The
Company XY that sell Soft Drinks is the market leader
within their market niche. This was done by smart
marketing concept, strong brands positioning, product
quality and aggressive positioning in the outlet. This
positioning is done through negotiation, profit story
presentation, discounts related to sold volume and
supported by the strength of the brand.
One
of methods of providing the market leader position is
enforcing the progressive volume targeting to customers
and the sales force. It is true that supply respond to the
change of demand. But it is also true that the demand is
influenced by change of supply. If the product is all
around the market, well positioned in large quantities,
that creates that consumers to choose the product that is
well exposed to the sight, simply because the impulse
reflex: I see, I want, I buy.
The Company XY is creating a significant success in the
market thanks to this commercial policy. But this policy
of aggressive loading of the market with the products
makes sales channels saturated with the products. Once the
sales outlets are full, they begin to resist slowly to new
shipments, since they are not sure will they be able to
sell current stock. Further stocking will overload
capacity, reduce the cash flow and potentially bring
expired products and write offs.
The slow sell in to outlets in the first part of the month
is causing overstocking in company's warehouse. Also it
creates the pressure to the distribution at the last week
of the month.

This
situation with concentration of volume within last week,
or even worse to the last two days, is creating the
tremendous impact to the Supply Chain. The company trucks
are underutilized at the beginning of the month, while
they are insufficient in the last week. The company needs
to rent the third party trucks. Even more, the 3rd parties
are using the situation and charge extra for the rush
orders. At same time the Company XY's warehouse is full at
the mid of the month, since the production is loading the
warehouse, but there is no sell out, until the last week.
In
order to avoid this, the Company XY started up the Process
Improvement Project with the activities in several
directions. First direction was giving discount to the
customers for achieving weekly volume targets, instead of
monthly targets. Second direction was giving the incentive
scheme based on weekly volume to the sales personnel to.
This incentive plan leveled the weekly volume demand level
to appropriate level:

During
the process of leveling of weekly volume, the very
important segment is education. Unbalanced weekly volume
does not only occurs in situation when there is greater
supply than demand, but also due to lack of planning or
unawareness of complexity that wrong weekly volume phasing
brings.
After
all, proper volume leveling is contributing to cost
efficiency, which is important segment on the journey to
the competitive advantage.
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