Articles

We are being bombarded with the idea of an imminent Digital Revolution that is already in progress and that those who do not take it seriously and not embark on it will be facing a serious risk of extinction.

The signs that can be perceived are the following:

(1)    The boundaries between industries are hard to perceive
Amazon and Google are examples of these blurry boundaries. Amazon is ecommerce; produces and distributes series and movies; offers cloud services among countless other things. That is, it competes in the retail space, with studios and distributors of films and with technology companies. Google, in addition to being a technology and media company, to give only one example, develops a driverless car. Is it a technology, media and future automaker company?

(2)    Interaction with machines using natural language
The interaction with machines via voice command is already a reality and the trend is that it is to become simpler.

(3)    Robotics
Replacement of repetitive activities by systems or machines is inevitable. Those companies that bet on BPO may suffer. The BPO IT sector in India already feels the initial impacts of such movement of replacing people for robots.

(4)    Data is the most valuable asset
Social media, data already recorded and captured and the connection between machines and equipment, generate a huge amount of data. This enormity of data is extremely valuable. By analyzing such data, in a structured manner, asking the right questions, one can with greater assertiveness and less expense to acquire customers, define product offers and prices among many other things.

(5)    Connectivity and Integration
By connectivity, I mean being "on" wherever you are with other people and other equipment. By integration, I mean making several different devices and equipment "talk and act" together to allow seamless connectivity and easy interpretation by the user. This means that the user should be able to receive clear (processed and interpreted) information at any time and regardless of their device or equipment and send it with their observations / contribution to another user and interact with everything involving daily life. Cisco, with its interpretation of the "Internet of Things," already shows how different devices can be integrated operating on a network that results in a better life for its users. A real example of the impact of this concept on a supermarket can already be seen. Using the existing technology - sensors, wifi, internet, mobile devices, customer can be recognized (profiling), receive special offers, become autonomous by browsing the store or getting information about products via video and even talking to someone using their devices (Manufacturers may become more present on the store floor even from a distance). Store management can, in turn, obtain more detailed information in real time to act or react, equally, in real time. This will be great when the technology is tested and its prices go down!

(6)    Cloud becomes a delivery platform
The benefits of cloud computing before focused on cost efficiency, offering virtual infrastructure and data center, resource sharing, the possibility of rapid capacity expansion and payment per use is on route to evolve to become also a sales and delivery channel, just to mention one immediate evolution.

(7)    The customer is pressing companies to digitize because of their interaction with technology
Customers want to interact spontaneously with their suppliers, making use of mobile devices, they want to experience on and off-line relationship and avoid rework.


The signs listed above point to a challenging reality: this Digital Revolution is associated with eminent changes in business models with direct impact on people management, processes re-design, and on the offering and delivery of products and services. That is, it is not something that should be relegated only to the area of Information Technology.

And today, there is already a great profusion of revenue models, ways of competing, and available technologies.

Revenue models expanded by including: transaction, rental capacity, licensing, subscription, commission, advertising, and trading, to mention a few.

The way to develop or expand the business model and to compete involve: building the business, buying a business, partnering, investing, incubating or accelerating.

And the technologies already available include: sensors, radio frequency, beacons, machine-to-machine communication, robotics, 3D printing, drones, blockchain, crypto-currencies, virtual and augmented reality, Artificial Intelligence, cognitive computing, analytical tools and applications.

The fact is that even unconsciously we are already in full digital transformation. The decision that is up to the companies is whether they will take a protagonists or followers role in this process.

And how to respond to this?

(1)    Recognize the need for transformation;
(2)    Understand and map what needs to be changed;
(3)    Define a route of how to implement the required changes;
(4)    Act fast by piloting (do not go big before doing a pilot)!

In such a process, given its complexity and technicality, it is very important to consider hiring outside help.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

 

 

The best time to revisit the state of the business is preferably when external pressure is still manageable. There are several examples of companies that simply ignored the evidence that something was wrong, taking them as isolated incidents rather than symptoms of an impending collapse. Such companies ceased to exist or were incorporated by others. It is always important to keep in mind that a business dies slowly, with rare exceptions.

There are four evidences that together or, individually, should give room, at least, for an honest reflection on the part of Management:

(1) Low growth
Growth is an important indicator of business approval by its customers. A low level of growth, in line or below inflation, indicates that the business faces the challenge of continuity. Especially if this low growth is associated with a low share of wallet.

(2) Low share of customer purchases (Share of Wallet)
A low or stable share in the customer's wallet may also indicate stagnation or decline. It would indicate one of two possibilities: a fatigue in the business model or lack of harmony between the business model and its current customers.

(3) Low productivity
Productivity is a byproduct of the relationship between revenue and capacity. The components of capacity are those responsible for generating revenues: facilities, warehouses, distribution centers, stores, vehicles, equipment, working capital and labor.

(4) Low or falling profitability
Profitability is the ratio of profit to equity or invested capital. Ideally, such a result should be a higher rate than that which would be obtained in the case of a low effort investment such as the investment in the financial markets adjusted by a premium for the risk incurred.

The distribution chain, which brings together organizations involved in the passing or transfer of products from manufacturers or importers to consumers, is, by its nature, subject to continuous pressure. Concentration of suppliers; decentralization of production and distribution; concentration of customers; emergence of new formats (competitors and substitutes) and regulatory risk (licenses, permits and taxes) are some of these pressures.

The answer to these challenges lies in the correct redefinition of the basic elements: customers, products and services, region and geography. That is, a combination of the Business Model (how to make money) and Value Proposition.

Value Proposition is what the customer buys when choosing a company. This involves three elements: Brand / Image; Offer (Products / Services) and Purchase experience.

The questions that should be asked would involve:

a.    Company's role in the customers’ needs;
b.    Elements of the Value Proposition that are determinant in the selection of suppliers by customers;
c.    Which segments of clients are most attractive to a Value Proposition;
d.    In what degree and size the wholesaler / distributor is meeting the needs of the target customers;
e.    In what dimensions the wholesaler / distributor outperforms or falls short of competitors;
f.    Which dimensions of the Value Proposition or target customer definitions should be adjusted to maximize profits.

By dimensions, we understand attributes such as: Quality of products; Promotions; Price; Assortment; Availability; Little fluctuation of prices; Brands; Agility; Payment methods; Delivery; Payment terms; Tradition; Price information; Telesales; Customer Care; Packaging and Ancillary Services (credit, consulting ...).

Possible answers involve:

(1)    Act as "organizer": retail format development; independent retailers alliance offering: brand, format, purchase, technology and services;
(2)    New businesses: Go-direct (explore retail); Develop Services business;
(3)    Increase assortment and increase customer base;
(4)    Supply Government?


The fact is that the answers will bring in themselves a betting component, thus the quality of the analysis and discussion will make the process less risky!

Contact us to discuss how to reinvent distribution by sending a message to This email address is being protected from spambots. You need JavaScript enabled to view it.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

 

 

Crisis has the characteristic of being unexpected, create uncertainty and affect objectives or goals. It is an inflection point where the previous system or model no longer works well. Thus being necessary to adopt another or reform / update the current one. The correct answer is change!

O process of change:

(1) It starts by recognizing that something is not going well, and this can be confirmed if cash generation is not sufficient to remunerate the invested capital (banks and shareholders) neither to pay for new investments and as a result compromising future growth;

(2) Following by the identification of possible measures: Can we change this? What, How and When? Do we need help? What kind of help?;

(3) And it continues by dimensioning the costs to be incurred: restructuring, sale of assets and/or business units, size reduction, structure adjustment.

And the decision to leave, abandon, discard, cut something that has been important but that limits and prevents the organization from evolving or surviving is very difficult. Mainly if not having faced similar situations previously.

There are, however, basic principles that if applied allow an organization to face a moment of crisis. These principles are the following:

1) Focus
Focus involves making choices and concentrating efforts and resources. This requires prioritization. And there is no way to prioritize without electing what is essential.

Focus, in fact, is the management of shortage or scarcity. Not that a company should act different normally. It happens that in a crisis situation, there is no other option.

And this includes reviewing and re-adjusting the business model (market, product, customers, channels-distribution) and the operational model (processes, infrastructure, organization and people).

2) Discipline
Discipline is linked to execution and performance (measurement). It involves implemented controls that will track execution and measure performance.

These controls-set involves: monitoring financial results (weekly and monthly); Personal interaction (field visits); and process of approval of spending (opex and capex). The latter - the expenditure approval process - should be linked to the need of a justification (in the case of opex) or a return calculation (in the case of capex).

In fact, discipline requires a bit of "micromanagement" from top management. This is not necessarily bad, because in spite of what is thought, this in fact empowers and makes people accountable by showing interest in what they do and also makes them more confident, as they know that (they) are not alone.

3) Communication
In a crisis situation beyond focus and discipline, it is necessary to maintain communication. And this exchange takes place through symbols, signs, behavior, besides of words.

The message to be transmitted must be repeated, consubstantiated, fulfilled and unique. To adapt the message by the public is not to change it, but to make it more easily understood. A message that does not arouse AIDA - Attention, Interest, Desire and Action - is lost.

And the audience to be reached is formed by: team (associates, employees); Financiers (banks and shareholders); Suppliers and customers. This involves both transmitting the message that is desired and also listening, processing and classifying what has been received and acting to obtain an adjustment / alignment between the two - what is transmitted and what is received - when it is necessary.

4) Team
A management team to deal with a crisis situation must have some skills that may not be in the team formed in a situation of "normality".

Among these necessary competencies, the main ones are:

a.    Ability to access goals and establish corrective actions;
b.    Agility in decision making and demand action; and
c.    Ability to understand ones role and the impact of the crisis situation on the team.

If the existing management team does not meet these competencies, it would be important to adopt one of the following alternatives: hire a new team member who can add such skills or, alternatively, hire a specialized consulting firm that can offer such skills through its team.

Contact us to discuss management in times of crisis by sending a message to This email address is being protected from spambots. You need JavaScript enabled to view it.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

Risk management is, in a certain way, the “quantification” of events that may be materialized conjugated with actions to mitigate them. This “quantification” is an exercise based on probability.

Risk may be quantified by using financial models and records of historical events and may be mitigated by transferring it. An example of the quantification is as simple as the cash flow estimation while the mitigation would be buying a financial hedge aiming to fix the price of raw material or of a currency.

