Lean go to market: adopting “Lean” principles in FMCG sales

The “Lean” methodology focuses on continuously improving an organization’s processes toward creating value for the customer. It has become the model in manufacturing and expanded across various industries, including becoming a mantra in the startup world. 

Because of the COVID-19 crisis, the upsides of such principles have become clear to many other sectors, that faced huge difficulties to adapt. And in the FMCG industry, although the need to improve sales processes in offline retail had been recognized for some time, the effects of the pandemic have made it a top priority: let’s detail what a “Lean Go-To-Market Strategy” means and how it helps boost performance in FMCG sales. 

Top FMCG executives agree on the following: the Covid-19 Pandemic has changed in-store execution forever. In our recent study, we’ve found out that they are convinced they now need to reinvent in-store, simplify operations, focus on a few key priorities and eliminate activities that don’t add value. So how can that be done? The answer may lie in a methodology developed by Toyota to make its factories more efficient in the 1930s…

Pressure for a better ROI from sales teams

Even before the Pandemic, growth was slow and hard to find in FMCG especially for the big players who were under pressure from new entrants as barriers to entry fall. At the same time the retail environment was changing with a more complex mix of channels that make in-store execution a bigger challenge. The effects of the Pandemic add another layer to these changes as people spend less in store and switch to online and to stores closer to their homes. All this brings the attention of shareholders and general management onto the topic of sales force ROI. The sales team is a big investment – sales and distribution costs will often be in the region of 30% of net sales. To give an idea of scale, consider a leading European beverage company whose sales team of 6000 needs to reach 1 million outlets in 13 countries. Faced with such a task there is no time to waste.

What is Lean Go To Market and how is it relevant to sales strategy?

In their book “Lean Thinking” James P. Womack and Daniel T Jones developed the methods Toyota pioneered into a set of tools that became known as Lean. Based on 5 key principles the method can be applied to any process including sales.

1. Define value

What is your customer prepared to pay for? Here it is critical to hear the “voice of the customer” and there is the double challenge of satisfying your customer (the retailer) and the retailer’s customer (the shopper). Concepts like perfect store and perfect shelf come into play here informed by shopper research and sales data. The key is to have a clear definition as a focus.

2. Map the value stream

Identify which activities deliver value to the customer. Those that don’t are waste and should be reduced or eliminated. An obvious example is the time spent driving between calls. If you can use routing software and adapt to traffic conditions to reduce that time it is a clear win. Spending time collecting data in-store is also wasteful. That sounds counter intuitive; surely data is needed to know where attention is needed? That’s true but Lean challenges us to think about better ways to get that data and free up time to get on with fixing the issues. Other examples of wasted effort include visiting a store where no actions are necessary (“overproduction” in Lean terminology) or leaving a store in need of attention (with “defects”) unvisited.

3. Create flow

Tune the process to flow smoothly so that bottlenecks and waiting time are eliminated. For the sales person, waiting to see the store manager is waste and so is waiting for the processing of the shelf images to get a “to do” list.

4. Establish pull

A principle of Lean Manufacturing is that what gets made should be driven by customer demand. The ideal moment for a car to roll off the production line is just in time to get it to the dealer as the customer signs the papers to buy it. That way the customer is satisfied and the costs of storing the car are avoided. It’s easy to make the connection to the retail world; we want to have the product continuously available but we don’t want to carry more inventory than we need. Understanding demand and forecasting using EPOS data is critical here as is accurate feedback about the condition of the shelf.

5. Pursuit of perfection

Use feedback from the system continuously to remove waste and improve flow. This is a key element of Lean Thinking. This can be fine -tuning on a daily basis and also deliberately reviewing progress, asking what can be improved and introducing innovations.

Lean Go To Market in FMCG

Many major FMCG companies are already deeply focused on Lean Go To Market, building highly tailored and customised field force models to tackle the specific challenges they face –  Unilever, Pepsico, J&J and Henkel to name a few. Applied properly this is more than a consultancy exercise to cut costs. It’s a big culture change and a different way of running sales. The smart use of information is a central enabler. That can include using shopper data collaboratively with retail customers to define the perfect shelf for a particular channel. It can also mean applying Machine Learning and AI to in-store data to optimise day to day activities.

