SEVEN WAYS TO PROFIT IN 2006

By
Sam Boyer

With the discounting of 2005 behind us let’s all hope the brewery executives have the sense not to repeat it in 2006. It proved to be a financial disaster to all entities in the industry…and probably damaged the “image” of your fine products. With a new year upon us, it is time for all distributors to review their operations and make the adjustments needed to ensure the growth of sales and profits in 2006. Below is what I consider the seven fastest ways to improve sales and profitability in 2006.

Analyze your sales and delivery routes. Beer distributors of all brands must on an annual and individual account basis determine which retailers require twice per week service, once per week service, and/or which accounts can be serviced with tel-sell. Retailers grow or shrink volume and their service levels need to be adjusted to ensure the service efforts you are putting forth in the market meet the needs of the retailers. Without this annual evaluation of account service levels it is likely a beer distributor is under servicing growing retailers and over servicing small and/or declining retailers. Your sales and delivery efforts must meet the needs of each individual account. Without adjusting service levels annually, they are mismatched to the market and this increases expenses and decreases sales.

Determine sales and delivery staffing. After each account’s service level has been determined, you will know the total number of sales calls that need to be made each week. From this information, it is a straightforward process to determine the number of sales and delivery personnel needed to meet the demands of the market. As an example, if it is determined your distributorship should be making 750 sales calls per week, and you and your staff feel comfortable with the salespersons averaging 15 calls per day, and they sell five days per week (75 sales calls per week), then you should have 10 salespersons on the street. If you have more, you are over staffed, and if you have less, you are understaffed and losing sales. The same scenario can be applied to delivery staffing.

Embrace new technology. Do your computer systems, software, and hand-helds match the technology that is available to you? If not, your productivity may not be what it could be. With the plethora of systems and products available at greatly reduced costs from the past, there is no reason for every beer distributor not to have the current technology. New technology improves productivity. Productivity improvements in a stable business means lowering payroll costs: this leads to greater profitability. When you look at new technology (and you must), you have to consider what improvements can be made to increase productivity. As one example, the remote transmission of orders as they are taken in the field and sent to the warehouse greatly improves warehouse productivity and reduces payroll costs. Embrace new technology and reap the rewards.

Reduce delivery driver turnover. It appears the number one human resource issue facing beer distributors is the high level of turnover among the delivery drivers. With the CDL requirements combined with the difficulty of the position, it is no wonder driver turnover is high. The CDL requirements are what they are; we can only address those issues that are within our control. Number of stops and cases delivered per day is a hotter topic than pay for most drivers. If long hours or exhaustion from the workload begin to take a toll on the personal life of a delivery driver, he will leave for another position. Consider this when determining the number of delivery routes we discussed above. Do you have a formal/written training program for new delivery drivers? If you do not, you are causing additional turnover for absolutely no reason. If anyone is not properly trained in the tasks required for their position they will be uncomfortable in the position…and eventually leave it. Train your delivery drivers; it will improve sales and reduce turnover.

Be visible to your employees. Nothing is more de-motivating to employees than to be out in the market, come into the facility, and see the distributor principle and/or top executives sitting in their offices chatting about sports, kids, weather, etc. They have been out in the market in the weather working. Employees will begin to think they are taken for granted and not appreciated, certainly not recognized for their efforts. Get out of your office and recognize your employees’ efforts, ask them how their day has been, ask them what went well and what did not. If you do not communicate with your front line employees on a daily basis, you will not be as informed about your business as you can and should be.

Be visible to retailers. In this time of hyper competition, a distributor principal and/or executive manager must be in the market face-to face with the retailers. In-market time is a must…how can an executive make decisions if they are not out in all parts of their market? If you are complacent and stay in your office, you risk the market share that you have. Distributorships either gain market share or lose it every year. Get out into the market…. not just to call on those retailers you know…. but to call on those you don’t know or don’t like…. when hyper competition sets in, as it has in the beer industry, every retailer is important, every one!

Be a leader. The single most important function of a distributor principal or management executive is to attract and retain quality employees. Any manager can with the right incentives attract quality employees. It takes a leader to retain them. Demonstrate leadership at all times. Follow the Kouzes and Posner five practices of leadership: