By Todd Ruberg, Simpactful Senior Partner
After 24 months of broad inflation and the resulting pricing recovery actions, CPGs now face the next challenge: How to anniversary last year’s pricing increases with lower volumes. In most categories, demand has dropped as consumers have evolved their buying habits by trading down, consuming less, or trading out of categories altogether.
CPGs are likely to respond in 2 key ways: 1) Stimulating volume increases and/or, 2) Making their Sales organizations more efficient.
Simpactful has a roster full of industry brand and retailer executives with experience in both, as well as the benchmarked insights that come from deep consulting experience. For this article, we’ll focus on Sales organization efficiency and the 4 critical questions we have raised in recent client engagements.
- What is the primary organizing principle? Over time CPGs have structured their organizations to capture the greatest potential synergies across the business. The 2000s gave way to dedicated multi-functional channel-based structures and teams as channels, such as Club and Dollar began to scale, and the business models of Food Drug and Mass retailers continued to evolve. Eventually, most added eCommerce as a dedicated channel focus. More recently, some CPGs are evolving beyond channels to focus in on priority retailers, with a more tailored resourcing and funding approach based on justifiable return on investment.
- No single organizing principle fits all. The key is looking at the categories, your company, retailer, competitor’s Strengths and Opportunities, and overall go-to-market strategy to develop an optimal aligned structure.
- What is the role of Central Planning vs the Field Organization? In the world of increasing complexity, an efficient and effective relationship between the “center” and the field organization is essential. Common questions we ask in assessing organizations include:
• How do these organizations relate?
• Which is driving the priorities?
• What are the optimal reporting lines?
• In which do functional resources reside?
• What are the roles and responsibilities?
- A key primary decision leaders must make is whether to structure using a lean center with more accountability and resourcing in the field, or to develop a more robust center with centralized resourcing designed to enable lean field teams.
- What resources do I need in my Sales organization to drive successful retail Joint Business Plans? The large and winning retailers have evolved capabilities rapidly. They now have vast data insights about their shoppers, offer sophisticated marketing platforms, and have developed high expectations for product supply capabilities with automated ways to account for the cost of failures. Robotics and Artificial Intelligence tools are being adopted rapidly and are accelerating the pace of change in these areas and more. We’ve worked with our clients to identify the new resources that can enable Joint Business Plans that lean into evolving retailer capabilities and demands, and where those types of resources can be most efficiently applied (and where they are not necessary or don’t generate return on the investment).
- Are our systems and processes as effective as they must be? The evolution of retailer capabilities has placed new pressure on CPG companies to not only have the right Sales systems and processes – but also the right supporting systems and processes within other functions – from IT and Analytics to Marketing and Product Supply that dovetail into the Sales systems and processes. For example, CPGs need to understand true profitability by retailer, with the right integration of all costs, fines, fees, and funds. Data and analytics systems need to approach real-time insights and be predictive vs look-back only. Brand and Media teams must consider the role of retailer media investments with national plans, incorporating the value of retail “gets” into ROI evaluations, as well as the commitment timelines by retailers that facilitate optimal Sales negotiations.
Organizing Sales is no longer a “set it and forget it” structure. As the retail landscape continues to evolve and develop at a faster pace, CPG organizations need to also evolve and build in the agility to continue to do so. Simpactful has experienced resources and benchmarked insights to guide you on the right moves.
Simpactful can help! To learn more about industry capabilities contact our team today at contact@simpactful.com or 925-234-6384.
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