Risk management may be seen as a loss of time and money – until something bad happens. When incurring in a loss, first action is to find those responsible. Nevertheless, the risk mitigation and containment as well the reaction against its materialization continues to be unaddressed.

Any company is subject to various types of risks, such as, to name a few:

. Reputation: threats to the image of products and brands;
. Regulatory: involving the observance of laws and regulatory framework;
. Human Resources: scarcity of talents or turbulence in the succession of leadership;
. Technology: operational or security failures in critical systems;
. Market: assets devaluation;
. Country: political, social and economic;
. Credit and Financing: delinquency (customers) or impossibility of obtaining credit lines to fund the business;
. Natural disasters: destruction or inoperability of offices and plants or production units.

Surely risk management has a cost. Hence the need of realism when deciding on which elements will be used to mitigate risks.

An important step is the design of a risk matrix. In this document existing risks are listed as well as the minimum control to be observed; the responsible for its implementation and control, and with what frequency. 

Among the risk mitigation elements that may exist, some are simple to implement and are part of the "internal control system" for any large organization.

(1)    Auditing
Given the number of scandals involving audited companies questions about the effectivity of this service (and obligation) may arise. It may, nevertheless, only by those that do not understand what the auditing service is about.

The responsibility of an external auditing firm is that of providing an opinion about the financial statements of a company prepared by its management. In order to do that, the auditing firm base its work on the existing internal controls, which reliability will define the scope (extension) of the tests that will be applied.

The work of the external audit is limited as based on tests and not on the reconstitution of all transactions, and, it also does not work on the assumption of the existence of fraud. Finally, it assumes that the financial statements are correct and elaborated according to the recommended accounting practices and that all that is known is there reflected / pictured. In fact, management must sign a statement to that effect, which is delivered to the audit firm. Of course, the audit firm remains responsible for the quality of its work, very much based on the quality of supervision, as fieldwork, for cost efficiency reasons, is performed by less experienced and cheaper staff.
 
So if the auditing service does not represent a safeguard or validation, why do it? First, it is important to bear in mind that there are steps prior to hiring an external audit firm, mainly the existence of formal accounting and internal controls. Without the existence of both auditing loses effectiveness and becomes prohibitively expensive.

Assuming that a formal accounting and internal control system exist, external audit integrates a system of checks and balances, being instrumental to give assurance to the board and exempt managers from responsibilities.

In addition to the external audit service, a company can - and must - create an internal audit department, also with the aim of reducing the hours spent by the external audit. While the external audit focus is on the financial statements, internal audit would be more focused on compliance (adherence to the rules and procedures and internal control). In addition, internal audit is (by its proximity and involvement with the business) more empowered to identify and prevent fraud than the actual external audit.

(2)    Insurance
Insurance is bought in order to transfer risks. In fact, currently, various types of risks can be transferred. The important thing is to measure the risk and its impact on the business. The risks commonly covered are: property (risk falls on property); liability (risks against the company); and credit (risk of default-delinquency). Insurers will both weigh the risks and establish a premium to be charged or decline the risk.

(3)    Use of financial instruments
Hedging is made to seek protection or limit volatility (or losses) that a company is subject to. Of course, this protection is largely contingent on the analysis (of the company) on the movement in the markets in which it operates or is dependent. There are traditional and more sophisticated hedging transactions. Derivatives are examples of the latter.

Traditional hedge, seeks protection on adverse price moves of an asset or liability being them a good, raw material or currency. “Derivatives”, as the name indicates, has a value that is derived from another, being an asset, index, currency or interest rate.

A common example of this type of contract is the swap of exchange rate variation for an interest rate. In both cases, the most common instruments are forwards (fixing a future price) and options (purchase or sale on a certain date).

(4)    Licenses
It is virtually impossible to be with the licenses (and / or permits and certificates) up to date. This for the following reasons: (a) are large in number; (B) are obtained from different governmental bodies and different levels (decentralized); and (c) renewal term is short. On the other hand, be in compliance with these obligations means, at least in theory, that the property and the business is compliant with the requirements needed to operate, thus mitigating risk.

The list of the required licenses is wide and can be, for the sake of simplicity, grouped into two main categories: (1) Licenses on Property and Construction (2) Licenses on Business Operation.

Thus, is recommendable to have a list of all necessary licenses. In this list should be included their expiration date, the involved risks and the area or person responsible for obtaining them. Generally, there is a department at Head Quarters responsible for overseeing it while securing the licenses is confided to a specialized agent or to the administrative area of the store.

(5)    Communication Channels
In normal conditions, the flow of communication is hierarchical. There is, however, times when communication can fail and important information is not reported, preventing the company’s management from anticipating problems that may affect the business or its reputation.

In retail, where there is a large number of employees working in different locations, there is a need to create a communication channel that can enable them to be heard. A good communication channel should be divulged and provide safeguards to the user (identity protection no exposure) and, above all, be connected to an independent committee responsible for analyzing and responding. More common means of contact are: phone, email or dedicated website.

The Committee should involve members of various areas (usually at least HR, legal and someone from the office of the CEO or the managing board), with periodic meetings to review the communications received. In case of need of clarifications or further investigations, the committee should have competence to trigger the internal audit or even make use of a consultant or external professional.

The Ethics Committee is one that is being adopted. It deals with complaints of various kinds, from those related to strategy as to corruption and moral and sexual harassment. The institution of such committees should not be seen as bureaucratization but instead, a necessary tool to avoid that the company may be found colluding, even if for lack of knowledge, with malpractices, irregularities or illegalities.

(6)    Crisis Management Plan
A crisis management plan should not be seen as something bureaucratic. A large company needs a plan to deal with situations that pose a threat that cannot be anticipated and that require immediate response. Examples of crises range from the closure of a store as a result of an inspection promoted by a governmental agency to a contamination of private label products or a fire. Important thing is to keep things simple.

There are three basic aspects to be covered and observed in any crisis management plan, in the following order: (1) physical safety of customers, employees and affected surroundings; (2) physical security of the store (assets); and (3) communication to management.

Communication is important. However, before something is disclosed, the facts must be established in order to avoid misinformation. This is why coordination among the responsible areas before making occurrences public is required. And the reason for simplicity is to allow quick responses / reactions.

If you need help in dealing with issues related to business models or just want to discuss them further, please contact us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it.  | Advisory Board | Interim Management | Consulting

 

 

There are two words currently occupying the top of the business vocabulary: Experience and Empowerment.

Experience is related to senses, process and result.

What is the experience that a customer expects when dealing with a provider of products or services?

When interacting with a supermarket, the experience customers want is that of finding options of products, in a constant way (avoiding out of stock), in clean and organized stores, in a way that facilitate their choice and that processes are simple allowing them to perform the required activities, both outside and inside the store in the most efficient and convenient way possible.

When interacting with a bank the experience the customer expects is that of easily solving their needs of collection, payments or transfers, credit, withdrawals, investment, and balancing by visiting the bank branch, using an ATM or via remote access.

When interacting with a service station the desired experience would be that of easily, safely and quickly filling up your vehicle, checking the radiator, tires and water, use the restroom and, perhaps if in a trip or facing intense traffic, have a coffee and / or a snack.

In common, the answers above point out directly to what should be the basic delivery of any of these businesses. What greatly affects experience is the difference between expectation and outcome.

Empowerment, in turn, is related to freedom, authority and room for making decisions.

Using the same examples above, experience can be greatly affected by the lack of "power" in the front line, that is, the lack of freedom or authority on the part of those dealing with customers.

In a not so distant past several companies adopted the inverted pyramid model. This organizational model challenges the traditional hierarchical model by empowering the employees closer to customers with greater decision-making power and authority. Management, in this model, becomes a facilitator. The theory behind it, is that such an organization becomes more adaptive and therefore more effective. I had the opportunity to work in an organization that advocated such a model and, indeed, it is a model that by empowering, it engages and, at the same time, makes employees accountable.

Technology has enabled companies to automate processes and business rules. Doing more and better with fewer interventions and hence fewer mistakes. On the other hand, there is a real possibility that this will lead to withdrawal of line staff. We experience such examples as clients when interacting with a bank manager or supervisor or with a supermarket manager. Their possibility of assisting customers solving a problem is very limited.

We talk a lot of experience and "empowerment," however, both words should be rephrased.

Experience is the difference between expectation and outcome. A "zero" result, in this case, is already very good and a positive, bad!

Empowerment, in turn, is more easily experienced when the experience is simplified, meeting the expectations of the client!

Recently, I have been visiting in Italy two retail operations that meet the expectations of their current customers.

The first operation is Carrefour Carugate (Milan), a store opened in in 1972 and remodeled in 2015. The big change, besides the incorporation of technology of equipment and displays, is the area of meat, fish, fresh foods, fruits and vegetables. This area was designed to stimulate the senses and organized as if it were a street market and even offering the possibility of consumption on the spot.

The second operation is Carrefour Urban Life (Milan). This is an express type store that offers at the ground floor coffee shop, bakery, ready-to-eat sandwiches and drinks stand, sushi station and a bar in the background. On the upper floor there is a space that contains armchairs, benches, working table and even a "meeting room". In this space products purchased at the ground floor can be consumed and orders can be placed. This space allows both leisure and work, emulating the concept of third place inaugurated by Starbucks (the first place being the house, the second the work and the third one ...).

And what is the relation of these two visited operations with experience? Everything! Experience is related to expectation and outcome. And the outcome will be as good as anticipating the customer's expectations. And this is done by analyzing consumption patterns, demographics, family arrangements, health concerns, income, beliefs and profession. Both operations articulate a physical delivery of what customers expect, even if customers do not know how clearly to articulate this.

And that's the big challenge of any business, to get to know how to identify and read customer expectations and, at the same time, articulate a concrete response!

If you need help in dealing with issues related to business models, please contact us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

 

 

I had the opportunity to work with defined control companies of different origins and stages. These companies could be classified into five groups:

(1) Company that meant for the family a means of survival. A platform for achieving the goals of the family unit;
(2) Inherited company;
(3) Publicly-held company under family control;
(4) Publicly-held company under control of a family office or family holding;
(5) Company built by entrepreneur.

