Dumex VietnamRoute To Market

Project Committee1. Project Leader: Nguyen Van Tho – Sales Director

2. Project Coordinator: Pham Xuan Dai - Sales Analysis

& Dev. Mgr

3. Project Member:• Nguyen Dinh – HR Director• Le Hoang Hai – Supply Chain Manager• Do Thi Kim Dung – Financial Analysis & Reporting

Mgr

4. Consultant:

Regional• Bruno CHEVOT - Sales• Pascal TOUVRON - RTM• Noel DUNBAR – Supply Chain CBU• Burhan – Finance Director

5. Sponsor:

• Rich Pham - Managing Director

RTM is at the heart of the Danone Mission and is strongly linked with our Baby Sales Strategy

To bring health through food

to the largest number of people

PeoplePeople Category

Category

Custo

mer

Custo

mer

Investment

Investment

Ava

ilabi

lity

Ava

ilabi

lity

It’s in the heart of the Baby Sales

Strategy

Aim of Route to Market

Drivetop line growth

Improveefficiency

Control of POS

Channel Developmen

t

Distributor Developmen

t

Issues

1.Financial capabilities of

current Distributors• Cash payment• Territory assignation• High inventory.

2.Control of POS.

Project Objectives

1.Keep up high sales growth.

2.Improve business productivity.

3.Enhance sales management &

control.

Project RoadmapReco

of

targeted Model

ImplementationAS-IS

Understanding

Identification of

Alternative Scenarios

1. Master data• Volumes per

City/Region• Volumes per

channel/Region• Milk powder

universal stores2. Distributor

profitability• S. Dist costs • Sales force costs• Management costs• Logistics costs

3. Current Role & Responsibility between DANONE and Distributors

4. AC Nielsen performance review

5. Benchmark with FMCG in Vietnam.

1. Model assessment based on the scenarios:

• Current model.• Recruit more

Distributors with current model

• Multi S. Distributors• Few Distributors* • Direct to Retailers

2. Description of each scenario

3. Define the criteria of assessment including:

• Dif. to implement• Risk & Opps• P&L• Productivity• Control4. Deliverable: Pilots

recommendation (incl. assessment + impl. requirements)

1. Implementation/Execution of Pilots

2.Define Criteria of success for each pilot. What is the key success factors? (Costs versus Control Complexity/Feasibility)

3.Organizational impacts & Change Management Anticipation (internal Danone)

4.Formalize Support for Decision.

5.Roll-out plan.6.Communication

Plan (Both External & Internal).

To be completed after scenario selection

30th Jun

Phase 1: As-Is understanding1. Master data

• Volumes per city/regional geographic organization.

• Volumes per channel/regional channel organization.

• Universal store by city Sales force organization

2. Distributor profitability• S. Distributor costs by region• Sales force costs by channel by region• Management costs• Logistics (Both of Distributor & S. Distributor)

3. Current Role & Responsibility between DANONE Vietnam and Distributors

4. Nielsen performance review find new opportunity in chasing more volumes• Distribution / Rotation per channel per segment

per city.• Market share per channel per segment per city.• Distribution / Volume sales per SKUs per city.

5. Benchmark with FMCG in Vietnam

Phase 1: Action PlanningAction plan

1st phase (AS-IS)PIC Remarks May June Jul

W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4

Volume per city/region/channel/MP universal store

Dai/Tho Market assumptionNPD Plan

Distributor profitability• S. Distributor cost per region• Sales force cost by channel per region• Management cost• Logistics cost (both Distributor & S.Distributor)

Dai/Kim Dung/Hoang Hai/Son/Hoi

Prepare P&L format

Current role & responsibility bw Danone and Distributor

Dai/Son/Hoi

ACN performance review (Distribution per region, market share per brand, store rotation…). Find out new opportunity

Dai/Son/Hoi

Benchmark with FMCG in Vietnam

Dai/Son/Hoi Abbott, MJ, Dutch Lady, Nestle, Unilever, SC Johnson & son

Phase 2: Identification of alternative scenarios1. Distributor model

assessment

1.1. Current model• Improve

performance / execution.

• Limit S. Distributor costs.

• Enhance sales management / control

DANONEVietnam

05Distributors

82S. Distributors

RETAILERS

Mead Johnson* model

Phase 2: Identification of alternative scenarios

1. Distributor model

assessment

1.2. Multi S. Distributor• Go Direct to S.

Distributor.

DANONEVietnam

XXS. Distributors

RETAILERS

Dutch lady, Nestle, Vinamilk & Uniliver model

Phase 2: Identification of alternative scenarios1. Distributor model

assessment

1.3. Recruit more

Distributor• Improve performance

/ execution.• Limit S. Distributor

costs.• Enhance sales

management / control

• Distributor direct to Retailer in key cities.

DANONEVietnam

XXDistributors

RETAILERSin small cities

XXS. Distributors

RETAILERSin key cities

Abbott*, SJ Jonhson & son model

Phase 2: Identification of alternative scenarios

1. Distributor model

assessment

1.4. Few Distributors

• Go direct from

Distributors to

Retailers

DANONEVietnam

RETAILERS

FewDistributors

P&G model

Phase 2: Identification of alternative scenarios

1. Distributor model

assessment

1.5. Multi S. Distributor• Go Direct to S.

Distributor.

DANONEVietnam

RETAILERS

For reference only

Phase 2: Identification of alternative scenarios2. Description of each scenario

• Role & Responsibility between DANONE & (Sub) Distributor.

• Sales force organization (recruitment, management, payment ).

