KABANOSY appeared on supermarket shelves in 2018 at first time, and your company has begun building a new niche in the snack market in Ukraine. Tell us, please, the history of the brand origin and building.
The KABANOSY product has a long history. For 3-4 years we have been looking for a new product that was supposed to expand the distribution model, form a new category, and been focused on the modern sales channel – retail. Making the decision we have paid attention to four main areas: the internal context in our company, the external context in the Ukrainian market, the external context in the market of Europe, trends and storage life of the product. These aspects have formed the decision framework on product launching.
We needed a product that would allow us to become a national level player on the internal market and also allow to enter external markets (export). The company's strategy for 2021-2022 is 30% of the turnover from export sales.
Historically, the idea was Polish, because the product began to be produced in Poland almost 100 years ago. But we needed German technology. German modern technologies make it possible to produce the product without a shell. This is how KABANOSY was born. We just combined these knowledges and capabilities and adapted the result for the Ukrainian market.
Along with the product, we had to create the Dmitruk brand from scratch. As we are a local Western Ukrainian brand, we had to enter the national market. A communication and a market entry strategy were built.
What is the most difficult part of managing a young brand in thousands of points of sale, where a customer meets your product first time?
Nobody needs the brands and products of the new category. We love it and know it, but people get along without KABANOSY. The habit of the product consumption has not been formed: the customers have enough snacks and classic sausages. The hardest part is to convince B2B partners, distributors, retail directors and category managers to get the product on the shelf. If the product is in distribution, only then we can invest in media and awareness building. Therefore, the most difficult thing is the market entrance.
Exactly the service of brand and sales management allows to control the shelf and protect yourself in the sales models across national supermarkets and hypermarkets. It ensure that the product is presented well, tasks are set up in time and specific shortcomings in outlets are corrected.
The company is moving according to certain patterns. There are: products location, category in which products are placed, loyalty programs, additional points of purchase, sensitivity of these points, placement conditions. We analyze which models work and scale up the best ones.
Our goal is the highest and best level of the assignment execution, but sometimes it is not enough for sales. The effie> allows to prevent risks that directly affect the product sales growth.
Why did you decide to automate sales management? Why did you choose effie>?
The distribution is growing, the products have sufficient potential, the coverage of an client active base of outlets is increasing, both in the national retail format and in traditional trade.
You can effectively manage the processes manually using Excel when there are 3-4 regions (like Lviv, Volyn, Rivne and Ternopil). However, we try to look at the business in prospect of at least 16-18 months ahead, and we were guided by common sense in our search for the IT solution.
KABANOSY was needed a stable system that would not crash when scaling and would provide an opportunity to improve efficiency. effie> not only solves problems, but also minimizes risks and improves the sales model.
We understand that people do their job better than others. And we have no additional questions for them.
What processes have you already automated?
We believe and invest in two distinct categories: meat sausages products and snacks. We advocate that there are products at the intersection of these two markets. We call them " sausagesnack ". We have built a distribution in "kovbasnack" category at the crossroads of one and the other. We are sure that beauty is created at the crossroads – this is about KABANOSY.
With such model we have managed to enter retail and quickly build the distribution. As of today, the total number of trading points we work with is more than 11’000. The active clients base has increased by almost 50% during the year of using the service.
We have automated processes related to personnel management: coverage, coverage totals, assignments generation and analysis.
We actively use assortment planning matrices, calculate the percentage of the agreement fulfillment by retailers. Out-of-Stock (OOS) and Out-of-Shelf are important and very effective tools. A new product behaves differently in retail, no one can predict the demand for it. Every Monday morning, based on our data we send OOS to logistics centers and the network places orders. Not all networks see the actual stock balances, so we provide them with this information ourselves. This allows to replenish inventory as soon as possible.
Among the automated processes we use trade marketing activities: price promotions execution, price tags, shelf stoppers, toppers, display places, additional POP.
We do price monitoring, including competitors. We use a gallery of photo reports separately for different categories: trade data, main displays, etc.
Have the processes in your company changed with the new service?
The processes have not changed fundamentally since the service for us like a pipeline in scaling from a regional distribution model to a nationwide. On this basis firmly and reliably:
· processes are forming;
· competences are acquiring;
· distribution is building;
· models and processes management are occurring.
Due to the service, the coverage and the number of points has increased. Of course, there were significant investments in retail. We do the work with the product at the point of sale by ourselves, manage the sales processes, and this allows us to look different to retailers and bring financial results both them and us.
Has your relationship with the merchandising agency changed?
They were and remain friendly. Processes have changed with the implementation of automation: we have built a new motivation system, introduced a new remuneration system for the personnel, reorganized the team structure on the agency and our side.
We are now effectively building a new supervisor role. We are not satisfied with the outdated and stereotyped description of the supervisor position in Ukraine. It contradicts with companies looking for grows. All we hear in response is: "This is how the market is arranged; this is how everyone works." The supervisor does not perform the functions that he should perform, only some tactical and human resource manipulations: "We can find people for you" ... We can find people ourselves. We need them to work.
Due to the effie> service, we see the assignment settings and their execution, and who is engaged in execution. And now we know for sure that supervisors do not set the assignments, therefore, do not control their execution.
