Emerging mobility

Wherever you go in emerging markets, there seem to be an affordable way of getting your goods around. In Dar Es Salaam and Nairobi you have the two wheel push cart (Mikokoteni) and in Accra a more modern four wheel version.

 South East Asia prefers the three wheel motor-cart version, known for its high noise and air pollution. Not to mention Popeye like arms to steer the thing. In South Asia a three wheel Chinese agriculture machine is responsible for getting the job done, especially in rural areas.

 With fuel prices on the rise at the pump (and at the shop selling fuel out of an oil drum) you are likely to see more of these delivery vehicles as trucks fall out of favour. With electric bike sales going though the roof in Vietnam, is the three wheel delivery edition just around the corner?

 

 

Distributor learnings

I am currently in Ghana and evaluating a distributor network for a company in the media industry. Some key learnings from my trip to date:

Be aware of the distributor powerbase. Competent distributors are key to most supply chains and collaboration is critical in expanding your footprint. However, distributors should not hold you and your decisions hostage. In emerging markets, even big distributors are likely to have limited reach in key regions and areas. Distance yourself from you current situation and ask yourself the following questions:

If I have to start this business from scratch today, what would the selection criteria look like and which key areas and regions do I want to penetrate?

Take note of the evolution. Too often supply chains in emerging markets just evolve without any strategic intend. Modern trade and retailing are expanding in Africa (maybe not as rapidly as Asia) and middle class consumers shopping patterns are changing. How will these changes in the market affect your business and are you taking the necessary steps to adapt to these changes?

Invest in people and partners. Training budgets should not be limited to employees but must include strategic partners. Develop and invest in your partner base and they will grow with you. Training is gold in developing economies and will also go along way in building relationships.

Don’t be an evil gorilla. When it comes to your distributors in emerging markets, you are likely to be the 800 pound gorilla. Be transparent and handle them with the respect they deserve. There is a lot to learn from even the smallest of partners.

Emerging Market partner selection and management

Southern Africa has been consuming our time of late, and I we have been missing in action. We recently conducted a supply assessment and pilot roll-out for a media company in Zambia. Our workstream focused primarily on the Go-to-Market strategy and partner selection.

The following key issues were identified during the assessment:

Select the right partners. Ensure you have a clear understanding of the partner selection criteria. Identify the key drivers of partner success and include it in your selection criteria e.g. retail expertise. Communicate the selection criteria to all stakeholders and constantly evaluate if you are on the right track. Focus on distribution partners that hold real growth potential. Poor partner selection can severely affect your Go-to-Market strategy.

There is gold in those mountains. Emerging economies provide unique opportunities outside of the capital. Regional town populations and GDPs are always understated and hold great financial rewards with often little competition. By expanding your footprint, it is also important to create the necessary support structure for your more rural partners. They are too often left to their own devices.

Take the guess work out of your business. Standard Operating Procedures (SOPs) and retail standards (for example) simplify your business procedures and help to ensure the same quality in all operations. Emerging market operations often lack critical skills and don’t make any assumptions what people can and can not do.

What gets measured gets done. Focus on the key performance drivers of your business and don’t overextend yourself. Sometimes less is more. Include key performance measurements to your business planning process and evaluate on a yearly basis whether you are using these measurements to track and improve your business. There is no point it tracking something just for the sake of tracking.

The natural guys looking at the big guys

Organic food and drinks companies are increasingly looking at teaming up with MNCs (multinational corporations). MNCs with large distribution networks provide easy access for niche product companies that are struggling to penetrate larger chains.

The natural product segment is currently one of the fastest growing segments, making it very attractive for MNCs. As large companies try to diversify away from slower growth segments, natural product companies are being snapped up.

However, staying independent within a large conglomerate can be challenging. Brands can get diluted, and some consumers might view it as “the nice organic guys selling out to the evil empire”. Cost cutting efforts such as substituting for cheaper ingredients, will also have severe negative implications in the long run. As one executive put it, maintaining “we are the world let’s hold hands” culture, is sometimes very difficult for larger organizations.

