8

TOCPA
www.tocpractice.com

26-27 2013,

Development of a Mafia Offer

New Goods

Evgeniy Yudin, CJSC Lybimy Kray, Russia

October 2013

Evgeniy Yudin
Purchasing director of CJSC Lybimy Kray.
Evgeniy has been using TOC since 2011. TOC
implementation focus areas are inventory management
and mafia offer development.
Education:
-Saint-Petersburg Institute of Trade with major
Technology and Organization of Catering Companies.

in

IMISP, Managers re-training program.

TOC areas:
- Essence of production management solutions
- Inventory management in distribution and retail
- Mafia offer development

E_Yudin@lkray.ru
+7(921) 997 09 26

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Current situation

The Company produces pastry goods

The Company sells the goods both through
distributors and directly to large retail chains
across Russia.
The client base consists of more than 100
clients.
The Company spends too much resources for
development, production and promotion of
new goods.
The sales volume of new goods grows
insignificantly

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TOC tool
Current reality
Understand the
Problem
WHAT to Change?

Cloud
UDE
Current
Reality Tree

Future reality
Solution
WHAT to Change To?

Transition
Implement the Solution
HOW to cause the
change?

Cloud
UDE

6 layers

Future
Reality Tree

Prerequisite
Tree

Negative
Branch

Plan
implementa
tion

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Steps of mafia offer development

1

Develop the profiles of client groups

Formulate typical UDEs

Development of UDE clouds

Clouds consolidation and identification of assumptions

Identification of competitive ability criteria

Formulation of a mafia offer

Making sure the mafia offer is effective

Development of Test questions to verify existence of
clients problems
Detailed sales process development for the mafia offer

8
9

10 Trainings of sales managers to sell the mafia offer

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Develop the clients group profiles

The client suffers from

I would like to solve it by

Value of new goods is not clear, we do

not know how to sell it.
Low sales of new goods at points of
sales.
New goods eat shell space of fast
selling SKUs.
Level of returned new goods from
points of sales raised , as they are not
always good.
Often there are goods with expiring
good before date at our warehouses.
Unequal demand at points of sales.
It is impossible to calculate the
optimal inventory, as the order
volume that is placed by different retail
chains may differ.

Having a presentation describing

clear value of new goods.
Reducing the range of new goods
in order to increase sales of
other SKUs.
Having an opportunity to
compensate returned goods
from points of sales at the
suppliers expense.
Promoting the new goods
extensively at the manufacturers
expense.

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Formulation of the typical problems

UDE 1: Most of new goods are not attractive to the customer.

UDE 2: Too often there is a surplus and shortage of new goods.
UDE 3: There are more returned new goods than goods of existing range.
UDE 4: points of sales do not want to expand the range of goods,
especially by introducing new goods.
UDE 5: Turnover of new goods is smaller than that of existing goods.
UDE 6: Sales of new goods do not increase total sales.
UDE 7: Sales of new goods do not increase profits under the contract.

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Formulation of the typical problems

UDE 7
Sales of new
goods do not increase
profits under
the contract

UDE 6
Sales of new
goods do not
increase total sales.

UDE 3

UDE 4

There are more returned ,

new goods than goods
of existing range

points of sales do not want

to expand the range of
goods, especially by
introducing new goods

UDE 2
Too often there is a
surplus and
shortage of new goods

UDE 5
Turnover of new
goods is smaller
than that of existing
goods

UDE 1
Most of new goods are
not attractive to the
customer

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Building of UDE clouds

UDE 3: There are more returned new goods than goods of existing range.

Control cost

D
Reduce range of goods

B-D1: It is necessary to allocated a pallet place for each SKUs storage that increases
need of storage
facilities.
A
B-D2:
Many ofprofit
items increases order batching time that leads to increased number
Increase
of warehouse employees.
B-D3: A large number of items increases the period of replenishment order forming
and the number of procurement department employees.
D`
B-D4: sales manager, as a rule, deals
with the range of 800-1000 SKUs and ignores
Increase range of goods
the rest goods and after a certain
number
Increase
sales of new items they do not add anything
to the turnover of the company.

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Building of UDE clouds

UDE 3: There are more returned new goods than goods of existing range.

C-D1: It is more likely that the points of sale will be placing

have a wider range of
orders for more items if we would
D
Control cost
goods.
-D2: It is more convenient for the points of sale to work Reduce range of goods
with a smaller number of items (replenish the full range of
goods from one distributor).
C-D3: The
A wider is our range presented at the points of
sale,
the less
shelf space remains for the goods of our
Increase
profit
competitors.
C-D4: The wide range of goods allows satisfying tastes of
a wider range of customers
D`

Increase range of goods

Increase sales

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Building of UDE clouds

UDE 3: There are more returned new goods than goods of existing range.