In terms of sales such companies ranged from millions to billions or Reais; in terms of coverage either regional or national; and in terms of customers, served from individuals (B2C) to legal entities (B2B).

The experience was very broad and rich. Additionally, it allowed me to eliminate wrong preconceptions. The main one is that defined-control companies controlled by families or individuals would be, invariably, non-professionals.

When we think of professionalism, we are led to the following elements: technical standards, practice, skills, line of conduct and financial return.

In this sense, professional companies are those that are guided by the set of elements above, allied to the practices of government that guarantee its perpetuity and the achievement of its objectives.

Government has relation with direction and control. And a company counts with a set of internal and external bodies that form the basis of government:

(1) Shareholders or Partners
They are the holders of economic power, being the owners of the company.

(2) Bylaws or Articles of Incorporation
It is the document that establishes the company’s objectives, its form of government and regulation.

(3) Shareholders' Representatives
Representatives of the shareholders are those appointed by them to conduct the business of the company, who may be Directors (if there is an organ of the Board of Directors) or Management.

(4) Management
Represents the body formed by those who manage or direct a company, whether by indication of the shareholders or their representatives.

(5) Internal Advisory / Counseling Bodies
These are bodies that advise and advise the representatives of shareholders or management. One example is the Advisory Board.

(6) Legislation and Regulations
Represented by the set of laws and regulations produced by a legislative branch.

(7) External Regulatory and Supervisory Bodies
They represent the bodies or institutions responsible for ensuring that the laws and regulations are being fulfilled.

What these bodies will be aiming to ensure is that there is transparency and exemption in the decision-making process, and that those responsible (for making the decisions) are held accountable. In addition, the existence of a conflict between economic power (financial interest) and political power (management, decision making) is, to a certain extent, positive. Governance, in the end, aims to optimize the performance of an organization, taking into account the regulatory and competition environment.

And, what does all of the above relate to the family-owned business? Just that it is not the kind of shareholder that controls the company that defines its degree of professionalization, but how such shareholders can segregate their interests from those of the organization, or even how they manage to segregate the individual from the legal person !

If you need help in dealing with issues related to governance or to help improve the decision-making process, please contact us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

If you need help getting started, you can count on us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.   


At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

 

 

2B Partners Consulting and FHO Corp, a company that offers solutions for commercial spaces, announced an alliance aiming to offer complete services involving planning, installation and help in the operation of commercial spaces.

2B Partners is a firm that offers services of interim management, advisory board and consulting for performance improvement for retail and consumer goods companies.

FHO Corp is a firm of project management involving design, execution, furniture and decor for commercial spaces.

The combination of these competencies may generate value for potential customers in the form of: complete solution/one stop shop (project, execution, products and logistics); fair price; differentiated customer service and respect to agreed deadlines.

Examples of projects involve: set up of street and mall stores; quiosks, offices; clinics; building common areas; refurbishment of offices and flats or hotel rooms. Additionally, other services involve: furniture adaptation; woodwork; and internal signage. Furthermore, given the existence of a retail division and the relationship with furniture manufacturers, procurement services are available.

In case you want to know more what we can offer you, contact us, to schedule a visit, sending a message to This email address is being protected from spambots. You need JavaScript enabled to view it. ou This email address is being protected from spambots. You need JavaScript enabled to view it.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

For the most part of my professional career I worked for multi-billion dollar companies in both sales and equity terms. Such companies always knew how important could be the contribution of consulting firms for the improvement of their businesses. And, for that reason, they always made use of these firms in various forms and fields.

There is intelligence behind this logic, which may be summarized as such:

1. Specialization that is not available internally
Every organization has internal specialists; however, their degree of actualization is limited. It is difficult to have within a company the degree of granular specialization that sometimes is required. Besides that, most companies, as avant-garde they may be, will never be experiencing new techniques or concepts except if they have been already proved elsewhere. A good accountant of a large company, for some issues, may need a specialist in international accounting rules. A good – internal – engineer may need of a calculus specialist for a specific project. An internal lawyer may need the opinion and experience of another lawyer specialized in a specific field. A good HR may need to access an assessment specialist. A good manager may need the help of a specialist to elaborate a strategic planning. A good finance manager may need the opinion of a specialist in payment means.

Complexity demands accurate answers and the wrong ones may be very expensive.

Consulting firms fulfill this role of answering the questions that demand specialization, experience and a fresh and independent vision.

2. Non recurring expense
A consulting firm is used for specific projects only when is necessary and, yet, when it can be afforded. There is no recurrence, it is not in the payroll, and it does not create future liabilities.

3. Speed in implementation
A consulting firm brings focus, add resources that would not be available otherwise and, as a consequence, can accomplish the project in lesser time.

When bringing in a consulting firm, along with it, due to the involved cost, focus is attracted to the project and to the problem that is being addressed. It is a manner of giving publicity and attracting attention from the organization.

The resources allocated, in terms of intelligence, capabilities and leadership, allied to focus, can lead to results quicker than that if executed by the internal structure.

4. Fixed term
A consulting firm must be hired for a project that has a beginning and an end. Metrics, deliverables and deadlines are the basis of the relationship with any consulting firm.

Additionally, from time to time, a contract with a specific consulting firm must be ended and other opportunities be exploited.

There are other reasons to make use of consulting firm: (a) the company opts for paying an average salary compensating this by making use of consulting firm; (b) the company opts for saving in training; (c) the integration of specialized professional within the company could be difficult, thus the consulting firm; and (d) the company needs an approval “stamp” (the case of multinational or public quoted companies).

As to the manner of using and hiring a consulting firm, there are a few practical tips to be observed:

1. Define well the scope of the project
Time must be spent in the definition of the object and extension of the project. The problem definition will guide the work and, consequently, the resources allocation.

A suggestion is to request to the consulting firm to perform a quick diagnostic to certify that the defined problem to be addressed is correct.

2. Choose the most adequate consulting firm
There are innumerous consulting firms of different sizes and origins. The most important is that the firm is the one more appropriate for the project in question.

A few tips in regard to the consulting firm selection: (a) consider their knowledge of the industry; (b) size is not as important as the participants of the project; (c) value experience.

3. Identify the total cost of the project
Consultants may charge for time and expenses;  have a combination of fixed and variable value; be totally variable (“ad-exitum”) with a minimum retainer that will be deductible;  or yet, a fixed value for the project.

Besides the fees there are expenses reimbursements and, yet, other expenses associated to the time of company’s employees involved in the project, and eventually allocated equipment and space.

Besides that, never forget, when analyzing the received proposals that “who pays peanuts, get monkeys”, or, who pays little, receives little. This is not an excuse for not negotiating  fees, nevertheless, one may think that the cheaper is not always the most effective!

4. Formalize the agreement
Draw a contract that establishes what was agreed in terms of scope, fees, payment terms and, yet, delivery terms and clauses of confidentiality, of eventual additional work (how they are going to be treated and approved) and of termination.

5. Be prepared to participate (including of the success of the project)
Never leaves the job solely for consulting firm. The work is a joint one. The involvement of the company’s personnel is fundamental to, beyond dealing with logistics (of the project), follow up on it, and facilitate communication with the involved areas, including interviews.

Make use of consulting firms must not be faced as a recognition of failure or inaptitude but instead as an opportunity of gaining time (and money!). It is about act intelligently as large companies do!

If you need help getting started, you can count on us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

If what “makes” a successful company is the combination of:

(1) Misssion: a clear purpose;
(2) Values, communicated and lived;
(3) Business Model: how to make money, something that cannot be static but evolve along with the client;
(4) People: competent, trained and committed; and
(5) Processes: customer oriented, necessary, simple, clear and supported by technology.

And success also depends on paying attention on the essential. And essential are:

(1) Growth:
A healthy business grows. Growth is the materialization of the approval of the customer to the products and services offered by the company. And growth can be achieved by winning new customers or selling more (or more expensive) to the same customers.

(2) Assets:
Assets are land, plant, equipment and rights that have cash generation potential, that can be used as see fit; and that are owned by the company.

(3) Profit:
Profit is the validation of the business model. Its existence attests to the sustainability of the business.

(4) Cash Generation:
O lucro ajustado pela variação de capital de giro, pelos dividendos pagos e pelos investimentos (capex) é o caixa gerado. Caixa é mais do que apenas uma unidade de medida, sendo o que permite a sobrevivência e a independência.  Caixa dá liberdade, permite cometer erros e concede tempo para fazer escolhas. Três perguntas que são constantemente feitas:  O negócio está gerando caixa?; De onde vem o caixa?; Onde o caixa está sendo aplicado?
Profit adjusted by the working capital variation, dividends paid and investments (capex) is the generated cash. Cash is more than just a unit of measure, as it allows a company to survive and grants it with independence. Cash gives freedom, allows making mistakes and gives time to make choices. Three questions that are constantly asked: Is the business generating cash?; Where does the cash come from?; and Where is the cash register being invested?

As opposed to the 4 essential elements of success, the main reasons for failure in business are:

(1) Do not treat the business as a separate entity;
(2) Not knowing the details of your business;
(3) Diversification towards an unknown business (loss of focus);
(4) Over-investing;
(5) To be improperly financed;
(6) Do not look around! Neglect what happens around, the environment in which the company is inserted;
(7) Think that things will improve even if there is no indication in this direction! This is a trait familiar to the Brazilians and a very risky one!

There are some basic formulas that big successful companies pay attention to:

(1) Profitability

A.  Return on Investment = Margin x turnover

i. Margin = Profit/Sales
ii. Turnover = Sales/Assets

B. Sales  (-) Variable Costs = Contribution

i. Units sold x contribution per unit

C. Contribution (-) Fixed Costs = Profit

i. Variable costs: vary with the volume of production
ii. Fixed costs: are fixed, regardless of the volume produced

(2) Investiment Decisions

A. NPV = Net Present Value
Value of the cash generated in the future by the investment discounted at an "x" rate, compared to the initial investment. If the values generated are higher than the investment, make the investment!

B. Payback period
Value of the cash generated in the future divided by the value of the initial investment. The shorter the period, the better!

C. Rate of Return on Investment
It is the rate that matches the present value of the future cash flows with the initial investment. If higher than desired rate, make the investment!

The complexity of large companies forces them to focus on what is essential, otherwise they will be lost. We can learn from them by focusing on what is essential and not falling into the temptation of copying their complexity and bureaucracy.

