Whenever a beer distributor engages Sam Boyer & Associates the ultimate goal is always to improve profitability. With some clients it is possible to make dramatic improvements in profitability with one or a few major changes. However, with most clients the improvement in profitability comes from searching among the details of the operation and finding those "small opportunities" that when combined together create a dramatic change in profitability. Below is a discussion on some of the more common "small opportunities" I have found in beer distributors.

Many beer distributors lack a clearly defined organization structure. This situation causes employees to have multiple bosses, hinders clear communications, slows decision making, and allows subordinates to "shop’ until they receive the answer they desire. Implementing an organization structure to establish a strong chain of command will improve your ability to react to market changes in a minimal amount of time. As someone once said, "time is money," and money is profits.

Beer distributors spend a tremendous amount of money (profits) on computer systems. However, in many instances the system is not fully utilized. Often many tasks that could be performed by the computer system are still being done manually. This requires additional payroll. Managers and administrative personnel should fully understand the computer system, know its capabilities, and fully utilize all its features. They can accomplish this by reviewing the manuals, call the help line (you are paying for it with your monthly service fee), and attending the software vendor’s seminars.

If you look at payroll strictly as an expense you are missing the point. You must look at payroll as an investment that will produce a return for you. With this view you will do everything possible to ensure an adequate return. Performance evaluations can go a long way to ensure the investment you made in payroll produces the return you need to be profitable. The primary purpose of a performance evaluation is to provide feedback to the employee that will improve their output (return on investment). If you do not conduct performance evaluations you are not providing to your employees the information they need to improve their output. If they do not improve their output they cannot increase the return on your investment in payroll.

If your compensation for the majority of your employees is salary and/or hourly you are not receiving the return that is possible on your investment in payroll. Furthermore, you may be locked into giving annual raises (increasing your investment) that further erode your return. Those beer distributors that employ properly structured commission and incentive systems will realize a far greater return in their payroll investment. Their investment may not decrease, but their return will increase.

If the inventory in a beer distributor’s warehouse received the same attention as the driver’s cash and receivables, inventory shrinkage would be eliminated. Inventory control is just a matter of having a good system in place, working the system, and paying attention to the details. The more common inventory control problems include:

Mental errors by your employees lead to customer service problems, loss of business, stress, and overall poor performance of a beer distributorship. Errors in paperwork by the drivers are some of the worst mental errors. The routes do not balance and the administrative staff is left to "figure out" what the drivers did. This is time consuming, costly, and unnecessary. All drivers must be required to balance prior to leaving the building. Requiring all drivers to balance correctly will send a message throughout your organization that excessive mental errors will not be tolerated.

Having a workplace safety program in place and operating is a necessity. The multitude of details associated with a workplace safety program can be overwhelming if not structured properly. Beer distributors must take active measures to ensure the safety of their employees. This will require you to be aware of all the details related to safety within your operation. Not having a workplace safety program can result in unnecessary injuries to employees, lost productivity, workers comp claims, and fines from OSHA. All of these impact your profits.

Most problems beer distributors face are directly related to personnel not performing. The performance evaluations discussed above will help. However, before you get to evaluations you need to make sure you are hiring qualified personnel. Attention to detail in the hiring process will result in better personnel and limit workers comp claims, unemployment insurance premiums, and turnover. The details of completing an employment application, checking references, and a credit check for employees that will be handling cash are necessary. Drug tests and medical exams for all new employees may be a detail that costs, but it also protects you, your current employees, and your profits.

Having a complete detailed and up-to-date policy manual will streamline your decision making process, help ensure consistency, and reduce the time you spend on routine matters. At minimum-detailed policies pertaining to employment, disability, introductory period, work schedules, threats against employees, sexual harassment, and workplace safety should be written and enforced. A copy must be provided to each employee and a signed acknowledgement form obtained.

The best way to penetrate a market and create some level of retailer loyalty is to make key account calls. Used properly by managers and principals key account calls are an excellent tool to improve profitability. Look at the details, determine which retailers deserve or require a management call, divide them among the managers and principal and go out and make them. Key account calls are not sales calls; they are designed for long-term relationship building. Work to create some level of loyalty, not to sell in the latest new package; that is your sales staff job.

The heart of effective selling is a consistent management ride-with program. Without it you are operating your distributorship in the dark. You will not know you are in trouble until it is too late. With it you will be able to anticipate situations before they arise, determine solutions or alternatives, and be out in front of your competition. However to be effective a ride-with program must be done on a consistent basis be structured to ensure all aspects of selling to retailers are covered, and be completed on all routes. The details of a ride-with program can be enormous: however if properly managed your ride-with program will be an effective tool.

This may be more of a ‘‘large opportunity" than a small one. If you are driver-sell with a one million annual case volume and average a 50 percent return load (typical) you are hauling around your market area two million cases of beer each year. The additional fuel, tires, and maintenance for your fleet is no small matter (or cost). Track the return loads by driver (use the computer system) and work with each one to minimize their return loads. If your package mix is so large it prevents you from reducing the return loads to 25 percent or less without excessive outages it is probably time to convert to a pre-sell/hybrid system.

No two markets or distributorships are the same. A selling system that works fine for one distributor may be totally inappropriate for another. The managers and distributor principals must do the detail work to determine which selling system or combination of systems will best match the needs of their market. Within some markets 100 percent pre-sell works great. In others, driver-sell is the selling system that matches the needs of the market for that particular distributor. Still in others, a combination of pre-sell, driver-sell, and tel-sell is what is required to match the needs of the market. Without analyzing the details of the market you cannot make the determination of what selling system is best for your market. Having the wrong selling system in your market will severely impact your growth and profits.

Analyzing the details of your sales and delivery routes can be very time consuming and frustrating. However, it is critical to your profitability. If your routes are severely out of balance you run the risks of excessive payroll costs and not being effective in the market. The excessive payroll results from the overtime your drivers put in because some of the routes are too large to complete for a regular week. Also if the routes are too large (stops and/or cases) you run the risk of the salespersons and/or delivery drivers not having the time to effectively complete their duties.

Annually all sales and delivery routes should be reviewed and adjustments made where necessary to ensure a proper balance between retailer servicing and payroll costs. Although this is time consuming, properly using the detailed information can make the difference between having a just OK return on your investment and a great return.

On every sales call the salesperson must do something in addition to just getting the order. He/she must perform some task that betters his/her position within the retail account. This may include shelf stickers, ads, displays, new placements, etc. This attention to detail is a must for beer distributors who wish to remain long-term. Gone are the days when the salesperson could go into an account and just take an order. If your salespersons cannot better their position within each account on each sales call they may require more training or replacement.

This is a critical detail and your computer system can do it for you. The information obtained from a new package placement report will certainly tell you who is performing the critical selling tasks and who is not. If you are only going to look at some of the details discussed in this article do not skip this one. It is critical.

The details in this area alone are at times overwhelming. They involve the quality of your rotation program, the ability of your employees to move product between accounts, and the tracking of who is ultimately responsible for the cost of the product. Distributors who are most effective in this area have (and enforce) written policies and procedures for all of the aspects discussed above. They also show the cost of "old beer" as a separate line item on their income statement.

Route helpers are a huge payroll investment with limited potential for a return. Having a helper assigned to every route every day is usually excessive and costly. Not every route requires a helper every day. Detailed management of this aspect of your distributorship will result in improved profitability.