Using In-Store Data in a Lean Go To Market approach

The key questions about in-store data are not whether to use it (pretty much everyone does) but how much is it costing me to get it? And how well am I using it?
The costs of using professional auditors and the emergence of smart phones/tablets and Image Recognition technology means that the answer to the first question is often “a huge amount of my sales team’s time”.

The theory is that the salesperson is in the store anyway and with a smartphone and image recognition technology we can make it easy for them to gather data. In practice it means more than half the time in-store is taken up with collecting data, time that could be used for improving the shelf, deepening the engagement with store managers and even making more calls. It also creates a potential conflict of interest; you are asking the sales team to collect the data that will be used to evaluate their performance.


The power of the crowd to drive efficiency

That’s where innovations like crowd-sourced data collection can help implement a Lean Go To Market strategy. Companies like BeMyEye use a “crowd” of more than 2 million shoppers across Europe. Each crowd member or “Eye” downloads an app that allows them to accept missions where they visit a store, take a photo of the shelf and note other in-store conditions. This provides a cost-effective and independent set of data available to the sales team before they start their route. 

The data is fed into an app and linked to route planning to optimise the daily activities of each rep.  This is a significant step forward because the data is used to identify and prioritise which stores to visit  or to simply complement their existing route when some store visits are still deemed ‘mandatory’.  It also used to prioritise and guide the actions to be taken during the call. 

It also feeds a dashboard so that managers can identify patterns that cause defects (does store x have a recurring problem?), investigate root causes and identify actions to improve. 

The end result of Lean Go To Market is less variation from the “perfect store” target, which in turn means more sales for you and the retailer. 

Sources of waste in FMCG field sales:

Type of waste Examples
Transportation – the movement of product and materials Double handling stock, searching for stock, searching for the right place to put stock
Inventory – the cost of storing product and materials Excess inventory, too much shelf space given to slow selling products – which could be more effectively be placed in other stores where the number of facings is lower
Motion – movement of people Poor route planning, traffic jams, unnecessary movement around the store, visits to compliant stores
Waiting – for information, instructions, materials, a prior stage to complete, Waiting to see the store manager, waiting for a shelf-image to be processed
Overproduction – producing more product than is needed right now Visiting a store with few issues when there is a store with more serious issues needing attention.Display materials that can not be deployed at the store.Collecting more data than can be used
Overprocessing – doing more work or producing to higher quality than the customer demands Unnecessary discounts.
Unused display materials
Doing extra checks “just in case”
Defects – product, materials or information that don’t meet the desired standard Damaged product, out of date products, incorrect pricing, incorrect inventory or shelf information.
Damaged promo/display materials.
Display materials not properly deployed or obscured.
Errors in setting shelf.
Out of stocks.
Shopper can not find product
Under-utilised skills –  Merchandising skills under used because too much time is spent on data collection

Lean Go To Market: a great tool kit

As companies re-engineer their approach to in-store execution, a systematic approach to identify waste, make improvements and measure the results will be essential. The principles of Lean have been proven to be effective and practical in many companies over several decades. In addition, many companies will find people in their businesses who have already been trained in the methodology and can be called upon to help. It’s a tremendous tool kit for improvement – and it has never been more needed than today.

If you’d like to learn more about how your team can use image recognition to complete more efficient stores audits, read the full outlook in our white paper “SCANNING THE SHELVES – How Image Recognition Helps Consumer Brands To Boost Their Retail Execution” here.

Neil Preddy

Neil Preddy

Neil has more than 30 years experience helping FMCG companies. He is a Six Sigma Executive Blackbelt and an advisor to BeMyEye.

Luca Pagano

Luca Pagano

Former VP Publishing, EMEA at EA Mobile and now CEO of BeMyEye since 2015, Luca has a real passion for retail, AI and mobile apps.

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