If you need help getting started, you can count on us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.   

At 2B Partners Consulting we aim to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Governance is government. Governance is related to direction, authority, accountability, transparency and participation.

Corporate Governance is frequently seen as the structure and the relationships that determine the direction and performance of the corporations.

CalPERS, the largest public fund in USA, defines corporate governance as the relationship among various participants in determining the direction and performance of corporations.

The American Managers Association defines corporate governance as how suppliers of capital get managers to return profits, make sure managers do not misuse the capital by investing in bad projects, and how shareholders and creditors monitor managers.

The objectives of monitoring, measuring, accountability, transparency, direction and performance have their odds of being met once a routine of producing and following up on results is in place. We name this routine: Results Governance.

The first step in its implementation is to define what will be measured.  A few criteria to establish what is going to be produced:

(1)    Less is More!
A lesser number of reports and metrics are always better for bringing focus and, thus, allowing analyzing the basic elements responsible for the development of the business.

(2)    Do not look for perfection
There is the risk of wanting, from the beginning, to have indisputable numbers. Accuracy is important; however, more than accuracy, it is important to begin producing the numbers (reports). Over time, with analysis and discussion accuracy will be improved.

(3)    Monitor performance
The performance of the business may be monitored via an Income Statement (or Profit & Loss Statement) along with a few performance indicators. 

The Income Statement is a report that shows if the produced income cover or not the costs and expenses of the business.

A Performance Indicator is a metric that allows the organization to compare its performance with its own targets as well as with the industry it is part of.

(4)    Measure solvability
The Balance Sheet depicts the assets and how they are financed (suppliers, government, service providers, banks and investors /shareholders ).

The assets being in excess of the liabilities the company would, theoretically, be solvent. However, there are two very important points to consider: valuation and liquidity.

The correct valuation of the assets and liabilities and their correct classification as to their degree of liquidity will affect the measurement of the company as to its solvency.


We suggest the implementation of the following routine as part of the cycle of Results Governance:

1.    Set up a Monthly Report
The existence of a monthly report requires the existence of: a set of standard reports that will serve as a reporting base together with a habitual meeting for discussing these reports, and the definition of its participants (show be those capable of influencing the numbers).

A periodic discussion of results should:

(a) Be objective and specific, seeking to explain the performance of the business and any deviation from the objectives;
(b) Comments should include actions that will be taken to remedy performance;
(c) In addition, space should be left to discuss other issues that impact the business and that are not captured by the defined reports.

2.    Set up a Weekly Report
An evolution, after the implementation of the Monthly Report, would be to establish a routine of weekly reports, aiming to provide room for more immediate corrective actions. This can be done by setting up weekly conference calls or simply via pre-formatted reports.

This report should include the following elements:

(a) Sales Performance
The objective is to monitor sales behavior, their costs, who is buying, who is not buying, which products are selling, and which ones are not. Compare this performance with the target and with the same period of the previous year would be equally recommendable.

(b) Business Development
In this block should be listed the measurable and effective actions that are ongoing and that will affect the development of sales. Other comments could be related to new product launches or new additions.

(c) General Information
Inform other topics that may be relevant such as: market news; competition, or others that may have an impact on the business.

3.    Schedule periodic field visits
An essential part of a good results governance program is field visits. By field must be understood where the businesses occur, be it store (if retailer), factory (if industry), customers and competition. Physical presence, an "owner’s look", allows one to identify inconsistencies between stories that numbers and reports tell with the reality as well as anticipate risks and identify opportunities.

4.    Value the Budget elaboration routine
The routine of building a budget is a unique opportunity to have a frank discussion about the state of the business, its real capacity to generate revenue, and also evaluate the management team as to their knowledge and their ability to identify and mitigate business risks.

Establishing a results governance routine is a first step in ensuring performance and accountability.

If you need help getting started, you can count on us. Contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.   

At 2B Partners Consulting we aim to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.    

There are two situations in which we need to conduct the “back to the basics” exercise: in moments of crisis and when facing the pressure for implementing the managerial fads of the occasion.  Crisis is an inflexion point in which the existing system does not work well. Thus, it is necessary to adopt another or reform /update the existing one.  Managerial fads have a few standard characteristics: present ready to use formulas, promise quick results, list complete successful cases and are presented as amply applicable. Other characteristics are the rapidity that are forgotten and the skeletons that they leave on the way!

When embarking in the “back to basics” exercise, the following elements must be revisited:

1.    Business Model
The Business Model is basically how an organization creates, delivers and captures value. In summary it is how it makes money!

Check the validity of the business model involve verify if:

(1)    the characteristics of differentiation in regard to the competition yet exist;
(2)    the processes that have the role of linking the various components are yet efficient and supportive of the relationship with the customers;
(3)    the benefits  offered by the products or services continue to be appreciated and desired;
(4)    the customers are clearly identified, and the way of connecting with them and of delivering the products and services are known; and
(5)    the difference between the income generated with the customers and the costs to offer and distribute to them the products and services is positive.  Profit is the confirmation that the business model works!

2.    Organization
What defines the performance of an organizational structure is its capacity of hitting its targets /goals.

An organizational structure: (i) identifies the activities /tasks to be performed; (ii) specifies the needs of personnel; and (iii) determines the line of authority and responsibility. This is done by taking into account the industry in which the business operates, the environment and culture of the company as well as its strategy.

The size of the organization - too big or too small – turns the gear slow or overloaded to the point of putting in jeopardy the achievement of the objectives.

The fact is that there is no right or wrong organizational set up; exists, indeed, the one that better suits the stage of development of the business as well as its financial reality. What must be always questioned are: (1) are we achieving our targets /goals? and (2) how our performance compares to the market in which we operate?.

3.    People Management
The basic activities involve: hire, train, develop, evaluate and align remuneration with the performance of the business.

The fact that managers do not invest time on people’s management is directly related to the low utilization of their potential.

Likewise, the decision making process being slow, greatly affects the performance of the people, to the point of demotivating them.

Lack of productivity is linked to the amount of meetings (too long and not organized), with the lack of training, of follow up and of established routines.

People must be treated as adults and with respect!

4.    Infrastructure
The installed infrastructure comprises the assets (examples: properties, plants/production units and equipment) that are the basis of income generation.

The lack of investment compromises the future capacity of income generation. The excess of investment, on the other hand, compromises the future profitability as it becomes a weigh.

Investment in infrastructure, initially, consumes cash! Frequently companies confuse cash generation with EBITDA, what is far from the truth.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) or LAJIDA (Lucro Antes dos Juros, Impostos, Depreciação e Amortização), in Portuguese, is not cash generation. It is, a measure that allows the evaluation of the business operational performance and, yet, compare it to other different companies as it does not consider: a) how the company is financed and to which cost (financial expenses); b) the volume of investments (installed capacity; infrastructure) necessary to generate income (depreciation expense that results from the invested value divided by its useful life), c) taxes particularities (situation); and, yet, d) working capital variance (terms of payments and collection).

5.    Growth Model
Growth is the validation of the business model by the customers.

Growth is attained in two ways: by selling more to the same customers or by acquiring new customers.

The first growth model is attained by offering new products or services (or yet by increasing the value of these products).  The advantage of opting for this model is the possibility of using the existing distribution channels, the existing logistics or at least the intelligence associated to it.

The second growth model is attained by going for new markets, regions or new customer groups.  The challenge in this option resides in the necessity of conducting an effort and, consequently, investing not only financial resources but, also, time and mobilization of intelligence (internal e external).

Revise the business, going back to its origins is an extremely useful exercise that also guarantees its continuity and, yet, frees the business from embarking in adventures that will be either costly or at minimum a time loss. It is a fact that size brings complexity. And this may give room to tension between the logic of working on simplification, of going back to the basics, against another – more sophisticated - of managing complexity by succumbing to the managerial fad of the moment!

At 2B Partners Consulting we are dedicated to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it. 

 

 

Brands are important for:

(1) Representing a specific value promise;
(2) Personifying a product, service or experience;
(3) Creating emotional connections with products and services; and
(4) Being the main contact points with customers making the purchasing decisions easier.

At the end, the value of a brand resides in its capacity of generating future cash flows. A “stained” brand may hurt importantly a company, putting in jeopardy its future.

In view of that, large companies, owners of big brands, invest heavily in developing, supporting and protecting their brands. This is also materialized in the protection of the price level positioning of the brand.

The dissemination of brands in distribution (retail), or yet, private label brands, apparently, took place in the 70s as a reaction to high inflation. At that time these brands were of low quality and low price.  Currently, private label brands are positioned in different levels of price and quality, including at the level of the big brands of manufacturers.  Worldwide the market share of private label is estimated at 17%. Europe is the region with higher share, especially in Switzerland, Spain, Portugal, United Kingdom, Germany, Belgium and France. In Brazil the market share is estimated at 6%.

The logic behind private label brand in retail is that of offering “value” for the customer`s money.  The customer will pay less for a product “homologated” by the retailer. For the retailer is a way of altering the balance of power unfavorably to the manufacturers and, equally, creating differentiation, and, as a consequence, incrementing its margins.

The categories that work in private label are those that have a low level of differentiation or product and brand and yet a high sensibility to price and high purchasing frequency.  Examples of products with higher chances of success are: Milk, Grains e Cleaning Products.

The growth and expansion of private label brands depends on marketing investments; on creating a portfolio/line of products (premium, average and first price); and, also, innovation.

What to pay attention to when deciding for developing private label brands?


1.    You may test first!

Private label is owned by the retailer. It is its responsibility to create, register, maintain, etc.
An alternative, testing first, would be working with an exclusive brand.  An exclusive brand is owned by a third party company that grants the retailer with the exclusive rights over its use for a given agreed time. This is, also, an interesting option for those low quality products avoiding the image risk. Its use should not be prioritized as once the retailer build the brand, making it grow, and lose the rights over its use.  

2.    If the decision is to create a private label brand and use it, then register and protect it

a.    Before registering a brand is important to be clear on which categories it will be used to select the ‘classes’ under which will be registered.
b.    Additionally, when thinking in the brand and before spending too much money in its development conduct an investigation to check if the such a brand is not already taken (registered by a third party).
c.    Follow up the registration of similar or equal brands in other categories and use the right to oppose.
d.    Keep evidence of the use of the brand, as it will help to protect it. A non used brand has its legal protection reduced.

