Distribution Best Practices
In many parts of the country, the pace of commerce has slowed somewhat as winter sets in. Many wholesalers are taking a well-deserved break from the hectic ace of the last year. The high-performance wholesalers are using this time to prepare for the next season and to gain an edge on the aforementioned resting wholesalers. If you are, or aspire to be, one of the high-performance group, here’s our list of tasks to consider:
Take to the highway —even though driving can be a hassle and, in many parts of the country, it’s darn cold, now is a great time to visit customers and branches.
Customer visits by the senior team — Many executives have devolved their customer touch to second- or third-hand biased briefings from the field, customer analysis reports from their shiny new business intelligence (BI) tool or their well-orchestrated big-hitter customer meetings. These folks are probably making decisions based upon this inadequate perspective. (For the record, we think meeting your big customers is critically important, but extrapolating their needs to your other customers is often a mistake. Often the heart of your profitability is in the small- and medium-sized customers so bonding with them is critical.) There is nothing like a face-to-face with the customer in his/her place of business. Many contractors are not operating at full-tilt this time of year. Therefore, you won’t get a picture of their real operation when things are hopping but you will get to see it up close and in person. The good news is that you may be able to score some quality time with the owner. Some ideas for planning your visit:
1. Plan your visit. Most exec visits and sales calls suffer because there was little or no planning involved…beyond where you will have lunch. Your objectives for the relationship, issues to discuss and how you can help them to be more successful should be somewhere in your plan.
2. Visit their shop if possible. You can observe a lot by just watching (Yogi Berra). When you look at their world, you get a much better feel for the problems they face and the problems that you can help them to solve. You can often see what they are buying and who they are buying from as a part of just paying attention. You can also assess their short- and long-term viability in these visits.
3. Take notes. Nothing shows more respect for the time the customer is spending with you and the information they are providing than by taking notes. You are showing that you value their contributions, which can make them more willing to take the deep dive you should be pursuing.
4. Talk to the owner and the kids who are working in the business. You may want to include key employees who have a promising future with this company or as they start their own business.
5. Thank you. A simple, no-cost thank you may provide the highest payoff of anything you do in the visit.
6. Ask what you can do to earn a bigger share of their business. We have nagged about this one for years, yet few wholesalers do it. Maybe some find it demeaning…to acknowledge that they serve the customer. Maybe others think it sounds silly. So far, we have never heard that it has produced a negative result, and have heard some success stories. You have to adapt the question to use your own words for telling the customer that you are willing to invest in the relationship to deserve more business.
Branch visits by the senior team — We want to remind executives that you may not have a clue as to how your branches operate when nobody is watching. Your well-choreographed visits reveal little about the day-to-day operation and the issues facing a branch. Again the off-season nature of the business results in a distorted view as compared to the full-on tempo of an in-season day, but this can be offset by the time for calm conversations with manager and branch team. Some ideas for planning your visit:
1. Plan your visit but don’t announce it. Take time to get up to speed on the branches' issues and the conversations that are needed. Drop in on the branch with no prior warning. This can be difficult as most companies have their own “jungle drums.” As explorers ventured into remote regions, they came to understand that the drums they heard, as they hiked through the jungle, were announcing their arrival to the next tribe down the path. Today the drums have been retired but are functionally implemented in the form of phone, emails and texts — but the result is the same — you get to see a “posed” picture of the branch. The team is all standing at attention, hair combed in clean uniforms. The aisles are swept. The inventory is all organized on shelves. The trucks are clean. There is a platter of freshly baked cookies on the counter. This is a good time to get a picture of the branch for your website but it is seldom, if ever, a true picture of the branch’s real operation. Frankly, some execs don’t want to see the nitty-gritty reality so they make sure that the branch knows well in advance of the scheduled visit. We think some no longer have the stomach for the work they would be obligated to do whenever they discover what the branch is really up to.
2. Tell no one. In some companies the only way to conduct a surprise inspection is to magically arrive having told no one that you are going or coming. This has two values: You get to see how the branch really operates and when branches know they are subject to surprise visits, they tend to raise the bar in their normal operation, just in case someone drops in.
3. Take a deep dive. Water skiing across the surface of a lake does not give much insight into the complexities of the lake. If you want to understand those complexities you need to get into the water. Legendary Sam Walton dropped in on his stores, spent some quality time visiting and then presented the manager with a punch-list of changes to be implemented and monitored going forward.
4. If you really want to understand what’s going on, talk to a variety of people at all levels. As consultants we cannot apply our industry expertise to a wholesaler’s situation until we have a well-rounded understanding of the business. Well-rounded understandings come from seeing the business through many sets of eyes who operate at all levels of the organization. By looking at the operation from many perspectives, you get the best possible understanding of the facts. We always conduct private sessions so individuals feel more relaxed about the conversation. Plus group meeting tend to produce input that is so filtered that it is mostly useless. As with customers, take notes to show respect and remember that the objective is to listen, not talk — a difficult mode for some execs.
5. Don’t forget the drivers. If you want to know which competitors’ trucks were delivering to your customer or what product they’re buying from someone else your driver might have the inside track.
6. Take note of all aspects of the operation from the parking lot to the restrooms. If you would like a copy of our branch visit checklist, email firstname.lastname@example.org. It’s a good outline for the process.
7. Provide praise where due and coaching where needed. If you want it to stick, follow up on the visit to see if they acted on the suggestions or just ignored it.
Competitor fly-bys (not to be confused with drive-bys) — Over the years, we have heard some tall tales as salespeople describe how difficult the competition is. We know it’s tough out there but sometimes the size of the dragons gets embellished along the way. When helping wholesalers, we always suggest driving by the most troublesome competitors’ locations. This serves several purposes: it offers as a reality check — most competitors put their pants on one leg at a time and it often yields insights as to what they are doing — what is in the yard, who is delivering, who is at the counter.
Develop your company’s action/reaction list — most branch managers have grown up in the industry. Some have had formal business training, some have not. Some have had good examples and mentors, some have not. There are many situations (actions) that branch managers face where they are expected to develop a solution (reaction). In practice, each branch manager, in good faith, makes up a solution and occasionally gets it right. We think multi-location wholesalers can improve their overall batting average by creating a best practices action/reaction list. If this happens, these are the things you do. Example: If margins are down. Pull the turn-and-earn report that shows the T&Es for each category to identify which categories are problematic. Then drill into the low T&E categories to understand which items are a problem. Then determine what needs to be done to correct the situations.
Hope this starts your thought processes for the new year. We wish all of you a happy, healthy and prosperous 2017.