2000:  THE BACK TO BASICS Millennium

by Sam Boyer

With all the consolidation activity in the beer distribution industry the past few years it is perhaps time to take a breather and focus on basic business fundamentals.  So much time and energy has been spent on consolidation the quality management attributes of success have not received the attention they require.  If individual distributors want to grow and profit with the economies of scale from past consolidations the following management attributes should become the focus of 2001:

Invest quality time in planning:  

Successful distributorships go beyond the annual brewery required business plans.  They set management goals for total case and dollar sales, gross profits, payroll expense, and net income.  Additionally, threats, opportunities, and alternatives are identified and tracked.  If you plan for 2001 you will know exactly where you are going… you will not be lost on a space odyssey.

Review retailer service levels:  

Retailers have incidents that affect their sales.  Annually all service levels should be reviewed and adjusted.  Make sure your operation has assigned the correct service level to each retailer.  With the increase in fuel costs distributors cannot afford to over service even one retailer.

Improve inventory management:  

Even with pressure from breweries individual distributors can affect their inventory turns.  Sharpen your pencil in both the ordering and internal control processes and make sure equity individuals are involved in both.  Review your package mix.  Just like retailers 20 percent of your packages produce 80 percent of your sales.  Use a sharp knife when reviewing the packages producing the last 10 percent of your case sales.  Do not tolerate out of code product.

Reduce discounting:  

Question every package on discount every month.  Do you really need to have almost all packages selling at a discount or if you eliminate one or two each month will this change really affect sales?  Put more pressure on your sales staff to “sell” at the front line level on secondary packages.  Make sure your staff completes all necessary applications for rebates from the breweries on discounts… and make sure there are sent to you on a timely basis… don’t allow breweries to be laggards.

Improve internal communications:  

This means more than saying good morning.  Use weekly management meetings to inform your employees of the changes affecting them and your operation.  Use job descriptions, performance evaluations, and a current employee handbook to formalize and document your communications.  Effective internal communications are required if you want to retain quality employees in this economy.

Streamline operations:  

This may mean an investment in technology.  Being two decades behind in technology is a sure indicator of an inefficient operation.  Those operations that are at or near leading edge technology are the most efficient.  A one-time investment in technology will reduce ongoing payroll and benefit costs.  Technology investments in order processing, delivery operations, and administrative duties produce the greatest return on investment.  Next is the elimination of outdated or unnecessary activities.  Do not accept “we have always done it this way” as a reason for keeping an activity.

Invest in sales and management skills training:  

Go beyond the brewery programs.  Seek out local trainers.  The best method of improving the performance of an operation is to improve the skills of the managers and supervisors.  Require each of them to do something to improve their skills each year.

Use compensation as a management tool: 

Make sure your compensation system is driving the performance of all sales, delivery, and management personnel.  A strong incentive system is more effective at driving sales than a commission dominated sales compensation system.

Strategic advancement:  

Do something to ensure profitable results in future years.  This may come in the form of a new warehouse, brands, equity partner, or acquisition.  Do not accept the status quo for your operation….move ahead….ensure your continuing success.