Organisations dealing with producing, distributing, and making products available at the retail point can have a constraint, at any point of time, in one of the following areas:
Many companies have seemingly contradictory issues in the supply chain like having significant stockouts despite having high overall inventory or price pressure from the supply chain intermediaries while the price to the end consumer is not affected or struggling with new products introductions/product freshness when the old ones still clog the pipeline. The source of the above problems can be traced down to issue of incorrect timing of creation and movement of inventory. This resultant surplus and shortages forces artificial pricing pressures, loss of sales and expediting. Firms have tried to improve their forecasting methods and tools to resolve this problem. However they never get it right. The solution to this problem lies in questioning the very need of forecasting.
For more information on how to ensure near 100% availability at less than half the inventory read:Know More
- Improvement of availability to near 100% in internal warehouses
- Reduction in overall lead time of manufacturing by around 50%
- Increase in output of plants by around 10-25%
- Reduction of overall inventories in the supply chain by about 30-40%
- Improve success rate of new introductions
- Eliminate or reduce need for Inventory liquidation sales
When retail footprint is largely covered by small mom and pop stores and is also geographically spread out, the task of directly reaching out to all retailers becomes unviable. So most companies have distributers who cherry pick retailers in their area based on cost of servicing. This practice creates a large reach gap in many territories for the companies. Companies believe that wholesalers will plug the gap, however such players in channel only add to conflicts rather than providing real reach. This age old chronic problem is assumed to be un-solvable by companies, so most have given up. The only way to approach this problem is to find out highly cost effective ways of reaching out to every retail point with single tier distribution network.
Know more about how to have a Go-To-Market strategy that can profitably reach out to all potential retailers, visit:Know More
- Exponentially increased number of retailers covered by direct distribution
- More than 100% increase in range of product available at retail point
- Sales growth higher than industry average
- Consistent, near 100% availability of relevant range at all billing points
- Distributor ROI of close to 60-80% compared to industry benchmarks of only 25-30%
Implementation of TOC systems in internal and external distribution, creates a situation where movement of inventory is on auto-pilot. The role of sales team of a company undergoes a transformation , as they have to focus only on individual retail points to impact sales. The load on sales team goes up many folds. The only way to deal with this emergent constraint is to release capacity of sales team and use new methods, structure and processes to effectively identify resolve issues impacting demand at retail points.
Know more about how to exploit sales team capacity and profitably reach out to all potential retailers, visit :Know More
- More than 50% increase in sales capacity of the sales team
- Maximize retail penetration
Companies having their own retail network, are typically constrained by shelf-space ( or working capital). The speed of inventory rotation on shelf space limits the ability of a retail company to make more money. Shelf space is, many cases, is occupied by significant quantity of slow moving stocks impacting potential sales. At same time, stock outs of the hit product is also chronic in many cases. Resultant effect is sales loss and poor inventory turns. TOC processes of rapid pull replenishment and rapid replacement, significantly increases the rate of sales, while releasing capital for store expansion.
Know more about how to avoid chronic delays, and poor output.Know More
- Same store sales growth by around 15-20%
- Improve inventory turns by more than 100%
- Increased gross contribution per unit of shelf space
- Improved display and freshness of stocks on shelf space
New Product Development
With a lean and agile distribution and supply chain capable of delivering a high ROI for trade partners, the next level of constraint for any organization is the ability to launch new products. Most new product organizations seem to be cluttered with many projects, suffering from frequent priority conflicts, delays, rework, and delays in production stabilization, and eventually delays in launch. Using flow principles of TOC, new product organizations can be transformed to increased speed of projects, while releasing substantial capacity to do more from same resources.
Know more about how to escape from the chronic delays and poor output that NPD organizations find themselves in:Know More
- Reduce project lead-time by 33-50%
- Increase Output by 30-50% from same resource base
- Reduced rework & Improved quality of output
- Rapid production stabilization
- Improved rate of success of launches
- Reduced stress on people and other resources
View these videos to challenge some of the entrenched best practices in this industry, understand the chronic problems they practices have created and find a radically new perspective.
The customary practice in most industries of setting Sales targets prevents companies from realizing the full sales potential of their markets! Find out why!
Volume based schemes in the distribution channel can limit a company’s reach and range availability in the market while simultaneously throttling its cash flow. Find out why!
Most consumer good companies believe that direct distribution to the large mass of small retailers is unviable and therefore try to service them through indirect distributors like wholesalers. Find out why?
Materials supplied by operations very often not as per your sales requirement? Are there stock mismatches and expediting every month?
Discover how organizations like VIP, Bajaj Electricals, and many others are using “pull” systems of Theory of Constraints to transform their supply chain for a competitive advantage in their markets
Aligning its operations to the principles of TOC – VIP Industries Ltd.
Indicators Remark Stock availability (branches) More than 90% consistently (from earlier 60-65%) Weekly fill-rates 85% (from 60% earlier) Same store growth rate (co-owned stores) 20% (much higher than the earlier growth rate) Secondary sales (pilot in distribution channel) More than 50% increase (compared to previous sales level)
VIP Industries Ltd., is India’s largest and a leading luggage manufacturer in the world. The company grew its top-line and bottom-line by aligning its operations to the principles of TOC.
We have partnered some of the major names in the consumer goods & retail industry to create and implement radical solutions which has helped redefine industry benchmarks. These include:
Adesh GuptaChief Executive Officer, Liberty Shoes Ltd.
With Vector’s help we changed the operations to ensure over 95% availability at the central warehouse for more than 5000 SKUs.Know More