Bringing Out the Best In People

Each and every individual in this world is born different. Moving though the different stages of life each individual goes through some learning and experiences develops a certain set of Skill.

Organizations are formed by so many individuals and each of these individual has his own skill. These skill equip him to do things better in a specific line of work, which no one else can do or let’s put it this way, other can also do, but not at the rate of execution, perfection this person can do.

In our day to day working life, we encounter many situations, where our true aspect of a team player comes into practice. While some of us pass, most of us fail. To explain this in a better way, let me cite you an example. Suppose, you are working in an organisation and you are a Zonal Manager, about 42 years of age.  You have worked in this organisation for over 8 years and have proven track record and great relationship with your management. There has been a sudden change in your team where one of your ASM has quit and new person has joined. The new guy is about 34 years of age, enthusiast, energetic and a little more smarter/skilled than you. In this stage one of the most obvious things that happen is, you as a ZSM have an upper edge over this new guy and do not let him do new things that this person is doing. There is a level of insecurity in you, what if he over takes you. Let’s admit it – it is a basic human nature. What we usually do, is make this person work in the old stereotype ways and stop him to do new things. If he does not listen, you impose and if required dominate and dictate. You suffer, the ASM suffers, his team suffers, and finally the company suffers.  Is this the right way? Now let us look this from a different perspective.

You know that this person is has an upper edge over you, but still you let him have the freedom to work and execute things. In one of the board meeting you also notice that somewhere the management looks into him as a future prospect and your reputation is dwindling. But instead of dominating and dictating, you do a little change in yourself. Don’t forget, that you have a track record in the past, you have also done things that other could not do. What you do now is, you upgrade yourself. Upgrade, your knowledge, develop new skills and contribute to this ASM who wants to change things for good. What happens is as under:

  • Your respect is not only maintained but also increased
  • All discussion move in the positive direction. There are differences, but at the end of the meeting a solution is achieved.
  • The ASM looks to you as a pillar and makes new plan of action for growth.

What you did was you bought the best out of the person.

Let us now take another practical example. This will give us a perspective to develop people. Usually whenever we do hiring we look at people who know 80% of the work that you desire to get out of him. When we finally get someone, we hire him, and he start working for us we realize that this person is actually at 30%. You want some work out of him, you see him trying, but his is unable to deliver. You give him some other work; he tries but still is unable to delivery. So what we do, we fire him.

Now look this at a different perspective. You are assigning him work, and although you see that he is trying, he is unable to give result. You are a busy man, have less time, but because you see this guy trying, you choose to take out some time and teach this person. In this case, you are developing him. You see that this person has the skill and ability but lacks the execution. You put in your effort and this person reciprocates and eventually turns out to be the best not at 30%, not at 80% but at 95% of what you desired. Of course, the underlying fact remains, that you have to access whether he can be upgraded or not.

You have again bought the best of the person.

It is easier said than done. It takes a lot to give time and develop people. We develop people with lot of effort and expectation; but we cannot take a guarantee that these people will stay with us for long. People come people go. But what is should stay is, we must continuously put our contribution in developing people. They will come they will go, but wherever they go they will always cherish what they learnt from you and in turn develop other.

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Vijay Sokhi

FMCG – Foods Professional

Business Consulting, Change Management, Sales Management and Motivation

 

Distribution – FMCG (There are no distributors today)

Distribution is one of the critical success factors in the FMCG business. Through distribution products are made available to each and every retail outlet that caters to the end consumer, fulfilling the consumer needs and generating business.

The distribution in the FMCG business is a very lucrative business, mainly because you just need to deliver the product. The company personnel ensures in-store visibility, marketing, promotion and all sales related activities. As a distributor along with on time delivery, the credit given to the retailers also have to be managed.