3.    The selection of the manufacturer of the products under your brand is risk management

a.    Carefully select the supplier: conduct a research, visit the plant, check references;
b.    Make use of a lab to conduct, periodical, analysis of the products; and
c.    Do not be afraid of breaking up with the supplier, replacing it for another. The beauty of a private label is its “portability”!

4.    Do not save on packaging development; and

5.    Position the private label brand product next to the branded one, in order to give opportunity to the customer to decide (.... and at the same time “increment” the cost of branded products!).

6.    Bring help! This avoids undesireble costs and reduce the learing curve.

This may be done by bringing a professional from a retailer that has private label brands (i.e.: Carrefour, Pão de Açucar, Makro to name a few with strong private label brands). Or, alternatively, bring a consultant that may help develop the area and train your team!


Retailers or distributors must always consider and study the addition of private label brands in their assortment.

At 2B Partners Consulting we are dedicated to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

A store assembles multiple functions. These functions involve the following actions: select, arrange, display, accumulate, store, supply ...

In fact, the role of any store - whether physical or virtual (e- or m-commerce) - is that of selecting suppliers and products, assuming financial risk and loss for storing and displaying them in a way that facilitates the process of identification, choosing, temporary storage (in carts) and transport from the store to outside.

The role, being well defined, the next question would be as to what are the elements that "make" a store.

These elements would be: goodwill, assortment, people, and design-layout. On the whole such elements are those responsible for "making" a store.

Goodwill
Goodwill is not just location but it is power of attraction. Goodwill is the combination of location with communication.

The definition of location will take into account the following basic elements:

(a)    traffic, frequency and socio-economic profiles;  
(b)    access;
(c)    public signage;
(d)    visibility;
(e)    parking;
(f)    neighborhood (competition and complementary stores)

Such elements can be obtained through observation as well as through simple searches such as visitation, traffic counting, conversation with lessors and store managers, and, if available, performance analysis of previous occupants. In addition, if more financial resources are available, geo-referencing or specialized consulting services can be hired.

A good location greatly reduces the investment in communication!

Assortment
The definition of the assortment is simplified when one has references (other stores or competition). However, some important aspects must be taken into account, such as: clients that will be served (individuals or professionals, social class, geographical region, customs and local products); the physical store size (physical space is a limitation); existing exhibition and display equipment; and last but not least, competition and what it offers.

The assortment also has a great relationship with replenishment (more space is dedicated to the leading products on sale, due to productivity), pricing and, consequently, profitability. As a result, there is a simplified classification into four categories, whose nomenclature may vary depending on the company: leaders (lower margin); second price or second brands (have a better margin); own/private label brand (better margin and differentiation); and first price (product for "combat"). The sales volume between these categories may vary according to the audience they serve. Generally, the leader and the first price have higher sales volume, while the second price and the own brand have smaller sales, but contribute to better margins.

People
In a store, we could identify the following main activities and in all, human intervention is required: reception of goods, replenishment of goods, production/transformation, customer`s service, receipt/closing of sale, cleaning, security and maintenance.

When receiving goods, the conference between order and supplier`s invoice is already done automatically, both in terms of price and taxes and quantities. The use of barcode readers in the reception of merchandise makes the process of loading the quantities more efficient and fast.

In the production / transformation of products, the use of appropriate equipment and utensils has made the process simpler and with fewer people. An additional step would be to set up production plants (i.e. butchery, bakery and pastry plants) common in Europe and the USA.

The receipt / closing of the sale with the use of barcode readers made the process less painful.

The areas in which technology still need to be more present is in customer service and product replenishment. To resolve replenishment the installation of sensors detecting the lack of a product on the shelves would be a solution. In the case of customer service, the installation of consultation terminals containing the store map and the respective product location, as well as an intercom or the possibility of sending a message to someone, including the supplier's own customer service area, would be helpful. Such experiments are already underway and are expected to be implemented by large retailers soon.

Design-layout
The store itself is the most significant communication between the retailer and the customer. Therefore, its design should be consistent with the retailer's image, positioning, and strategy. Its layout, on the other hand, should influence purchasing behavior, mainly through product exposure, flow / traffic facilitation, and the creation of the "wow" factor.

The elements that must be worked are:

(1)    Visual communication: identity (customer perception about the store) and signage (navigation).
(2)    Design: exterior (store front, access and windows), environment (color, music, odors) and lighting.
(3)    Planning: allocation of space, layout and circulation. The most common types of layouts in large stores are:

a.    Free Flow, more common in department stores, where exhibition equipment and goods are grouped in a scattered manner, allowing free navigation;
b.    Grid, most commonly used, in which exposure equipment is placed in line or corridors, usually at right angles;
c.    Race track or Loop, in which one enters and exits through one acess, circulating throughout the store and departments. Examples are Ikea and Aldi.

(4)    Exhibition: selection of exhibition fixtures (racks, gondolas), presentation and exhibition (style, idea, colors, price, and vertical - accompanying eye movement).


Two legitimate questions would be: Does the physical store have a future? Would the principles of creating a virtual store differ from those used to create a physical store?

The physical store has a future that goes through:

•    Experience (senses, touch, education, personalization);
•    Integration between physical and virtual store (e-commerce and m-commerce);
•    Experimentation of alternative models to the sale of products, such as: rent and complete solutions offer (cleaning, or maintenance, not only providing ready to eat meals but catering);
•    Become a manufacturer-funded demonstration site for products and services (testing; tasting);
•    Smaller in size but not in the assortment, by using technology combined with delivery at home or in the store itself.

The ecommerce store faces the same challenges as a physical store with regard to: goodwill (location + communication), assortment, people and design-layout.

Goodwill
Location must be selected among search engines, marketplaces or even virtual malls. The advantage is that there is a greater number of information available: number of visits, conversion rate. The downside is that data are often not reliable or not applicable. And, mainly, occupy a well located space is expensive!

Assortment
The construction of the assortment will be done, as in the physical store, targeting the customers they want to serve and what the competition offers. The idea that in a virtual store the assortment can be unlimited is fallacious. There is financial limitation. It is true that a virtual store can make use of the purchasing only after the sale takes place, as long as there are agreements in place with suppliers.

People
The main activities of a virtual store and the equivalent of those of a physical store are linked to:

(a)    customer service: checking customer ratings on social networks, answering questions about products and tracking delivery;
(b)    marketing and sales: definition of promotional calendar, definition of banners;
(c)    checkout: checking for receipts (for order fulfillment).

Design-layout
The importance of design and store layout in a virtual store is just as important as in the physical store. Elements involve: Visual Communication (identity and navigation), Design (Home page, colors, movement); and Planning (allocation of space for products, product data, photos, category page). The item Exhibition (presentation) is the one with greater weight and with more options to compensate for the absence of physical contact. The exhibition should count on: large and quality images; 360 degree vision, clear call to action: 'buy' button; Icons that create trust; Use of "last units" to make the customer decide; educational videos (including in partnership with suppliers); price comparison; customer feedback; clear description of products in a way the customer understands and researches; possibility of contact via chat; clear and visible exchange policy; and a fast page loading.

In the end the virtual store (e-commerce and m-commerce) is not so different from the physical store. In fact, they are complementary. This is so true that virtual stores are opening physical stores. Retailing is meant to serve the customer, interacting with him in conditions that fit their lives. The new store should reflect this!

At 2B Partners Consulting we are dedicated to help companies to address the questions such as those above via the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.        

This email address is being protected from spambots. You need JavaScript enabled to view it.  | Advisory Board | Interim Management

 

The main responsibility of the buying area is to make a reality the positioning of the business by defining and properly selecting the product offering. This primarily responsibility demands a series of activities to be developed by the area, such as: analysis of market opportunities; assortment definition (offering to the customer); suppliers’ selection; product and supplier performance evaluation (sales, margin, working capital, shrinkage); presentation and availability of products at the point of sale/store (guarantee that the product is available at the point of sale).

In view of such responsibility, the day-to-day of the buying area is tough and demands much organization and discipline, as well as creativity and a certain degree of intuition.

In a large company, where many hierarchical levels exist, responsibilities are divided between strategic (C-level), of supervision (manager) and of execution (buyers and assistants). Strategic responsibility involves the constant evaluation of how the role of the area will be affected in view of the changes in the consumer market (behavioral, demographic) that, in turn, influences the sales channel (brick and mortar, virtual), identifying the possible answers. Responsibilities linked to supervision are related to the short and medium terms, involving the fulfilling of the targets established for the area. And, finally, the responsibilities related to execution are those of more daily and immediate, involving, buying, negotiation, relation with suppliers and answering to the sales channels.

There are three false beliefs about the buying area: (1) bulk of its time is spent on negotiating; (2) intuition and experimentation guide its decisions; and (3) it has discretionary power to include suppliers indiscriminately.

The buying area is an area managed based on statistic, financial data, and surveys and researches. Of course there is room reserved for intuition and experimentation. Nevertheless, this is increasingly less frequent and curbed. After all, in a large distribution company is fundamental obtaining economies of scale (more volume and concentration) and of scope (less products in more sales channels).

The 7 (seven) main activities of the buying area are:

1.    Assortment definition (customer offering)
Some aspects must be taken into account such as: customers that will be served (professionals vs. individuals, social class, geographic region, habits and local products); size of the physical store (space is limited!); available exhibition equipment; and, not less important, who is the competition and what they offer.

2.    Suppliers selection
The objective should be that of having the lesser possible number of suppliers to obtain bargaining power and, consequently, lower costs and more support from the supplier. Additionally, a lower number of suppliers lead to reduced expenses, demanding lesser employees (buyers and assistants) and control simplification. In this process of supplier selection various aspects will be considered: market share; supplier relationship with the network; price and margin; commercial policy (minimum orders, order “tradeload”, returns treatment, support and promotions); and expansion capability (supplying different stores and different geographies).

3.    Product and Supplier Performance Evaluation
This evaluation considers the following elements: sales, purchases, gross margin, received income (free merchandise and money), shrinkage, stock in amount and days, accounts payable to supplier in amount and days.

