Know-How Exchange : Strategy

I would only split up if it is easier on the market to do so. For example, if the products are sold through different channels, then I would split up the products by different markets. An example being if you sell fresh biscuits to restaurants and packaged biscuits to groceries.

Of it the products are very different so they are handled by different people in your target customers, you can split it up that way. An example being if one product line was sold through the packaged goods section, and another through the deli section, and each has its own manager within the customer company, then split it up.

You want to make it as easy as possible for your customers. What you absolutely don't want is to have 2 people going into t the customer separately and competing against each other for shelf space, or even just for the time to talk to the customer.

I've been through this dilemma in salty snacks in the United States, all store-door delivered. We acquired a cookie company and had to decide if we really wanted to have our route salespeople take on a large number of additional SKUs in a different category for store-door delivered products, or if we were better off splitting the business into two different distribution arms.

The answer in the end (to cut to the bottom line) was to stay with a single delivery system but pare the line down using the 80/20 rule. We deleted the slowest moving 80% of SKUs, using a careful analysis on an area-by-area basis. That freed up lots of room on the trucks for new items which then had to justify their real estate with sales volume. If the new items didn't cut it, they'd be replaced in 3 months with faster moving items.

The decision was based primarily on how our customers preferred to be served, and they indicated that they'd rather have one delivery for more items, and laid the burden on us to decide which items would stay and which would be cut.

Interesting conclusion to the story: We ended up INCREASING total sales with fewer items, because the salespeople were able to focus their attention on the best sellers, ensure that they had adequate shelf-space, and secure secondary in-store displays much more effectively.