Overview:

Closed $25 Million in Merchandising Work*:  Associate led team that closed $25 million worth of retail merchandising work for a pharmaceutical manufacturer.  $10 million of the work was for the development of a nationwide convenience store merchandising organization (developed from scratch in 90 days.)  Another $10 million of retail services were provided to the mass merchandiser channel and the remaining $5 million of merchandising work was performed for grocery retailers.

    Problems / Challenges Faced:

• Manufacturer faced rising cost of in-house merchandising team - was considering outsourcing

• Manufacturer was concerned about certain problems related to outsourcing the work:

  • Loss of control

  • Confidentiality

  • Knowledge of reps

  • Ongoing training

  • Span of control of rep supervisors

  • Quality of work done

     Solution:

• Manufacturer hired big consulting firm to analyze outsourcing alternatives

• Associate had already established his expertise and reputation with the manufacturer

• Manufacturer trusted Associate enough to ask him to help educate the consultants on industry and the issues

• Associate cultivated / courted / educated the consulting firm        

• With consulting firm's input, manufacturer decided to outsource. 

• Manufacturer put out invitations to present a "capabilities review"

• Associate's firm had a tremendous advantage because of working with the consultant

• Possible stumbling block / objection:  Manufacturer wanted to use a $/hour service model for their grocery store coverage needs rather than the traditional "% commission" model to pay for the services.   Associate's company had never done this before

• Original proposal was for grocery, drug and mass merchandising channels.  Actual sale grew to include the convenience store channel

• Re-setting Unreasonable Cost Savings Expectations:  Initially, manufacturer had unrealistic expectations on cost savings with the Convenience store service solution.  Manufacturer was currently spending approximately $8 million per year and wanted to reduce the overall cost of the program.  Associate worked with Manufacturer's VP of Finance on a full service analysis, which revealed that Manufacturer was not including all costs in their analysis.  Associate convinced manufacturer  to actually spend $10 million for the service solution

• Associate's firm met with the majority of manufacturer's retail service personnel that were to be displaced by the outsourcing.  Approximately 65% of manufacturer's people signed on to work with Associate's company

Results:

• Convinced manufacturer to use Associate's company, even though they did not have a convenience store operation and a competitor had a convenience store operation

• Helped manufacturer discover that another bidder was withholding the fact that the bidder was doing work for the manufacturer's major competitor

• Initial $15 million of work was for grocery, drug and mass merchandising channels

• Additional $10 million of the work was for the development of a nationwide convenience store merchandising organization

• Program was developed from scratch, up and running in 90 days

• This project became a turning point for Associate's company.  Today, the $/hour model has become the  Associate's company's most important business segment (there is some debate about this)