The movement of goods from production facilities to end customers is an arduous journey that involves a lot of networks. Every branch, such as a production site, regional sales office or retail outlet, and every channel, such as dealers, distributors or wholesalers, plays a critical role in ensuring products reach end users smoothly.
As such, underperforming branches and distribution channels can affect the effectiveness of a manufacturer’s products in reaching the market and customers. If either underperforms, the manufacturer may experience lower sales and increased costs.
Improving the performance of branches and channels
In Brazil, there is an increasing demand to address underperforming branches and channels to achieve operational excellence. Mergers and acquisitions can sometimes contribute to such underperformance. Below are strategies that have been tried and tested by Renoir that could help enhance the performance of these underperforming units:
1. Optimise Product Portfolio and Sales Effectiveness
This strategy involves optimising the product mix and influencing pricing strategies by focusing on higher-margin products and efficient market engagement.
What You Can Do
- Identify opportunities to introduce higher-margin product lines to supplement existing ranges and review the product mix to reduce less profitable items.
- Develop structured sales planning processes, including detailed daily and weekly sales planning, and prospect management tools.
- Redefine sales activities and implement journey plans to ensure 100% outlet coverage.
- Use data and analytical tools to understand market dynamics and customer preferences. Implement training programmes for sales teams to improve their gross margin management skills.
Benefits
The above steps can boost profitability and margin growth. At the same time, they reduce inventory risks by better aligning production and sales efforts with market needs.
Improve project profitability with root cause analysis
Manufacturing ERP software compliance soars with MCS system
Management system drives efficiency and contractor compliance
Manufacturing ERP software compliance soars with MCS system
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2. Improve Supply Chain and Cost Management
Mergers and acquisitions can result in multiple supply chains, vendor bases and operational purchases. Following an M&A, manufacturing firms often focus on critical aspects of supply chain and cost management to cut costs.
What You Can Do
- Rationalise vendors, renegotiate contracts and conduct market analyses to reduce procurement costs and improve supplier performance.
- Improve stock accuracy and enhance warehouse practices to reduce holding costs and minimise stock shortages.
- Optimise production and sales planning processes to improve accuracy, reduce lead times and enhance on-time delivery.
Benefits
Lowering procurement expenses through better pricing or payment terms helps optimise costs, while avoiding overstocking reduces unnecessary storage expenses. At the same time, minimising excess manufacturing and waste further enhances operational efficiency and cost-effectiveness.
3. Improve the operational performance and productivity of underperforming branches
You can focus on efficiency, throughput and quality across manufacturing processes to improve performance.
What You Can Do
- Install a rigorous Management Control System (MCS) to monitor daily and weekly operational performance and identify deviations.
- Implement Short Interval Control (SIC) and encourage active supervision to improve real-time performance tracking.
- Install Root Cause Analysis (RCA) systems to identify and eliminate the underlying causes of downtime, waste, and quality issues.
Benefits
Prioritising resources and efforts based on actual operational needs rather than guesswork enables organisations to identify and eliminate sources of defects, errors, and process variability, thereby reducing scrap, rework, and material losses. This targeted approach not only improves resource utilisation but also enhances workforce engagement, driving greater overall operational efficiency.
Renoir is adept at quickly identifying and quantifying improvement opportunities. Our approach to revitalising underperforming branches and channels has delivered significant and rapid financial results for clients around the world.
If your network isn’t driving growth, it’s holding you back. Let’s turn your weakest links into top performers.
