How to Increase Sales and Profits Long Term
Investing in the future beyond new products, distributors continue to reinvest in their plant facilities, transportation and technology to improve their ability to increase sales and profit over the long term.
While nearly 47 percent said the addition of new product categories would contribute to increased sales and profit in 2014, 80 percent said improvements would come from increased operations efficiency and 74 percent said they would result from the addition of new customers within their marketplace.
Meanwhile, 80 percent said pricing pressures and 38 percent said increased competition could be expected to dampen sales and profit in the new year. But distributors are not standing still. Nearly 63 percent plan to acquire new or upgrade existing technology, 40 percent plan purchases of new fleet equipment, 31 percent will add new warehouse equipment and almost 29 percent will add new refrigerated/combo trucks and/or trailers.
In addition almost 29 percent said they will expand warehouse facilities. “We are doing better on tracking our vehicles and we will become more green in 2014,” said Gummer. “We are making sure we have the best type of working conditions for our employees, whether it is a more automated conveyor system or more ergonomic matting to make it easier for them when they walk.”
Gummer’s company is testing automated carts with specialized pallets, with the customer’s order on one pallet that can then be wheeled into the store without the driver having to pick up or carry products. “It’s something the beverage companies are doing, and we think it might help us increase efficiency,” he said. “It’s a matter of having the right product on hand at the right time and having adequate inventory, so it’s performance and efficiency that is critical,” observed Dempsey.
He said Myers-Cox is working to create a more efficient warehouse to eliminate overhead and is also rolling out new technology to help improve service to customers. “Our objective is to allow our sales reps to provide more of a sales and service function rather than simply taking orders,” he said. “We win by providing better service to our customers, and so our customers win, too. If our time is consumed by mundane order taking, then we are not doing our job well.”
Myers-Cox is providing Windows-based software and Bluetooth-enabled scanners so they can have access to the distributor’s product book, inventory and order online. At Mountain/Service, high efficiency lighting has been installed in the warehouse to save energy and reduce cost. The company has just added ProCat’s ShipRight software system to increase the efficiency and accuracy of deliveries. In addition, ProCat’s ReceiveRight is being implemented to accurately confirm vendor purchase orders at the dock.
“With sales force automation, we’re using iPads and ProSel from Ai2, and our sales reps are now taking orders from customers on iPads, and our customers have the option of using Order Shark from their smart phones to place orders,” noted Altman.
Another innovation that Altman believes will help cut down on energy consumption is the addition of solar panels on all 100,000 sq. ft. of the company’s warehouse roof, made possible by a grant from the New York State Energy Research and Development Authority. The grant covers about 40 percent of the project cost, according to Altman. “That is going to save us a lot of money in the future. It’s going to be a big deal,” he said.
Meanwhile, the survey showed distributors are taking numerous operational steps to improve efficiency, cut costs, improve customer service and boost profits. For example, 22 percent are participating in AVVMA’s InfoMetrics data program. Nearly 39 percent plan increased implementation of category management, which goes hand-in-hand with InfoMetrics and the data it provides, and more than 61 percent plan to increase their focus on the cost/benefits of servicing specific customers. Almost 42 percent plan to pay more attention to the cost/benefits of handling products provided by specific vendors.
Thirty percent said they would increase sales/customer service staffing, and almost 14 percent plan increases in technology staff. Owen says InfoMetrics is an important tool for his company. “Our category managers use it for SKU management and our sales force uses it as a sales tool with our key chain accounts.
Our sales managers will sit down with the key chain accounts, show them what’s selling, what’s not, and what they are potentially missing out on.” Customers appreciate the help, according to Owen. “I’ve received a lot of positive feedback from customers,” he said. “They don’t have to do the research and try to figure this out. And the information is from a trusted source, not skewed by manufacturers.” At Pine State, InfoMetrics has proven to be so important that the company has just hired a new business analytics expert to help customers analyze their data so they can achieve maximum benefit.
“We’re constantly reinvesting in our business,” Canning said. “We’re looking to double our business, and the area we are investing in most is technology and the utilization of business intelligence. We’re making investments in personnel, adding salespeople and sales consultants in foodservice.” In addition, Canning said, Pine State has made a “huge investment” in upgrading its rolling stock, and now intends to purchase the technology needed to help make those units more efficient. “But our biggest investment in 2014,” he said, “will be in helping our sales force utilize what I think is the greatest tool of all InfoMetrics.”
Source: Convenience Distribution Jan/Feb 14