It is not an influence tool, it is an opportunity to see that the model needs to be changed as a whole. Our team does not waste time changing what is not working in the market.
Today we are focused on building new efficient models using the data obtained.
Has additional leverage emerged in negotiations with the networks regarding the POP plans fulfilment?
Yes of course. Our product and our working policy in retail is based on additional points of purchase. POP is a huge block of the market entry strategy and cooperation agreements with retail networks. This is a large part of investment, so the fulfillment of these conditions is critical for us. We carefully control the POP including effie> applying.
The difficulty is that usually the central office and the operational office of a particular retailer are two different entities. There are different people, processes, so agreements with the central office do not guarantee that they will be fulfilled at the operational office level. The operational office has no direct impact over 100 or 600 sites.
When installing a additional POP during the first month, products are displaced from the main place of sale and collection take place only at POP. It is more convenient for any category manager to add one more product to the planogram, and transfer one main product to the POP. This increases the turnover for its product category.
Earlier, Yulia Demchuk, who is responsible for this project, collected so called "astral" data and tried to justify them. On their basis, reports on displacement from the main points of sale were prepared. Today, every Monday, we send retailers a letter "Displacement status from the main points of sale - 16 point of sales", adding photos and an address. And there are two ways to solve the problem: either we adjust the cost in the monthly invoice for the POP, or we call them and say: "Please contact the operational office to inform each outlet. The problem is not on our side, but on yours. "
We are not trying to negotiate toughly with partners or retailers. The service shows that we are fulfilling our functions and agreements, while retail outlets are doing the opposite. I am not saying that they are incompetent or that their business does not work properly. They do not have time to monitor the situation at each outlet because of the large scope of work. And we give such data them for use. Our approach in these questions based on the partnership principles.
How do you manage with product expiration dates today?
The service makes it possible to systematize work in this direction. One of the steps of each visit is filling out a questionnaire with the info on the products expiration date.
The expiration date of our product is 60 days. If remains less than 15 days, we see this and get information on amount of such a products at a given outlet. Then we work with the merchandiser and he builds the process of internal movement to one or another zone according with display standards for quick sale.
If we have unprofessional planning, we immediately see that, localize and change the demand. effie> gives us such opportunity.
Where you able to reduce your defect rates?
We see the number of products withdrawn from the point of sale, or such that was transferred to substandard goods in the report "Analysis of the goods shortage reasons." Colleagues leave data in the comments. And we know what was registered: regrading or poor unsealing, or goods with an expired shelf life. We used to have a product return indicator due to poor planning. We could not predict rapid growth, and therefore it was "overload" in some outlets. Now we can manage this process more efficiently.
Which reports are most helpful for you? What decisions do you make based on the received analytics?
The most useful ones are "Assortment matrix" and "Out-of-Shelf " broken down by networks. When launching a new product or SKU, and this is a different model from working with a regular product, we monitor the Out-of-Shelf across the networks and look for the indicator "Sales frequency at a point of sale ". We check out the frequency of very quickly "washed out" products, why this particular product, this particular SKU, where the product was placed. Why did this particular weight of the product not another? Is the reason in the price? Through the Out-of-Shelf we go to the analysis and make strategic decisions, for example, about the product weight changing.
Now we have the possibility to compare the product sales frequency between nationwide retailers and some local ones connected to the service.
Could you compare the indicators at the beginning and after a few months of using the service?
As of today, the service has been operating for one year and four months. We tested models with and without service to check how the system and standards work. We can sacrifice data from one point of sale in order to scale further on the sales basis.
The increase in product sales in national retail vary from 22% to 26% due to implementation of standards, work with the product, POP and control with the help of the effie> service.
Do you use the Assignment settings functionality, Сhatbot?
The assignment settings functionality is almost the main feature which we use to manage teams. The teams also share the operational information via messengers. But the motivation and remuneration system based exactly on the executed assignments. Only assignments and their analysis are the confirmation of the work done.
We use the chatbot to set tasks promptly. It is used both by managers of our team and those who have access to the program. Previously we had to make calls again and again for any reason, for example, why there is an Out-of-Stock at certain point. There were a redundant number of calls and tasks.
Using the chatbot I can set the assignment by myself, when visiting an outlet and facing the problems with Out-of-Stock or improper placement of the POP, or failure to comply with other agreements.
We consider the chatbot to be one of the essential advantages of the service. Now we are connecting to it our own distribution network. Our supervisors, who manage our teams, were amazed at the functionality of the chatbot and the capabilities of the virtual store check. The ability to quickly review your territories, see what is happening in retail outlets and place an order is an A+ mark.
Do you see new opportunities for working with the service? What are your future plans?
We are a young team that is gaining the skills in work with large nationwide distribution models and sales over automated processes and services.
Solutions and processes are perfectly built in the effie> service. The IPLAND team is constantly working on improving and developing new functionality. Today it allows to use data and work with trade marketing activities, shelf shares, prices, etc.
effie> is an opportunity for our team professional growth. Our aim and potential are to transfer the business of our own distribution with our own teams to the model working with service.
We have built and tested the work in nationwide retail, so we are transforming our own distribution and plan to scale during 2020, add about 50% of outlets and visits. Our immediate goal for the nearest future is scaling, systematization and professional shelf and product management.
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