Henkel: Benefits that a State-of-the-Art Sales Management Tool Can Bring
Published in Vedomosti. Business: a Personal View, 21.04.2016
Henkel managed to increase the market share and marginality owing to implementation of a new sales management system at its Russian office. In addition, the company can now slash annual costs of sales management by 10−15%.
Tool for Efficient Sales
The products under the Fa, Losk, and Vernel brand are sold in virtually every Russian shop. This is explained by not only the popularity of those and many other brands owned by Henkel. The manufacture of consumer and industrial goods for which efficiency of sales is of paramount importance endeavors to maintain the full product range in all sales outlets from nation-wide retail chains to small convenience stores.
During the years that the company has been operating in Russia it has created a well-developed distribution network. Henkel supplies its products to major retailers and many distributors that serve minor retailers. Handling such a partnership network is a very involved business process that Henkel had to organize with maximum efficiency. Owing to the sales management system deployed at the company’s Russian business, it managed to expand its market share, increase marginality and, in addition, to save annually significant amount.
Root Problem: Management
One can rapidly respond to changes in market situation only provided fully complete information about current sales is available. Otherwise, data about changes, after having passed through a long chain from the vendor to the sales outlet inevitably get outdated making the company’s lagging after competitors a critical one. Given the large range of products, vast dimensions of the country, and developed distributor network, effective instruments for managing sales are required. ‘Since earlier our managers were maintaining accounting on paper media and in incoherent Excel broadsheets, it was not possible to create a holistic picture of the state of affairs with sales and efficient development of KPI systems and the designing measures that aim at improvement of sales channels was an even more complicated task, says Konstantin Galizin; head of the department for organizational development of Henkel Beauty Care sales in Russia and CIS. — At the same time we had to resolve other tasks: to ensure high efficiency of managerial decisions and automate the process of submitting requests from individual sales outlets to distributors. It simply was not possible to attain all those goals without using a unified instrument.
The main goal of Henkel’s management was to optimize mobile trade and merchandising to eventually increase sales volumes. To fulfill the goal, several key areas were identified. The company needed to create a set of instruments that would enable setting targets, planning and analyzing sales, collecting and processing analytical data on the state of the market, and distributing products based on both primary sales to distributors and sales to retailers from the distributors’ warehouses or the company’s distribution center.
Instruments for Each Link of the Sales Channel
It was evident that it is not possible to create a universal instrument that would allow the company to resolve all of its problems. An attempt to implement the solutions that Henkel uses in other countries also failed since in Russian reality the expertise gained at foreign markets cannot be directly applied. The issue was how to implement a unique scenario: to select the platform that could be integrated with the distributors’ accounting system and maintain operability of several solutions combined into a unified information system.
The core of the system is storage on the basis of Microsoft SQL Server. Data on current sales supplied by the company’s distributors and information from Henkel’s own information system are inputted into the storage on a daily basis. The storage underlies operation of the OLAP cube, an analytic system that generates detailed analytic reporting. The OLAP cube is handled by CDC Analytics, a special business-analytics solution deployed at Henkel, that provides the company’s managers with visualized reports on current sales.
The most significant part of the project was to deploy the SFA solution OPTIMUM ASUMT. This universal instrument that can be easily integrated with different information systems operated by distributors enables one to comprehensively collect current information in the process of contact of the sales representative with end sellers.
This solution is the main working tool of all employees in charge of Henkel’s sales. In addition to sales data, the personnel can also use reference materials. They can be employed, for example, to make a presentation about the company’s new products to the personnel of an individual shop. Sales representative can access the system via mobile devices (usually 7” tablets); the system clients have been developed for all mobile platforms (iOS, Android, and Windows). The system is currently operated by more than 2,000 employees (sales representatives, merchandisers, and supervisors) and 200 distributor companies that deliver Henkel products.
Smaller Expenses and Higher Marginality
Deployment of the sales management system allowed Henkel to fulfill all organizational goals. Currently all updated information about current sales and compliance with distribution standards and processes is available at Henkel with a minimum delay, virtually in real time, owing to which the company can plan sales for the nearest time period with an accuracy of one day.
Expenses have been slashed. Even with consideration for investments in the deployment of the system (that paid back during 6 months) and the system operation costs, the company saves annually a significant amount that would not be possible without implementing the system.
As to the sales themselves, the sales management system enabled Henkel to increase its market share in some segments and boost marginality. In addition, the cost of fulfilling orders also significantly diminished (by 20−25%). All of this is a result of applying state-of-the-art technologies that facilitate efficient business management.