• Difficult to implement• Risk & Opps• P&L• Productivity • Control

Deliverable: Pilots recommendation (incl. assessment + implementation requirements).

Phase 2: Action PlanningAction plan2nd phase

PIC Remarks June Jul Aug

W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4

Model assessment based on the scenarios:

• Current model.• Recruit more Distributors

with current model• Multi S. Distributors• Few Distributors* • Direct to Retailers

Description of each scenario

Define the criteria of assessment including:

• Dif. to implement• Risk & Opps• P&L• Productivity• Control

Deliverable: Pilots recommendation (incl. assessment + implementation requirements)

Open discussion: Can we do parallel if we start pilot run for model 3 at beginning of July? If we do so we will have 2 months for assessment (complete pilots at the end of Aug Can be well prepared for the budget of next year submission….In case these 2 models are not the best options, we still have time for pilot run for the other option at the beginning of Aug…..

Phase 3: Reco of targeted model 1. Implementation/Execution of Pilots

2. Define Criteria of success for each pilot.

(Costs versus Control Complexity/Feasibility)

3. Organizational impacts & Change

Management Anticipation (Internal DANONE)

4. Formalize Support for Decision.

5. Roll-out plan.

6. Communication Plan (Both External &

Internal)Phase 4: Implementation To be completed after scenario selection

Phase 3: Action Planning

Action plan3rd phase

PIC Remarks Aug Sep Oct Nov Dec Jan11

W1 W2 W3 W4

Implementation/Execution of Pilots

Define Criteria of success for each pilot. What is the key success factors? (Costs versus Control Complexity/Feasibility)

Organizational impacts & Change Management Anticipation (internal Danone)

Formalize Support for Decision

Roll-out plan

Communication Plan (Both External & Internal)

Implementation

Last Points

• Key success of RTM Full support s from CODIs

• We will meet every 2 weeks to ensure things are fully under our control.

• Keep this information among Project’s committee members only.

Thank You

Micro Planning

AS-IS

Understanding

Sales Volume per City

1. Master data: Volume per city:

• 6 key cities (ACN’s definition) contribute 53% of total sales• 21 top cities contribute 80% of total sales• GT contributes 91% of total sales nationwide

AS-IS

Understanding

1. Master data: Volume per channel:

• GT channel contributes 91% of total sales• DRC in GT channel contributes 65% of total sales• Grocery is the 2nd contribution and we will focus on this channel in this year

Sales Volume per Channel

AS-IS

Understanding

1. Master data: Average trade support per channel (mio VND/ton):

• Local store and Big C are the most expensive• Metro is the most productivity in term of cost/ton• Define cost per territory then

Trade Support per ton

Unit: mio VND/ton

AS-IS

UnderstandingMilk Powder Universal Store

Channel/Outlet (MP )

Grocery Specialty Market Stall

Pharmacy Total Current Dumex covered

% Dumex covered

HCMC 3,345 600 274 323 4,542 2,675 58.9%

Hanoi 3,050 200 3,250 1,608 49.5%

Cantho 710 710 275 38.7%

Nhatrang 222 222 209 94%

Danang 600 600 352 58.7%

Haiphong 752 752 285 37.9%

Other Provinces

7,000 7,924 7,393 93.3%

Total 15,679 800 274 323 18,000 12,797 71.1%

AS-IS

UnderstandingCurrent Distributor Profitability

AS-IS

Understanding

Current role and Responsibility bw

Danone & Dist.

Current roles and responsibility

Danone Distributor

Sales strategy X

KPIs alignment X

Training X

TMKT support X

Warehousing X

Inventory Control X

Credit Control X

Sales people and facility X

Delivery X

Distribution X

Support promotion X

AS-IS

UnderstandingACN

Performance Review

Identification of

Alternative Scenarios

Model Assessme

nt

DANONEVietnam

05Distributors

82S. Distributors

RETAILERS

DANONEVietnam

10Distributors

RETAILERSin small cities

54S. Distributors

RETAILERSin key cities

DANONEVietnam

82S. Distributors

RETAILERS

DANONEVietnam

RETAILERS

06 Few Distributors

DANONEVietnam

RETAILERS

Option 1 Option 2 Option 3 Option 4 Option 5Layer

Danone

Distributor

S. Distributor

Retailer

Identification of

Alternative Scenarios

Model Assessme

nt

Identification of

Alternative Scenarios

Model Assessme

nt

Identification of

Alternative Scenarios

Model Assessme

nt

Identification of

Alternative ScenariosDescription of

each scenario

Identification of

Alternative Scenarios

Define the criteria of

assessment

Identification of

Alternative Scenarios

Deliverable: Pilots recommendatio

n

Reco

of

targeted Model

Implementation

Reco

of

targeted Model

Define criteria of success for each

pilot

Reco

of

targeted Model

Organization Impacts

Reco

of

targeted Model

Finalize support for

decision

Reco

of

targeted ModelRoll out Plan

Reco

of

targeted Model

Communication Plan

Pilot of Distributor

Model 3

Map Universevs Actual Stores-> Provision Store (incl. Dumex)-> DRC-> Ideal Route Planning

Territory

Pilot

Audit As-Is-> Pic of success Compliance-> OSA-> Uncovered Stores

-> Delivery: * Actual cost from * Existing Model

1

2

3

4

5

Simulation of Resources Required-> #Presellers-> # vehicles-> Freq Visits per Cluster/Channel-> Time Study with with SubDist

-> Delivery: * FTE * Cost to serve

6

Pilot Roadmap-direct

July-AugSep:launch

Reco

of

targeted Model