10 key barriers with partner collaboration

1. Culture differences. Different organizations have different values and ways of doing things.
2. Poor alignment. Organizational goals and incentive conflicts.
3. Contracts and legal. Poor drawn up contracts or lack of contracts.
4. Accountability issues. Overlapping processes and unclear accountability issues.
5. Competing partners. Conflict of interests with competing organizations.
6. Lack of leadership. Lack of leadership to drive the collaboration process forward.
7. Communication. Poor communication between partners and lack of knowledge sharing.
8. Technology barriers. Integrating ERP and other tech systems provide unique challenges.
9. Unclear benefits. Benefits are not clear to all parties or are sometimes understated.
10. Corrective actions. Fail to identify problems and implement corrective actions.

10 key issues for evaluating inventory

1. Forecasting process. What is the current forecasting process and who is involved in setting targets?
2. Information technology. Identify the current IT system(s) employed by the company and are regular upgrades and improvements taking place with partners?
3. Collaboration. How much does collaboration take place between the various internal and external partners?
4. Items overstocked and out of stock. Which items are over and out of stock and what are the reasons? Is there a pattern emerging in the data?
5. Expired and out of date. What are the current product shelve life’s and what is the affect on the forecasting?
6. Safety stock factor. Are you using a safety stock factor and is it the same for all product SKUs and classes?
7. Product life cycle. What is the current product life cycles and how do the various SKUs differ from one another?
8. Lead times. Identify the product lead times and are there potential bottlenecks?
9. Process flow and visibility. Do you have a clear understanding of the inventory flow and are there potential opportunities to reduce time wastage?
10. Continuous evaluation. Is continuous evaluation and tracking taking place and what are the required KPIs?

Sales data capture challenges

Salesmen traditionally have been criticized for inadequate data capturing in outlets. However, some sales environments provide unique challenges for sales organization.

Limited time. Salesmen are likely to struggle in fast paced environments where data capturing will slow down the sales process. Organizations must evaluate simplified processes that require limited time to complete.

Aggressive environments. For example in emerging markets crowded markets provide particular challenges. It is always important to remember that some data is better than no data. Sales organizations must evaluate each sales situation.

Language problems. Many multi-national companies still provide English only documentation.

Training issues. Ensure salesmen are familiar with the sales process and eliminate company jargon where possible.

Sales data collection

Not all sales systems can be automated right away. However it is important to start with small improvements. These improvements can be standardized forms or simplified forms e.g. checkboxes. The following needs to be analyzed:

• Data collection process
• Accuracy of data
• Potential collaboration with sales partners
• Data entry simplifications
• Timeliness of data

10 key steps for developing a distributor evaluation system

1. Map out requirements- develop evaluation criteria and get agreement from key stakeholders
2. Process and roles- identify each stakeholders’ role in each operational process
3. Benchmarking-determine key KPIs that will form part of the evaluation
4. Create rating systems- develop the system and communicate and train employees and distributor partners. Ensure all parties have a clear understanding of the rating system
5. Pilot- launch pilot and evaluate results
6. Refinements- make adjustments to the evaluation system where required
7. Roll-out- implement evaluation system
8. Build relationship with distributors- the evaluation process will fail if distributors view it as a witch hunt. Sell benefits to employees and partners
9. Share- create a dashboard and make information easily accessible to all relevant parties
10. Conduct quality improvements- highlight focus areas and commence quality improvement process

Learnings from Unilever Indonesia

I recently read an article about the success of Unilever Indonesia, one of Asia’s top consumer goods companies. Please find below a summary of the key learning:

Distribution network strength – covering more than 600,000 outlets, their distribution network is a key competitive strength and a barrier for entry.

Growth in modern trade- accelerated growth in the modern trade sector provides opportunities for competitor entry.

Affordability – small pack sizes ensure the brand is affordable to all segments of the population.

With crisis comes opportunity- the 1997-98 financial crisis forced the company to reevaluate their strategy. These strategic changes are currently driving sales growth.

Low labour cost provides opportunity- the company is currently exporting products to South East Asia and Australia.

Micromarketing approach- consumers are segmented by geography and need state. Different climate and environment, result in different need state.

Quality assurance- the company does not outsource manufacturing and has better control over quality.