Beverage Distribution/Organisational Chart

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Question
QUESTION: Hi Eric,

I have attained a exclusivity for a juice manufacturing company out of my country to market and distribute their products in my country.

i have started the distribution but it seems i am the only employee handling all divisions aside the driver who does the deliveries. i would like you to help me with a typical organisational chart for a Beverage distribution company.

Also, I would like to find out if i employ someone who would handle sales, distribution and also create new business what title would be appropriate and what would be the associate salary and allowances or commissions that come with it.

ANSWER: The organization design reflects the size of the operation.  If I'm right you're currently just 2 people.  For growing a company that's going to be tough.  You need a couple more hands.  In these early days (which is all I'll really address here) the organization I would expect to see:-

- Sales - this can be you as the GM, setting up accounts; and then the Driver acts as the rep and sells off the truck; the truck becomes a warehouse and profit centre; in the early days, you're looking to get 1 more person in to find accounts and more drivers.  You should pay a premium for the drivers: you want to discourage stealing, encourage proper customer care, safety and good accounting as you don't have the wherewithal to control it otherwise.

- Warehousing & Procurement - this will become more of your role as you off-load the Sales; you want to forecast how much inventory to hold; lead times to replenish; reload vehicles quickly.  

- Accounting & Settlement - the trucks need to be settled back to inventory that was assigned; your pricelist, etc.  This can be done in Excel, but you should get somebody in who knows this sort of technology.

Your primary goal is numeric distribution.  You want to be in as many locations as possible; if only doing a case a week; that's good enough.  Your sales is going to spend 70% opening accounts, 20% coaching drivers (doing route rides, watching and training), and 10% admin.  You too need to be route riding with your Sales and Driver; teaching the Sales how to get better at opening accounts and coaching the driver.

As for accounting, in the early days you are just cash on delivery.  You DO NOT want to give credit, you don't want to have more staff chasing bills, issues with chasing drivers who gave credit etc.

Next, you will want to work on improving customer relations.  You'll be looking for better placements; at this point you'll probably have to have some accounting staff.  It might be you give 1 weeks credit and collect on delivery for the week before.  But now you'll need to have Customer Cards (manual system will work).  This tracks the sales week-by-week.  Monthly, the drivers should report on the situation by account.

I think this is the bare minimum; and it gives you a path.  You'll know you need a bigger organization as the customer base increases.  This will require more roles and development of departments.  

One of your points where you need to get more serious will be when the sales drivers reach 8; adding another 8 should require a 2nd Sales supervisor.  Opening remote warehouses, too, will require more skills in terms of transports between operations, better warehousing and route accounting.

Another aspect is switching from Route Sales to Pre-Sales.  In Route Sales you burn alot of fuel; going to Pre-Sales you're contacting the customer in advance, perhaps by phone or a visit a day in advance.  That determines what to deliver.  When you get to that stage, you need to rethink stocking trucks, picking, etc.  But you can save greatly on fuel, avoid wasted journeys, etc.  This will see you develop a Order Processing & Routing department.  And at this point your Sales team changes from supervising entrepreneur Drivers to Sales Reps.  As you can imagine, this will get more involved and change the organization.

I hope this can get you started.
 

---------- FOLLOW-UP ----------

QUESTION: Can you help with a margin model and also payment template. So how many departments should a Beverage distribution company have and what should they be?

ANSWER: This is a length of string discussion.  I'd have to put time into your current situation and market to understand and recommend more fully on the departments; and I'm not in a position to do that.  A typical, going business has the following departments, groups:-
- FINANCE/ACCOUNTING
- SETTLEMENT
- ROUTE PLANNING
- WAREHOUSING/LOGISTICS
- SALES
- DELIVERY
- HR
- MARKETING
- IT

So "9".  Is that what you need to know?

As to Margin model, this requires an understanding of your cost drivers.  Please take some time to explain what they currently are and then I might be able to advise.

Please further explain what a payment template is.

---------- FOLLOW-UP ----------

QUESTION: concerning the margin, I to know the percentage margin that is fair for a distributor and with the payment template, i want an excel spreadsheet that i can enter the payments done by customers from time to time

Answer
Still length of string type of question.  The "fairness" of a margin reflects the cost of capital, carry costs, product demand & exclusivity, credit terms, cost of goods vs what the market will bear, etc.  I've seen margins as low as 10% and heard of margins at 300%.  

On a Payment Template, while I have done Excel settlement systems for Route Sales, this has to be crafted to your needs; and is more than I'm willing to do for free.

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Eric Hofer

Expertise

Over 27 years experience, with 17 in international FMCG in back office operations and in field sales and data collection, including design, development and deployment of Handhelds, Marketing Equipment (Service, Tracking and Return on Investment), reporting and Vending management. Have participated on the launch of operations in new markets, and re-engineered the back office in several countries.

Experience

Designed and led the development and deployment internal ERP system for Pepsi used in On-Premise/Vending in 13 markets. Designed 2 handheld systems, the latest is now deployed in 4 markets internationally. Re-engineered the back office functions (settlements, despatch, invoicing, credit control, etc) for over 20 snack, confectionary and beverage operators. Developing software: Progress, VB, Access, C, Sybase, SA

Organizations
Innovative-Selling Solutions; SalesSuite

Publications
BudapestSun

Education/Credentials
State University of New York - BA Economics NYU - Courant - Graduate work - Computing

Awards and Honors
Moderator of LinkedIn CEE Group

Past/Present Clients
PepsiAmericas PepsiCola International PepsiCola Company British Steel British Telecom Britvic (Pepsi's bottler in the UK) AT&T BellSouth Mars Overseas Bottling Pepsi France Matutano (Frito-Lay Spain) Frito-Lay Pepsi Foods International Chase Manhattan Bank Kidder Peabody National Power SmithKline Beecham Mars Overseas Bottling (Pepsi Azerbaijan) A&P Bottling (Pepsi Serbia & Montenegro) Iberia Bottlers (Pepsi Georgia)

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