Sales management sme indirect selling

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Information about Sales management sme indirect selling

Published on January 24, 2014

Author: AbhinavMathur1


Coping With The Challenges Of Indirect Sales And Distribution Controlling In SMEs Case of an Asian SME Asian Herbal Presented by: Abhinav Mathur

Asian Herbal What Is Happening with them? Go Global SME Intermediaries Outsource Services F O R Infrastructure / Transportation / Expertise WHY Establishing Global S&D Network

Understanding the “B2B2B2C” Model Four-tiered Indirect S&D Model 1st B2B – Manufacturer to Wholesaler B2C – Retailer to Customer 2nd B2B – Wholesaler to Retailer

WhatProblems Faced With The Four-tiered are the problems faced? S&D Model: Planning Prices / Sales Revenue / Controlling Inventory. Manufacturer Does Not Meet The End User  High cost of advertising  Loss due to price reductions  Production scheduling  Price formation  Gaining an overview of intermediaries S&D activities

S&D KPIs Asian Herbal (M), wholesaler’s (W), and retailer’s (R) sales (S) with finished goods inventory (I) – when turnover is slow • Right KPIs help attaining a better price, sales revenue & contribution margin • Help determine inventory levels & days of stock in hand • Need for Data includes – sell in – sell through – sell out – Sell in: Asian Herbal sells goods to the wholesaler. – Sell through: the wholesaler then sells some goods to the retailer – Sell out: the retailer sells goods to customers Setting up right price for further managing inventory at the intermediary level requires setting up right MIS

Price formation for Asian Herbal’s digestive tonic S&D KPIs • As Need for checking selling price from manufacturer to wholesaler , wholesaler countermeasureto retailer & retailer to for quick turnover, customer Advertising & Price Reductions may help… • Essential question ALBRIM who will bear 140.00 cost? 0J935200 of – 5 ml 96.67 107.42 the Material Brands 0J925200 ALBRIM- LS 0K555000 AZITHRAL PACK 5 ml 3 ml WBR PTR 89.77 46.96 MRP VAT 99.74 130.00 52.17 68.00 • Manufacturer / Wholesaler / Retailer all have vested interests to boost turnover • Wholesaler & Retailer with big buying power pass on the Price burden to the little guy – the SME Reduction Seen As The Best Choice By The SME Along With Checking Intermediary Margins

IVA for Asian Herbal’s digestive tonic What could possibly be done? • Much needed Inventory Value Adjustment (IVA) • For every “old” product unit wholesalers and retailers have on hand, the manufacturer gives a credit amounting to the difference between the product’s old and new price • Ideal for short life span goods • A credit note can be given at the time of next billing Future Estimation Of Inventory & Appropriate Reserves Still Required

IVAs Impact On Price • Reserves cause major loss of price transparency with discounts for intermediaries at the time of original purchases • Problems occur in accounting for customer & individual product contribution unit contribution margin = price per product unit (minus) variable cost per product unit • Varying PU price due to quantity discounts & differing payment terms for wholesalers • Highly elastic demand & supply

Impact On S&D Planning • Right supply chain management to ensure right product is in the right place (at the retailer’s place of business), at the right time, and in the right quantity. • Helps avoid additional costs (advertising campaign/price reductions) • “Just in time” & “pull-principle”; manufacturing as per market demand • Controller at Asian Herbal must have updated information from intermediaries to regulate production & optimize pricing decisions Hence MIS Is Of Key Importance

Resolution… • A multidimensional KPI system helps in understanding intermediaries better and felicitates a trustworthy relationship • Indirect S&D model demanding but can be leveraged to expand & drive sales effectively, reaping benefits for an SME • Sharing of timely data through an effective MIS is a key challenge which the SME has to undertake


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