evgeny yudin_eng_8 tocpa_oct 2013

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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

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  • 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

    [email protected]

    +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?