Redrawing The Map
How a fortune 100 technology company simplified its channel strategy to improve profitability, speed and serviceDOWNLOAD
A major high technology company relied on a dizzying variety of routes to move its products to market. While company executives suspected that their approach was inefficient, they had no way of knowing. Deloitte helped the company analyze its models for moving products to market globally. The company expects that the resulting changes will significantly improve its profitability, efficiency, competitiveness and customer satisfaction.
Imagine that in addition to selling hundreds of products online, you rely on a huge network of distributors, wholesalers, retailers and other business partners to sell the same products around the world. For over a decade, you have expanded these “routes to market” to respond to competitors, serve a specific customer segment or sell in a small geography. And for years you have supported this massive selling network with significant resources, including discretionary discounts and corresponding administrative resources that have a direct impact on your bottom line. That’s the challenge this company faced – and it put discretionary discounts in the crosshairs for improvement.
But what if the discounts were only the most visible sign of even bigger challenges? Did the company really need all those resource-intensive routes to market? How could they be more efficient? Were the right products being delivered through the right routes to market? Were the needs of business owners and end customers being met? These were the questions we encouraged the company to consider. But it had been solely focused on measuring profitability, by region and by product. It had no way of knowing whether its routes to market were working properly as a whole or individually – especially when considered within the context of discounts, operating costs and competitive pressures.
In the hunt for new ways to look at your existing business, it helps to have someone who’s been there before. Deloitte has helped some of the most successful companies in the world in their efforts to analyze and restructure their market strategies, and was able to help this company get up and running quickly. Here are some of the highlights.
In the end, we helped the company give shape to the ideas of many company executives who suspected that the product distribution strategy was flawed, dig up the hard facts about routes to market and develop a plan for moving forward.
The company expects that combining numerous routes to market into only a handful will help improve volume, margins and customer satisfaction:
Change of this nature is a massive undertaking, one that goes to the heart of the organization. Today the company is getting its governance, policies and infrastructure in order to smooth the path to this transition. It expects to significantly reduce operating expenses as well as spending on discretionary discounts.