4.    Product presentation at the Point of Sale (Store)
It is not recommendable to create a store solely based on statistical models and privileging efficiency. The company needs to make choices and bets aiming to differentiate from the competition and /or improving profitability. The buying area may contribute to that.

5.    Replenishment
Both out of stock (lack of products) and overstock (excess of products) are reflexes of replenishment problems. It is the buying area responsibility to provide information about replenishment parameters, analyze stocks without sales for many days, on imminent problems involving suppliers and revise the position (portfolio) of pending (outstanding) orders.

6.    Control Activities

a.    Assortment Committee
The committee is comprised of professionals from the buying, operations and logistics areas. The Committee analyzes new suppliers and products to be introduced establishing sales and profits targets as well as an evaluation schedule.

b.    Visit to Competition and Own Stores
This is an activity of “visual” control. Visiting both the competition as own stores, allows comparison in terms of assortment, promotions, price level, and, eventually, a new supplier (that maybe could not reach the large retailers) can be identified.

c.    Buying Agreement
Every supplier must sign a standard buying agreement. Such contract establishes responsibilities from side to side – those involving the product are assumed by the supplier, except when the product is affected by bad storage or bad manipulation –, fees or funds or incomes to be paid (and how they are calculated), the price list to be used, payment terms, the treatment of product returns etc.

d.    Annual Negotiation
At least once a year there are negotiations in which both the retailer and the supplier discuss their objectives and seek mutual alignment. Depending on the relation with the supplier and its performance, the defined strategy may be reducing its participation, developing another supplier.
Generally, suppliers are classified accordingly to levels of sales and profits. Based on this classification, participants of the annual meeting are defined. This may involve up to the CEO of both companies (top to top meeting).


7.    “Opportunistic” Activities

a)    Tactical Negotiations
These negotiations represent an “arm wrestling” and a “give and take”. Examples of these types of negotiation are those involving a compensation (or even return) of stock purchased in excess or a margin recovery for having accompanied an activity promotion conducted by a competitor.

b)    “In-Out”
These opportunities arise from big lots of products offered by manufacturers or distributors. They may be originated by discontinuation of production, excess inventory, excess imports, products apprehended by the IRS, among other motives. The strategy to be used – and of difficult application by large retailers – is that of purchasing the product and put it on display without any commitment with the maintenance of that item after it is sold out. This is a double opportunity for a higher profitability and of creating excitement/animation at the point of sale (store). Large retailers face difficulties in taking advantage of such opportunities as they do have neither the flexibility nor the autonomy. The structure and the processes created to make the business efficient and controlled do give slim or no room for such activities. When they do take place it is an exception to the rule.

At 2B Partners Consulting we are dedicated to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.   

This email address is being protected from spambots. You need JavaScript enabled to view it.  | Advisory Board | Interim Management

 

 

2016 was an extremely challenge year. 2017 will not be that different. Thus, what we should do to live through 2017?

1)    Keep focusing on the basics
When thinking in business, the basics are: assets, growth, profits and cash generation. These 4 (four) elements are interrelated and central to “validate” the chosen business model. The assets (property-plant-equipment, stocks, and accounts receivable) are the basis for sales generation. Sales growth (via increment of market share or new stores /businesses) is what attests that the clients are “accepting” the proposed business model. The profit attests the health of the business model (generated income are greater than the expenses to obtain them). Finally, cash is the thermometer responsible for attesting that everything is going well, or yet, the business is growing healthy. When cash is not being generated the reason might be that the company is overinvesting (in ppe, stocks or accounts receivable), overpaying dividends or the sales growth is insufficient or yet there is no profit.

2)    Do not forget risk management
Risk management may be seen as a loss of time and money until something bad happens. When a loss occurs a witch-hunt takes place. Nevertheless, the most important, that would be the mitigation of risks, and a quick reaction to its materialization, continues to be unaddressed. Clearly risk management has a cost. Thus, the need of be realistic when deciding on which elements to use.
An important step is to draw a risk matrix. In this document is listed the existing risks, the minimum controls to be observed; who are the responsible for its execution and for the controlling, and with which periodicity. Among the elements of risk mitigation that might exist, some are of simple implementation and are part of what could be called “internal control system” to any large organization: audit, insurance, hedging, licenses, communication channels, and a crisis management plan.

3)    Do not forget of the people
The focus on a situation of scarcity, demands:

a)    Keeping an eye on the Organizational Chart:
The organizational chart is the representation of the organizational structure, what involves activities/tasks to be performed, needs of personnel, and the line of authority and responsibility.
b)    Working to retain key-people. Key people are always important!

4)    Establish a method that leads to a continuous improvement process
A method whatever it is should stimulate:

a)    Set targets;
b)    Define a plan;
c)    Be disciplined in the execution; and
d)    Track and measure.

5)    Practical tips

1.    Dive into the details of what is important to the business;
2.    Test the limits not accepting “B.S.”, even when disguised in concepts of difficult understanding;
3.    Look for help from outside to what is not your expertise, it will be certainly cheaper;
4.    Keep your eye on the Balance Sheet;
5.    Purchase of direct and indirect (products and services) must be periodically revised;
6.    Financing clients and suppliers is a source of income;
7.    Trips, visits, trade shows must generate results;
8.    Developing commercial and institutional relations is not an activity to be forgotten;
9.    Do not let a subject to be forgotten or to “die out”;
10.    Keep the communication flowing, avoiding surprises!


At 2B Partners Consulting we are dedicated to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it.  | Advisory Board | Interim Management

 

Despite a great progress in recent years, the following questions in retail remain constant and correctly answer to them is the big challenge for any retailer wanting to be successful.

1.    How to serve the customer more efficiently using the existing technological tools?
The challenge is to properly utilize the available technologies productively, by incorporating them in the relationship with the customer. Using it avoiding “fashionisms” and without losing the need of evaluating the cost-benefit of these technologies.

2.    How to have a broad and manageable assortment, covering the customers’ needs?
The challenge is always that of the existing assortment strengthen the business positioning and doing this without losing economies of scope and scale.

3.    How to make the customer's life easier in terms of localizing, selecting and paying for the goods?
How to better give the customer autonomy to go around inside the store, easily finding and selecting the products, and going through the checkout quickly is to continue occupying a big part of any retailer’s agenda.

4.    How to be close to the customer, helping them to make better use of their time devoted to shopping?
The theme here is offering ready-made solutions combining products and services. The challenge is that of combining complementarity with scale.
 
5.    How to deal with the geography, multi-format and multi-business elements without losing its essence and without dispersion (without loss of scale)?
The search for the right balance between location (where to be present), and through which formats and businesses (how to be present) are a challenge.

At 2B Partners Consulting we are dedicated to help companies to address the questions above thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management

Main trends dominating discussions in Retail are:

1.    Multi-channel (or Omni Channel)
The way consumers interact and shop, demands from retailers the development and use of a wide "mix” of channels. These channels involve different store formats (in size, assortment and focus), investment and development of e-commerce and m-commerce (mobile commerce), use of pop-up stores (temporary stores), catalogs, kiosks and commercialization in public places (taking the possibility of consumption to a location closer to the consumer: i.e. metro).

E-commerce is a channel that demands a lot of attention, because currently there is an unfair division of the revenues generated among the ecosystem’s participants. Platform, system developers (IT companies), transportation companies, payment gateways and demand generators (i.e.: social networks, search engines, price comparators) capture most or even more of the generated profit margin.

2.    Store size reduction
The proliferation of new formats, coupled with the high occupation costs and little customer's willingness to spend time with everyday purchases, has led to the reduction in size of the stores. This is a trend that will endure. Existing hypermarkets, over time, should be transformed into shopping centers or areas of mixed use (residential / commercial).

3.    Format segmentation (Niche)
Specialization around the consumer lifestyle, combined with the increase in consumption power, has given space for creating niche stores formats. This is a concept opposite to "one stop shopping". Additionally, it is related to the re-valuation of the consumer experience as a whole.

4.    Offering Solutions and Experiences rather than Products
The retailer should be concerned in offering turnkey solutions to the consumer rather than products. The concepts of basket, pre-prepared, pre-selection and ready for use or consumption are in the consumer's mind, that retailers that do not pay attention to it will put in jeopardy its existence. This trend is in line with the following demographic changes: smaller family units and / or economically active, aging population and reduction in the use of domestic employees.

5.    Show Rooms
Physical stores have a new role: show room. Consumers visit them to interact with the products, ask questions and eventually buy from an online store. Mindful of this, investment in social networking to identify consumers with this profile and design specific offering for them makes sense. Additionally, having an e-commerce and to its integration with major marketplaces are complementary movements.
 
Another trend is the replacement of sales for the provision of services in a model whereby the supplier will fund the store operating costs and pay an administration fee. The store would function as a show room for the suppliers’ products, adding the services of curator and product"evangelization".

6.    Rent (Leasing)
A force or trend is the subversion of the logic of purchasing by leasing, loan or shared ownership. The store would offer the possibility of rental, such as, for example, tools or household items. This is something that, with the new generation of consumers known as millennials, will gain traction.

7.    Marketplaces
Physical stores with large areas may position themselves as marketplaces, allowing third-party merchants to offer in their sales area their products and services.

The major online stores are expanding their "market places", to the detriment of their own stores, assuming that they can be more successful and profitable by originating traffic and being paid a percentage of sales made. The merchants selling through the marketplace are responsible for relationship with suppliers, ordering, inventory management and delivery.

8.    Picking Points (Click & Collect)
Another trend is the provision of picking point services, or points of collection for products ordered from an online store. In this case, the physical store would be charging the virtual store by providing handling service, storage and delivery of purchases.

 

At 2B Partners Consulting we are dedicated to help companies to optimize their businesses by offering the following services: advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Feel free to contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management

 

 

I have been blessed with the opportunity of meeting and be around successful people. What I could so far learn is that if there is no formula for their success, there are a few traits or characteristics that are present in all of them.

