
A 2 day training for sales personnel
was developed based on the
prepared materials.
8 TOCPA
Summary
Focus of attention in the process of new
goods promotion was turned from what we
like (Supplier value perception), to what the
customers would like.
Change from carpet bombing to pinpoint
strikes.
Started a project called Blitzkrieg.
Analyzed the existing range of goods.
Started a project named Aperitif.
The development department was
restructured.
8 TOCPA
Thank you for your attention!
Questions?