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  1. 1. I want to tell you, why it is dangerous to introduce new business process by «copy-past»
  2. 2. What is Danon? *local brands within 22 countries Avian Confectionary*Dairy
  3. 3. In 1995 Danone purchased «Bolshevik»* and launched business optimization *one of the oldest confectionary Russian plant
  4. 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. 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. 6. And we started from scratch, and we need high- speed business model
  7. 7. And we need to cover 80 cities within 2 years
  8. 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. 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. 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. 11. And we started the negotiations Having a lot of trips across Russia, I developed the model, which suited both Danone and Distributors
  12. 12. Danone: How much do you pay to your agents? Agent Salary
  13. 13. 3% of total turnover Agent Salary Danone: How much do you pay to your agents? Distributor: 3% of total turnover
  14. 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. 15. Distributor: Agreed. But 3% should not cover all the salary! Turnover of Danone Agent Salary ? 3% of total turnover pays Distributor
  16. 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. 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. 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. 19. So, we hired exclusive sales agents …. But there came an obstacle …
  20. 20. It was not profitable for distributor to deliver our orders to shops — it was less than minimum delivery lot Unprofitable logistik
  21. 21. DS3 DS3 mixed 3PD Focus on sales Strong Average Weak Delivery lot Small Average Big There was the trick?
  22. 22. Unfortunatelly, mixed team did not always provide profitable logistik
  23. 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. 24. But I am payed for Danone only
  25. 25. It seemed, that we considered everything …
  26. 26. But … how to manage them
  27. 27. Models, effective for 40 agents, Did not work for 400…
  28. 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. 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. 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. 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. 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. 33. And if you plan to introduce new business practice, Think about your strategy !