For what purpose the well-known cheese manufacturer introduced a new service for managing merchandisers called effie>? Why did the company decide to move away from the usual IT tools and launch the "pilot" of the new product? What characteristics should the "ideal" IT-development have to possess to really help the manufacturer to increase sales in outlets? Answers to these and a number of other issues were voiced by Vladimir Filonenko, Head of the Trade Marketing Department of COMO Ukraine in an interview with TradeMasterUA.
TradeMasterUA: – What interested your company in the new solution called effie> by the IPLAND company?
Vladimir Filonenko: – "KOMO Ukraine" positions itself (and indeed it is) as a progressive, innovative company that is constantly in search of new tools for solving emerging problems and market challenges. It's not a secret that the situation on the domestic dairy market has changed for the worse in recent years: the rise in milk price has led to increase in the cost of production and, accordingly, in the cost of final product on the shelf (hard and processed cheeses). The milk segment decreases with the dynamics of about 20% compared to the previous year, and those tools we used before, allowing the company to grow by +40% annually, do not allow us to achieve the same results anymore.
In this regard, we conduct all sorts of experiments, pilots, launches of new solutions in various areas of their business – both in production and distribution. We experiment with the standards of merchandising, expand the staff, change activities types, change the price promo format, etc. At the same time, we monitor how innovations affect the company's performance.
I note that this is a "regular" operation mode for us, although in many companies it would probably cause a "wow effect". This approach has allowed us to become one of the market leaders and constantly occupy the first positions. Therefore, we regularly monitor all the emerging innovations and try to assess how they can be applied to our business. One of these interesting innovations was effie>, developed by IPLAND.
Vladimir Filonenko is the Head of Trade and Marketing Department at COMO Ukraine. He has been engaged in distribution since 1997. Vladimir Filonenko has work experience with the following companies: From a Sales Representative with such companies as Frutierra (Pepsi, Slavutych…) and Lan-Ukraine to Commercial Director with the Olympia (nappies) and Sparta (energy drinks) companies, as well as marketing experience with "Alef Vinal "(Brand Manager of Helsinki, Zolotaia Amphora), Dolmart Ukraine (Brand Manager of Tbilvino, Bagrationi 1882 TM) to the owner of the brand agency "Fabrika Brendov" (2007-2011).
Dubnomoloko PJSC cheese factory is one of the largest enterprises in Ukraine and a producer of unique KOMO cheeses. It is equipped with the most modern equipment for the production of hard and processed cheeses. All processes in the factory are fully automated and standardized. Thereby the factory annually produces more than 15 million kg of hard cheeses and 4 million kg of processed cheeses according to unique original recipes. COMO adheres to the highest quality standards and possess a Certificate of compliance with the International Standard FSSC 22000. KOMO TM has been holding the leading position on the Ukrainian natural cheeses market for the third consecutive year. KOMO TM was awarded with numerous awards, in particular, it was twice recognized as the Brand of the Year, and distribution was recognized by market participants as one of the best in Ukraine among suppliers in FMCG.
– What effie> service is amazing for? What precisely it has that the other IT companies’ solutions are lacking?
– I confess, initially I saw anything new and unusual in effie> – "habitual", standard functionality. But when the IPLAND representatives held a presentation for us, I grasped that this service is very convenient from the point of view of monitoring and controlling over all company processes.
Unlike other software products (at least those I had to get acquainted with), effie> contains not only a set of dash-boards with the "sheets" of 500, 800 or more squares, but also allows you to "fall through" into these squares, receiving reports broken down by specific sales channels, networks and even by separate stores. Herewith it provides an opportunity to change the indicators you interested in.
For example, I decided to view the "Active Client Base" (ACB) indicator. I will immediately have access to data both on modern trade (modern stores – hypermarkets, supermarkets, etc.), and on traditional trade ("traditional" stores, stalls and other outlets selling goods through the counter). I can change the time period in one click and see data for the past week, the last year, and see if our sales in this channel have decreased or increased conversely.
Moreover, when choosing the modern trade, I can click on the chart and "fall through" into a particular retail network, so I can see the number of stores within the network and sales rate of our products.
In other words, it is possible to take any major problem faced by a company in its activity, and by dropping to the required level within 15 minutes to get a list of questions to be posed to those people responsible for a specific sales channel or network. Therein lies an advantage over other software solutions. I admit that I have been working in distribution since 1997, and I think that a software product is priceless if it allows you within 5 minutes to find out the number of SKUs in a retail network, the balance and sales dynamics of your product just about on a real-time basis. Of course, you can open the matrix and find out your SKU. But who can guarantee that it shows the real state of things? Networks can make changes without notification. For example, Head of the Cheese Department can calculate that faulty goods percentage for any cheese is too high, and stop ordering it from the distribution center. But we would think that our goods are sold in 87 stores, while they were available in 63 stores only for 2 weeks!
effie> – IT-services of a company's sales management both into national networks and traditional retail. Services are developed in accordance with the recommendations of the largest distributors and manufacturers. With their help, you can plan and manage working day of not only mobile employees, but also supervisors, and other employees of sales department.