The distributor margins are very thing. As explained above, the distributor just acts as a small logistic partner, small time investor. Over the past I have seen most of the distribution companies running in losses or shutting down. The margins are so thing that if the systems, especially the back end and cost is not managed properly, the distributor will never know when the losses happen. New companies usually give 8-10% of margin to the distributors; in some case 12% also; but companies that are established give about 4-6% on the higher side. To operate in such kind of margins, a very strict control is needed. If this is not controlled or known, the distributor will never know whether he is making losses or doing business for charity, where after cutting all the expenses what he makes is a meager 1-2%.

Top companies have a system called distributor ROI, which itself is a vicious circle. They have highly skilled employees, who on the paper show that the distributor is making sustainable margins, where on actual terms the distributor is not making anything at all, but are camouflaged with the turnover. In one of the companies that I have worked, I have practically seen how the top personnel of a leading FMCG companies calculate the ROI of the distributor. If the calculation come to an amount that is equivalent or close to the top employee of the company, they will make the distributor re-invest.

Therefore before moving to the distribution business certain check points are needed.

  • Distributor should not aim for only large brands; he should have a mix match of large and small brands. While the small brands are difficult to distribute as the order quantity is less, they still yield good margins and in the long run yield more benefits.
  • The distributor should always have a kitty of companies with him, ranging anywhere between 10-15 companies. Then the logistics make sense.
  • A lot of money is blocked in the credit note as well, which most of the time is disputed.
  • Cost should always been monitored, and PnL should be made every month.
  • Should look for getting CFA for the company for which they are distributing.

 

I have served for last so many years into the business of FMCG; have seen distributors who have come across such kind of situation. Most of them closed, others corrected and re-align the business, and very large distributor who have evolved. Would like to cite a couple of examples

Jay Foods: One of the leading distributors in Pune who is into the FMCG business. He has multiple products with and one of them was a very large business enterprise in India and it was this company that was substantially contribution to its turnover. I have met, interacted and discussed with him so many time during my visit to Pune.  On one such visit as I was talking to him, he told me that he has given up the distribution of this large company. I was a little bothered to hear this as it was his major business. He then explained me that – although the company gave him a large turnover, he was earning no substantial money. What he meant to say me was – the return that he was not good with respect to the money he had invested.

He is still into FMCG distribution with selected brands giving good margins. But most important he is into manufacturing of his own products and is doing good business.

VS Logistics: Another enterprise into the business of distribution of FMCG products. He has been into the business from a very long time and has evolved every time. During one of my discussion I was debating with him on the challenges of distribution and told him that he has to be careful with the overhead and the actual return that he is getting, he came up with a very revealing answer.

  • He understands that the in thin margins it is difficult to run a business. He has keep good people in the business who are working and updating him about the business
  • He is also into the business of CFA for most of the products that he distributes. ‘
  • More than staying with the team in the office doing all the back end work, the CEO, of the company is more involved in ways and means of generating new avenues to create business. He has tied up with leading e-commerce Company and has exclusive right for all India distribution.
  • He has kept able staff in his team, who does the entire back end with a lot of precision. They have been giving guideline and checkpoints. In any case if they get into an alarming state, immediate corrective action is taken

 

I don’t call VS Logistic as a distributor; I would better call him as a Biz Enabler. Companies who are not only looking at distributor but also a total supply chain solution provider, who would contribute in giving business solution, then VS Logistic would be a  ideal person that they are looking for.

Aparna Enterprise: A distributor located in Pune with a turnover of more than 100 Crore.  Sometimes you are so large that all you have to do is manage the business and rest will follow. The best thing that I have noted about the company is that they key peoples of the company are working with Aparna, since long, may be for a decade or more. There are employees who have been working with the company since its inception. Notable things are :

  • Although being a large business enterprise, the CEO of the company is a down to earth person. There are people who are successful and show an air in them while taking to them. But this gentleman, being very intelligent and hard working, has build his team. One of the reason because of which he has been able to retain people is the way he deals with them.
  • The key peoples have been upgraded with the change of time.
  • There is good team work; it is not that if a person is on leave the business will fall, there are other people who work for extra hours to ensure that the work is done on time.
  • The best of all no matter how big or small the company is their dealing is very cordial.