1.    They want to be the best!
The first characteristic present in successful people is the desire to the best. This is the most important of the 8 characteristics. The desire or will of be the best is what make one work hard, without limit of hours or in spite of innumerous trials and errors. It is the fuel, the motivation. The will of be the best is that make possible to go through the cycle: “expectation-implementation-failure-frustration-evaluation-correction-expectation...“. And do not be tired of repeating it. This process of seeking to be the best involves, indeed, competing. Compete with the aim of measuring performance and progress. And compete is not bad as long as the established rules are respected! Seeking to be the best, in fact, is our manner of giving room to our divine particle, of being closer of reaching fullness in something. And this, in fact, is what success is about!  
“All athletes are disciplined in their training. They do it to win a prize that will fade away, but we do it for an eternal prize. So I run with purpose in every step. I am not just shadowboxing. I discipline my body like an athlete, training it to do what it should. Otherwise, I fear that after preaching to others I myself might be disqualified.” (Saint Paul)

2.    They put their soul into their purpose!
The second characteristic present in successful people is that they put their soul into their purpose and vision. Purpose is mission. Vision is where to go or an imposed limit. Purpose is related to competencies and infrastructure. Vision is ambition. It is not possible to give life to a purpose or vision if doubt or hesitation is present. What consumes your time? What calls your attention? What would you like doing if you could and or the necessary conditions were present? What thoughts make you smile? What are your abilities? What you do or can do well? And equally important: What you do that people appreciate? To what reason(s) people access you? For what you are praised for? What people ask you to repeatedly do? To find purpose, or, to what you were wired for is an encounter with yourself. It is to discover yourself! And establish a vision is to imagine a possibility that you can construct!
“No, dear brothers and sisters, I have not achieved it, but I focus on this one thing: Forgetting the past and looking forward to what lies ahead, I press on to reach the end of the race and receive the heavenly prize for which God, through Christ Jesus, is calling us.” (Saint Paul)

3.    They are committed!
The third characteristic present in successful people is that they are committed. This is maybe one of most difficult characteristics, mainly, in our current society in which the concentration span time is limited and in which – well elaborated – contracts continue to be broken or breached. To commit is to place oneself in a prison; is to place yourself in a place available for something; is an obligation; is to contract; to pledge; to surrender! There is no possibility of reaching success in a field without commitment, without making choices at the expense of letting go other options. It is necessary to surrender completely even in the face of failure and frustration. Commit yourself and place your heart is to fight as if it was the only and decisive fight. Is to face the involved risks. Is to dive in and not just to wet the feet to try the temperature!
“Commit everything you do to the LORD. Trust him, and he will help you.” (Book of Psalms)

4.    They do differently!
The fourth characteristic present in successful people is that they do differently. It is difficult to be different in a politically correct world as this that we live in, in which consensus building and patterns are privileged. Do different is not to be worried in observing existing form or formats. Be different is to be distinct or be out of the standard. It is to be “disruptive”. Be disruptive is to not care for breading with patterns. It is to launch into disorder, interrupting the normal course or unity. It is to be unconcerned in being original even at the possibility of something to be tempted or done! It is as said by Steve Jobs in a speech dedicated to the “crazy ones”: “Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” Saint Paul, many years before, had already similarly said: “Instead, God chose things the world considers foolish in order to shame those who think they are wise. And he chose things that are powerless to shame those who are powerful. God chose things despised by the world things counted as nothing at all, and used them to bring to nothing what the world considers important.” (Saint Paul)

5.    They are not afraid of applying new techniques!
The fifth characteristic present in successful people is that they use what they have in a different way, applying new techniques. In other words, they are innovators. They insist in trying finding, introducing, or launching something new. Innovation demands observing the environment, under the optics of their competencies and resources, with curiosity, focusing on the changes that are occurring even if yet incipient, and being willing to make small bets or pilots. Innovate involves curiosity, observation, study, test and sweat!
“Besides, who would patch old clothing with new cloth? For the new patch would shrink and rip away from the old cloth, leaving an even bigger tear than before. And no one puts new wine into old wineskins. For the old skins would burst from the pressure, spilling the wine and ruining the skins. New wine is stored in new wineskins so that both are preserved.” (Saint Matthew)

6.    They value themselves!
The sixth characteristic present in successful people is that they value what they do, not expecting that others will. In the end only they know first-hand how much was the cost in terms of dedication, renunciation, training, trials and errors, and the extent of quality and innovation embedded in what they have done. Self-praise or, best, self-recognition is something ill seen as it may be associated with arrogance. Nevertheless is far from being like that. Whose accomplished something must be content with the did, feeling that made something worthy or recognition. Many hide themselves behind false self-depreciative modesty that refrain people from see and recognize the accomplishment. These people act as blockers, self-saboteurs, maybe for fear of exposure and scrutiny. But if you like it and appreciated it, show it that others, certainly, will!
“Be strong and courageous! Do not be afraid or discouraged.” (Book of Joshua)

7.    They keep on learning!
The seventh characteristic present in successful people is that they continue learning. They are curious and are not afraid of making questions! They challenge themselves to try something new and do it if in young age as well as in advanced age. This is what that keeps them active and young; is this that energizes them. The learning process may be formal, structured or based on practice and unstructured, it does not matter. What matters is to value learning, the discovery, the challenge of the test and, inclusive, of finding that your initial hypothesis is wrong. The person who keeps on thirsty of learning, that values it may live various beginnings, as in the end what keeps them on the race is the race itself and not the finish line. And thirsty and opening for learning makes they live other lives and careers!
“Intelligent people are always ready to learn. Their ears are open for knowledge.” (Book of Proverbs)

8.    They play hard!
The eight characteristic present in successful people is that they are good, do good and play hard. Be good is to have an inclination for the loyal, fruitful, advantageous, true, competent and skilled! Inclination is not enough. It is important to act in order to materialize the good. Doing is related to work, task or obligation. One does because is right and for feeling responsible. It is to become a protagonist. And play hard is to empting yourself, dropping the last drop of sweat, reach your limit, and not be afraid of the dispute and of what it may cause. Play hard is not the same as playing outside the rules or being dishonest. Play hard is to face with the deserved respect; is to play to win!
“Work willingly at whatever you do, as though you were working for the Lord rather than for people.” (Saint Paul)

Two things are important to be clear: the definition of success and how many characteristics are necessary and if we may develop them. As to success, we may assure that it is not related to accumulation of goods and titles but instead in being performing what you have being wired for, that your characteristics, qualities and competencies allow. A successful person does not need to have the 8 characteristics but only a few, essential and common to all: will of be the best; commitment; value yourself and what you do; and keep on learning. I am certain that we may learn and develop the other characteristics if we recognize that they are important, pay attention in how we react to them and seeking to condition ourselves to change. Success!
“Do you see any truly competent workers? They will serve kings rather than working for ordinary people.” (Book of Proverbs);“For I can do everything through Christ, who gives me strength.” (Saint Paul)

At 2B Partners Consulting we are dedicated to help companies to optimize their businesses by offering the following services: advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Feel free to contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting
http://www.2bpartnersconsulting.com/site/index.php/en/articles

 

 

The retail activity is labor intensive. Personnel expenses along with the occupation costs accounts for most of the total expenditure for any retailer.

The important activities, like any other business organization, involve: hire, train, develop, evaluate and align compensation with the performance of the business.

The aggravating factor is that within the store, the turnover rate is 50% or more. That is, the entire workforce is completely renewed every six months. This makes the activities of hiring and training difficult to perform.

The reasons for this high turnover lie on both retailer’s error as well as the non-adaptation of the employee. The retailer's error involves, for example, the hiring of employees living far from the workplace or that of a very young age. Lack of employee adaptation involves the difficulty (or refuse) to work on weekends, the hectic pace of work or the proximity to the public. Within the store, work is little intellectual, very procedural and repetitive, which can make it unattractive.
 
As turnover is something inherent to the sector, it is very important the design of procedures and short and simple routines, that are easily reproducible, and preferably automated. Some non-core activities, such as cleaning, security and maintenance, are subject of outsourcing.

In a store, we could identify the following main activities that in all them human intervention is required: goods receiving, shelves replenishment (gondolas or racks), production / processing (butcher, bakery, ready meals), customer service, closing of sale (checkout), cleaning, security and maintenance.

In goods receiving, checking the order with the supplier’s invoice is already done automatically, both in terms of price as well as taxes and amounts. The use of bar code readers in receiving goods makes the quantity entries most efficient.

In the production / processing of products, the use of appropriate equipment and utensils has made the process simpler and with fewer people. A further step would be the creation of production plants (i.e..: butchery, bakery and confectionery) something common both in Europe and the USA.

The closing of the sale (checking out) with the use of bar code readers has made the process less painful.

The areas where technology still needs to be more present are on customer service and on shelves replenishment. In customer service, the installation of consultation terminals containing the store map and the location products, as well as an intercom or the possibility of sending a message to someone, including the supplier’s customer service area would represent a great improvement. To make shelves replenishment more efficient will demand the installation of sensors (beacons) detecting the lack of product. Such experiments are already under test and should be disseminated soon as their cost decrease.

1.    Development
A healthy company produces leaders. Even in spite of the high turnover of the sector, there will remain professionals who want to develop a career in the organization. The positive aspect is that given the retail dynamism, this professional will have opportunities.

Working is the best training there is. Therefore, large retail organizations create opportunities for development of professionals by promoting job rotation and promotion. Such professionals are subjected to a set of training, developed specifically for the organization, involving topics such as negotiation, personnel management, financial mathematics and analysis of results.
In addition to internal development, there is also the trainee program (new graduates), which seeks to develop leaders in a shorter space of time and of better quality.
The combination of internal development personnel with external hire is desirable and strengthens the organization.

2.    Evaluate
The appraisal of personnel is important and practiced continuously in retail. The main criterion is linked to the results deliverance. However, other criteria such as behavior and relationship are also taken into account.
At the management level, a performance evaluation promoted by the immediate superior is conducted at least annually. The purpose of this evaluation is to create an opportunity for a frank discussion avoiding surprises. The evaluation produces goals to be achieved in the following period.

3.    Aligning Remuneration to Business Performance
Increasingly, retail organizations use variable compensation as an alignment tool of individual success with the success of the business.
The most common bonus criterion takes into account individual performance and business performance as a whole. Individual performance is largely linked to a "hard" component, the financial result (actual compared to budget), and lesser linked to behavior (discretionary component). The individual result is paid only if the organization as a whole achieves its goal.

At 2B Partners Consulting we are dedicated to help companies to optimize their businesses by offering the following services: advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Feel free to contact us to obtain more information: This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management

 

Recently I have faced an arrogant. Finding this sort of professional is not uncommon in the corporate environment. I have to confess, however, that there was a long time since I have met someone like this one.