The dashboard implemented in the service contributes to your confidence in the reality of the situation arisen in your business and opportunity to consciously adjust your strategy. "IPLAND", the developer, is a Ukrainian company, IT-service provider of the solutions, developed in consideration of the needs of distributors and manufacturers.
– Are the sellers those who update stores data in effie>?
Our merchandisers. The employee comes to the outlet with an Android-smartphone with effie>. Each of them has a step-by-step description of merchandiser’s work plan at a particular store. The gadget's display shows, for example, 34 cells to be ticked or indicate residues. The merchandiser is not tasked to tick all 34 positions – only those shall be appeared in its photo later. If earlier, I needed to enter every outlet and look at the photos, now I see the merchandisers’ statistics. For example, a person should have noted 34 positions, but indicated only 27. Where did the 7 SKUs disappear? In the general report, I see that only 59,000 are available of the 60,000 SKUs in all networks. I enter different networks, and I see that there are 300 SKUs decrease in one network, 700 in the other network, and 20 in the third network. Of course, first of all, I shall find out where the 700 SKUs disappeared.
For this purpose, I can compare the number of stores visited by merchandisers in the current and previous week. Absence of changes shows that the goods are physically absent at the stores. I check out-of-the-stock reports at the stores and send the appropriate document to KAM. Having received it, KAM starts contacting the retail network, indicating that its Distribution Center is not functioning well, wherefore we do not finish selling some goods. These actions are taken by KAM almost in real time, when the situation has not yet managed to acquire a threatening character, compared to 2 weeks or a month, as before. Efficiency and operating simplicity "window in the window" are just the effie> features in which we are very interested in.
Quite frankly, there were no another system for me, except effie>, which would allow me to get to a specific store and ask a specific merchant or specific KAM a specific question, or send a request to the network to find out the reasons for undersupplies from the Distribution Center. And such phenomena are very often observed in practice. Because there are no ideal Distribution Centers for any company, there are several distribution centers of about 20 in Ukraine working well to a greater or lesser extent. And when the company (such as ours) has about 30 thousand customers, 15% absence of SKU on the shelves threatens huge losses. In addition, the missed sales of the present day cannot be covered by sales of the next day, even if you bring the goods.
Figuratively speaking, we bring 40 tons of cheese to the Distribution Center every day, wherefrom it is distributed to 300 stores per 6 kilos. We are not informed about the quantity of cheese brought to a store. Therefore, merchandisers are the main source of information for us, and effie> appears to be a valuable and useful tool for them, as shown by the first results of use.
– What is the duration of the first "pilot" and what preliminary results were obtained?
– The pilot was conducted for two months excluding the period of preparation for implementation. It was launched for a limited number of stores, and in the modern trade channel only. The most important and rather unexpected result was that we had to reconsider almost 100% of the merchandisers' routes around the city. It turned out that 16 of our 17 routes were ineffective, despite experienced, literate and intelligent supervisors and territorial KAMs – employees who able to correctly assign the tasks to merchandisers and who know the city well. Most of the merchandisers paid attention to work at the outlets only 3 hours a day, and about 5 remaining hours they traveled around the city. The IPLAND representatives indicated it to us, justified routes inefficiency, and helped us to remap them for free. We followed the recommendations and have already noticed the positive effect of this step.
The second positive effect we experienced is that we have begun to effectively combat the out-of-stock, arising due to Distribution Center’s work disruptions. effie> helps to promptly collect operational information and understand the reasons of out-of-stock, and to take appropriate measures as well.
The third point: we began to cope very quickly with any situation arising from the absence of a merchandiser from work. Employee’s absence on the route shall be instantly displayed in effie>. Knowing that we can move another employee to the place of absent one, put an additional task or cover the route by several employees. Then we find out the reasons of absence. Previously, such measures could be taken not earlier than on the next day.
– Consequently, you will continue to implement the solution in the company, and, perhaps, expand the scope of its application?
– Most likely, so be it. Based on the first results, we saw that effie> cannot only replace our internal program for merchandisers control, but it can be successfully retranslated to the entire merchandising zone of our products. effie> possess a number of modules, have not been studied yet in more depth, such as "Order acceptance module", "Stock entering module", etc. I think that this is a matter of time, and "the elephant should be eaten in parts". We will most likely come to this in the nearest future and effie> will also be installed on the smartphones of sales representatives and distributors’ merchandisers. At least, I do not rule out such an opportunity.
Interviewed by Valerii LOBOVKO