This business enterprise is a classic example that good companies are made by retaining good people and to retain them, you have to ensure that the basic need of respecting people is fulfilled. This is one thing that lacks in most of the business enterprise today.

Suryam Enterprise: I would not call him a distributor; the company is lead by an entrepreneur who has extremely clear goals and work with clear direction.

  • The company keeps all the data with it, which all the distributor do, but they have a little edge of other, they also do complete understanding and analysis of data
  • For all the companies that the company is working with, the CEO keeps himself abreast with what is going the market in terms of the industry and then talks about it
  • Suryam has worked with start-up and then grew along with the company. It takes a lot of patience to wait for a brand to develop
  • Suryam has certificate of appreciation from Indian School of Business for one of its project in the business

For all the companies that want business enterprise who want robust growth, then he would be a strong choice.

 

Concept Marketing:  Of all the people I have mentioned, according to me the best person in the business is Concept Marketing. The CEO of the company is an incredible person. He was one of my distributors in one of the companies that I have served.

  • The turnover that this company was handling was not very high, but he was very good at what he was doing.
  • With less turnover, his income was close to the company that was doing business that was more than thrice his size.
  • He has micro level understanding of his business.
  • Key success factors that ingredient for what he did were
    • He had the actual cost, with all the detailing
    • Had good rapport with the end customer
    • Had great service to the customer. He has very less difficulty in retaining customer
  • What he did is what most of the other people in the business doe, but his way of doing was excellent

Although he has a conservative approach to business, he is an ideal person if someone has to know the basic of distribution. Today he has given up the distribution of the companies that he was working earlier, and is currently running his own brand and as I said earlier, makes good money.

These are few examples that I have given, but there are a lot more – Jalaram Trading, Gulmohar Enterprise, True Value, Bajori Foods, Concept Marketing, Hasmukh Enterprise, TJUK ….. all of them have evolved in the business.

For me, I don’t call them distributors, I call them ‘’BUSINESS PARTNERS’’

 

 

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Vijay Sokhi

FMCG – Foods Professional

Business Consulting, Change Management, Sales Management and Motivation

Start Ups – II Idea

In continuation with my earlier post

 

All the start ups are born out of idea.  It is the nurturing of the idea and the continuous effort that a company puts in building the idea that leads to the formation of a large business enterprise.

But the very concept of idea is not enough; it has to be backed up with proper data and study. Some of the very practical point to be noted while we are in the process of building up the idea is:

  • Idea is come like a spark and also go like a spark. Studies have shown that out of various ideas that are generated; only 1-2% of them really see the end result.
  • The most important thing to note is that a lot of money goes in building up the idea. Sometime you are so close, so close; just an inch more before the final concept, and you realize that it cannot move any further from here. E.g – You want to create and app for a super smart phone, that can act as a seismograph device, alerting you before an earthquake. Sounds great, you start working on it and after investing a lot reach a road block.
  • Sometimes company develops a very nice product, so good that it’s practically has all that you need to make it a success. The product is developed and launched in the market, bombarded with marketing, people go crazy, buy the product take it home, and finally realize it is very difficult to make.
  • There are so many products that are launched, every month but only a few actually become successful. Companies now adopt a secure way of brand extension, to launch a new product

This and a lot more are the shortcomings. But there are successes, and these are mostly because a lot of markets study, brainstorming and analysis is done to launch the product. It is important to understand that any idea that is build up on an assumption is most likely to fail. It is only those ideas that backed with proper data and understanding has a chance to succeed.

=============================================================While most of the people choose to work with established brands, I have chosen to work with new brands, new products. After working with one of the largest MNC’s – Hindustan Unilever Limited, I have worked with start-up ventures likes Typhoo and Vegit.

If all the talent wants to work with top notch companies, how will a start up evolve, create economy, create employment and create empowerment.

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Vijay Sokhi

FMCG – Foods Professional

Business Consulting, Change Management, Sales Management and Motivation