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  • 1. I want to tell you, why it is dangerous to introduce new business process by «copy-past»
  • 2. What is Danon? *local brands within 22 countries Avian Confectionary*Dairy
  • 3. In 1995 Danone purchased «Bolshevik»* and launched business optimization *one of the oldest confectionary Russian plant
  • 4. Distributor bought refrigerator and cars Payed salary to exclusive agents Achieved break-even point within 2-3 years DS3-model of Danone Dairy was:
  • 5. With it’s model Danone covered 2-3 cities annually* * Mind that majority of the cities were already covered with exclusive sales agents
  • 6. And we started from scratch, and we need high- speed business model
  • 7. And we need to cover 80 cities within 2 years
  • 8. And our existing distributors did not want to invest heavily in our exclusive sales agents* * And we need to return our investment in agents within 2 years
  • 9. At that time there we the following shared investments in salaries: 50% / 50% One pays the whole (distributor or supplier) Fixed and variable (producer pays fix, distributor – variable part of salary, or vice versa)
  • 10. But no one model fit us Because of time to market Or by managability of agents Or by return of investment within 2 years
  • 11. And we started the negotiations Having a lot of trips across Russia, I developed the model, which suited both Danone and Distributors
  • 12. Danone: How much do you pay to your agents? Agent Salary
  • 13. 3% of total turnover Agent Salary Danone: How much do you pay to your agents? Distributor: 3% of total turnover
  • 14. Danone: How much do you pay to your agents? Distributor: 3% of total turnover Danone: so you can pay to our exclusive sales agent not less than 3% of turnover of Danone Turnover of Danone Agent Salary 3% of Danone’s turnover pays Distributor
  • 15. Distributor: Agreed. But 3% should not cover all the salary! Turnover of Danone Agent Salary ? 3% of total turnover pays Distributor
  • 16. Distributor: Agreed. But 3% should not cover all the salary! Danone: Danone pays the difference. And we decide about fixed/variable, You job is to pay your 3% Turnover of Danone Agent Salary Danone pays 3% of total turnover pays Distributor
  • 17. Within 2 years turnover of Danone grew and the 3% covered the whole salary of agent, and we did not invest any more but fully managed exclusive sales agents 3% cover Agent Salary Turnover of Danone Agent Salary Turnover of Danone doubles Danone 3%
  • 18. Distributor started to check validity of our agents’s sales, as he payd 3% of their turnover. It was double-check of secondary sales Pleasant discovery
  • 19. So, we hired exclusive sales agents …. But there came an obstacle …
  • 20. It was not profitable for distributor to deliver our orders to shops — it was less than minimum delivery lot Unprofitable logistik
  • 21. DS3 DS3 mixed 3PD Focus on sales Strong Average Weak Delivery lot Small Average Big There was the trick?
  • 22. Unfortunatelly, mixed team did not always provide profitable logistik
  • 23. And we obliged agents to add “ballas to the order заказу up to minimum lot. As a “ballast” we used «Chaka» peanuts»* * In every region «Chaka» peanuts» were different products
  • 24. But I am payed for Danone only
  • 25. It seemed, that we considered everything …
  • 26. But … how to manage them
  • 27. Models, effective for 40 agents, Did not work for 400…
  • 28. Adaptation, on-boarding, mentoring, work with, recruitment Annual Personal Development Review Career ladder, strategik organizational development plan And we started to set up business processes for our exclusive sales agents:
  • 29. There is no difference is sales agent on our payroll, or on distributors — when he sales our products exclusivelly, he gets all the benefits of Danone General Manager, Danone-confectionary Alexey Mekhanik
  • 30. As example, our agents on distributors payroll got their fix and var salary on the 3- rd day of the month And it was not only words, it was strong processes
  • 31. As a result, in a two years 60.000 retail outlets 40% Revenue growth* 400 exclusive sales agents *with the same EBIT in %
  • 32. Secondary logistik Investments in salaries People management But in your case everything can be different … We successfully turned around to DS3 due to 3 strategies
  • 33. And if you plan to introduce new business practice, Think about your strategy !