A-B: Each spent

ruble reduces
our profit

A
Increase profit

A-C: Each
additionally sold
SKU brings profit

Control cost

D-D`:
We do not know whether
the product will be
successful, but we do not
want to lose the planned
profit

We do not know how to

Increase sales
draw the line between
successful and
unsuccessful items.

D
Reduce range of goods

D`
Increase range of goods

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A-B Each spent ruble

reduces our profit

Clouds consolidation and identification of assumptions

C-D: Product range expansion increases

complexity of business processes and costs
Summarized

Control cost

Summarized
D
D
Not to increase the
range of goods

Summarized
A
A
Have a profitable
business

2.

Summarized

Increase sales

A-C: Each sold SKU

brings additional
turnover

1.

D`
Summarized
D`
Increase the range
of goods

D-D`:
We do not know
how to identify
success of a
product.
We do not know
which inventory
level of new
goods should be
maintained.

C-D`: It is convenient to have a wide range of

goods for both the client and customer
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Identification of competitiveness criteria

Key competences.
Know-how, design, technologies that
allows to produce marketable goods .
Delivery reliability.
Product availability.
Flexibility in response to changing market
needs and demand.

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Formulation of mafia offer

Control cost
A
Have a profitable
business

Increase sales

D
Solutions/injection:

1. We
offer
goods, sales of which will

be at level of top selling by the

supplier in the same price range.
2. We offer a clear program of work
on new goods and carefully follow it
(value of new goods, presentation,
budget, deadlines,
promotion and
D`
etc.).
3. We provide
a warranty, terms and

conditions of risk compensation for

unsuccessful new goods.

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Convincing in the effectiveness of the mafia offer

We do not know how to identify if the

product is successful

We do not know which inventory level

of new goods should be kept.

Our work methods result from the compromise between the pressure to increase or
reduce the range of goods

Assumption-D
Working with the
existing range of
goods does not
require attraction
of additional
resources
Assumption A-
Each spent ruble
reduces our profit

D`
We feel pressure
To increase
range of goods

D
We feel pressure
Not to increase
range of goods

We shall
Control cost

We shall
Increase sales

A
We want
To have a profitable
business

Assumption C-D`
It is convenient to
have a wide range
of goods for both
the client and
customer

Assumption A-C
Each sold SKU brings
additional turnover

15
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Convincing in the effectiveness of the mafia offer

7

5

,

4

,

2
,

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Convincing in the effectiveness of the mafia offer

2

,

4

,

5

,

,

,

( , ,
, ,
..)

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Convincing in the effectiveness of the mafia offer

UDE 1: Most of new goods are not

attractive to the customer.
UDE 2: Too often there is a

surplus and shortage of goods

UDE 3: There are more returned
new goods than goods of existing
range.
UDE 4: Points of sale do not want
to expand the range of goods,
especially on account of new
goods.
UDE 5: Turnover of new goods is
less than of existing goods .
UDE 6: Sales of new goods do not
increase total sales.
UDE 7: Sales of new goods do not
increase profits under the contract

Solutions/injection

V
V

V
V
V

Our mafia offer include:

1. We offer the goods, sales of
which will be at level of top selling
by the supplier of the item in the
same price range.
2. We offer a clear program of work
on new goods and carefully follow
it
(value
of
new
goods,
presentation, budget, deadline,
promotion and etc.).
3. We provide a warranty, terms
and
conditions
of
risk
compensation for unsuccessful new
goods.

V
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Test questions development to identify clients problems

Test questions :
Do you have returned new
goods?

UDE:

What are your financial

expenses on returned goods?
UDE 3. There are more returned

new goods than goods of

existing range.

Are there any cases, when new

goods are returned almost
completely?
Are there mass returns of new
goods?

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Detailed sales process development for the mafia offer

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Detailed sales process development for the mafia offer

Distributor

Lybimy Kray
Offers product in
demand

Covers points of sales

Training and
motivation of sales
representatives

Motivates sales
representatives

Provides sales
support program

Ensures new goods

availability at the
warehouse

Compensates returns

Reports on sales

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Detailed sales process development for the mafia offer

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Detailed sales process development for the mafia offer

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Trainings of sales personnel to sell the mafia offer

A dialogue of a sales person based

on 6 layers of resistance to change
was developed.
Draft cooperation agreement was
developed.
Developed the calculation tool
Calculation of potential sales of
new goods in the region.
Printed a guideline brochure Mafia
offer for new goods.
A 2 day training for sales personnel
was developed based on the
prepared materials.

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Summary

Focus of attention in the process of new

goods promotion was turned from what we
like (Supplier value perception), to what the
customers would like.
Change from carpet bombing to pinpoint
strikes.
Started a project called Blitzkrieg.
Analyzed the existing range of goods.
Started a project named Aperitif.
The development department was
restructured.

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Thank you for your attention!

Questions?

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