Invited us over to a meeting and began to impose his conditions, wanting to “corner” us and did not care to listen. His objective was that of either getting us to agree with him satisfying his conditions or capitulate in view of his threats implicit in his speech.

And so is, as the arrogant assumes and expresses in his behavior the belief that he is better, cleverer and more important than the other people. The arrogant is full of himself and deaf! He loves the sound of his voice. And the source of his weakness and the reason why he is not a good negotiator resides in the fact that he underestimates the counterpart.Dealing with this sort of people is tiresome and, depending on the existing type of relationship, stressing. The reactions to this individual may be:


(1)   Pure and simple confrontation;

The problem with this option is that of creating a declared enemy. Additionally, you will end up with a problem with the company due to the individual that is, for now, representing it.

(2)   Hear without listening (the famous " It goes in on ear and out the other");

The problem with this option is that if you do not pay attention the situation can be aggravated against you.

(3)   Pure and simple ignorance; or Ignoring is a possibility, nevertheless, again, an enemy is made and a problem with the company the guy represents is created.

(4)    "Give him rope" and wait for him to hang himself.


Once the ambush and lack of dialog are identified, best is to pay as much attention you can, take notes and register everything and let the guy raise the most possible crazy proposal. That kind of business proposal that will be easily refused by your superiors or partners. The goal is that of making the proposal or request impossible to be attended. And if your diagnostic of the arrogant was well done, this will not be a problem! This action will either give you room to refuse without losing face and to scale up the discussion in the organization.

I have opted for the latter, seasoned with the subtlety of my region (Minas Gerais). That is to look inoffensive and let him continue underestimating us.

This meeting made me consider about how dangerous, costly and disastrous to be presumptuous, vain.

Important is that we “scan” ourselves, evaluating and testing our level of vanity to check if it has reached the arrogance level.

The test is relatively easy. In case you are speaking more than listening, thinking that everyone you engage are inferior or less capable, and, yet, looking from above to everyone and not at the height of the eyes there is a good chance that you have already became an arrogant!

“Pride goes before destruction and haughtiness before a fall.” (Book of Proverbs)

At 2B Partners Consulting we are dedicated to help companies to optimize their businesses by offering the following services: advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Feel free to contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

 

 

Pricing in retail is a complex process due to the large assortment. It is a process that demands analysis, choices, measurement and correction. And the price level that can be practiced is always a clear indication of the degree of customer acceptance of the services provided, being it the retailer's positioning in the customer's mind.

1.    Pricing Approaches
There are two basic approaches towards pricing: (a) economical, based on the formula cost + tax + desired profit; or (b) market, based on competition. In the first, the company uses its capacity of manufacturing or purchasing a product, as well as its needed or desired profit objective as basis for pricing. In the second approach, the company “looks outside" for the market to price and, consequently, the cost objectives.
The use of each approach is due to factors such as market share, product or service differentiation and degree of competition. It is possible that the same company may use both approaches for different categories of goods.

2.    Pricing Strategies in Retail
In retail the two more common pricing strategies are EDLP (Every Day Low Price) and HiLo (High Low).
In the first, EDLP, prices per product are regularly low, with little variation over time. This strategy works well for large companies with buying power, robust IT systems, and limited assortment and services. This model allows a more constant and predictable demand, reduced inventory, reduced spending on promotion, advertising and staff.
In the second strategy, HiLo, regular prices are higher, punctuated by frequent price promotions. This strategy allows attracting customers seeking low prices, and also allows the retailer to highlight other attributes than price, and allows it to normalize inventory.
In Brazil, there is no retailer that practices pure EDLP. There is always a combination of this strategy with a promotional activity. And it is a difficult to implement strategy as it depends on scale and that customers associate the retailer to a low price image.

3.    Pricing Area
Given the growth and the consequent increase in complexity, the (large) retail companies have established a pricing area / department. This area is of great importance for allowing the optimization of both the gross margin and sales. This is achieved with the use, by a specialized team, of modeling systems, competition shopping price surveys and market analysis.
When pricing, two dimensions are considered: store and product. At the store level, the factors to be taken into account are: location, competition and store positioning. At the product level, the factors considered are: objective category, sensitivity to price category, seasonality and regionalism.
The product categorization is based on their purpose: (1) Traffic Generation (Price image is critical); (2) Routine (price remains important and supports the price image of the store); and (3) Margin (is to optimize the margin, are categories with low sensitivity to price).
The calculation of the final price to be practiced at the store will be based on a reference price or objective margin, once considering the factors at store and product levels.
A well-located store, where there is not a lot of competition, can and should set a higher price than a poorly located one (where the attraction of traffic is required) and / or where there are many close competitors. Also, depending on the store location, a product can vary from category between Routine and Margin. Hence, the reason for pricing group of similar stores (clustering).

4.    Cost, Price and Margin Calculation
Theoretically, the price calculation formula is simple, or, product cost + tax + profit. There is, yet, confusion between the definition of markup and margin.
Markup is the percentage to be applied on the cost price, to set the selling price. Example: if the cost is R$ 10 and the markup is 50%, the selling price is R$ 15.
Gross margin, in turn, is product of the gross profit over the selling price. Example: assuming no tax on purchase or sale, and using the previous example, the profit of $ 5 (R$ 15 retail price – R$ 10 cost price) divided by the selling price of R$ 15 produces a gross margin of 33.33%!
The first important aspect to properly calculate profit margin is to have the costs of the products identified. The second aspect is to have the taxes on both the purchase as well as on the selling price well calculated, what in Brazil it is not a simple activity. Important is to have taxes (fees, rules) parameterized in a restricted access system that is periodically reviewed by professionals (accountant or tax area professional).
The last aspect is the definition of the objective margin to be applied on the product. It is called objective margin as it is not always achieved, as there are periodic promotions that will impact the final margin. This objective margin should be set considering the following aspects: Turnover (demand, what is important for the customer) and differentiation (what the retailer wants to be and how it can be competitive).

5.    Tips
When pricing keep things simple! Always try to have the customer's perception as to the value (product + other attributes) being offered to them. Do not be inflexible about the pricing strategy adopted; you can vary. And make no mistake: there is always conflict between market share and profitability. The element responsible for the resolution of this conflict is the price. Do not complicate or buy sophisticated systems if you have not already "done by hand"! Above all, do not make major changes without previously run tests (piloting).

At 2B Partners Consulting we are dedicated to help companies to optimize their businesses by offering the following services: advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Feel free to contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management

 

 

In any business there are three processes demanding close management: Relationships, Activities and Cash.

1.    Relationship
The final challenge in any business is, as Peter Drucker already said, to create customers. In the end, are these individuals (if B2C) or companies (if B2B), that approve and legitimize the business by consuming its products and services. The process of managing relationships comprehends the interaction with current and potential customers, aiming to retain existing customers and identifying and conquering new ones.
The relationship process aiming to conquer customers, invariably, involves the following steps: Research (the general consumer market for the product or service); Qualification (election of potential consumers to the products and services); Contact (reach); Presenting (call of attention); Dealing with opposition (conditions, environment and restrictions); and Closing (closing the business, being it the signature of a contract or the transfer of the property of a product).

Due to the importance of managing relationships, we develop and application that allows managing the contact (interaction) with both customers and prospects. The register may be in 4 categories: active customers, delinquent customers, inactive customers and prospects. The functionalities involve the registry of all contacts made between the company and its customers; tasks scheduling. It also allows, manage events (planned activity involving participants either clients or prospects), being possible to control who was invited, who confirmed presence and who really attended. Available, also, through specific development, set up a customer relationship area on a “website” where customers may update their data, enroll in events, make requests that are sent to the responsible for the CRM. These requests are available on the dashboard as unanswered messages. An association that already uses this app is enjoying it given its simplicity and easy to use.

2.    Activities
There are people that live in fear of being cheated and for that reason invest time and money to avoid that such fear materializes. An environment based on distrust does not build safety or security. A practical example is our own Brazilian society, in certain way based on distrust. We are constantly called to prove that we are alive, that we are who we say we are, that our signature is ours and, yet, this society deals with scandals of corruption that only increases in size, complexity and number. In fact a “suspicious” person or society (or organization, or company) does not attract trustworthy people, or at least, does not retain them.

Simple controls involve few really important things, such as:

(1)    Keep contact with people, asking them and looking for understanding their activities and projects;
(2)    Establish a limited number of goals and that are achievable and manageable;
(3)    Have in place an adequate record system that is updated (i.e. bookkeeping);
(4)    Have in place a reporting timetable of activities, projects and their respective value; and
(5)    Provide employees with tools that reduce the possibility that tasks are forgotten /not performed.

Within this spirit we have developed a managerial application - “Gestor de Atividades”/”Activities Manager” – that allows a big number of activities distributed between various different responsible both for external or internal clients be controlled. This app also allows recording punctual and recurring activities; follow up on their development as well as the possibility of sending emails.

3.    Cash
Cash is King! If there is an incontestable truth both in business and in life is this.
Cash is more than merely a unit measure, being what allows survival and independence.  Cash gives freedom, room for committing errors and time for making choices. For a startup it represents the oxygen that allows it to develop products and acquire customers. For a company already established it allows – gives time – it make adjustments in its infrastructure or to its business models. For an individual it means the possibility of going through a period of unemployment, a sabbatical or a career or professional change. If Cash is king, being for a company or and individual, most important would be to manage it by having clarity on the inflows and outflows, their origins and their terms of collection and payments. Thus, a good cash flow system that allows registering commitments, rights, cash position, estimates, and, yet, predictability is fundamental.

It was with this certainty and in view of a practical need when in a project involving a startup that we developed a managerial application of Cash Flow (FC). This application was based on experience and it carries embedded concept and, at the same time, flexibility. A differential of this application to others is the possibility of making entries of accounts receivable, accounts payable, and provisions (estimates) and, as a result, having the possibility of extracting a report of Cash Flow Forecast. According to an early user, an interior designer and founder of a furniture and decor ecommerce, she says: “What I like the most about the Cash Flow app is that it allows me to anticipate my needs of cash. It gives me assurance and time that allows me anticipating the necessary measures. I have liked it so much that I will use it for my home!”  

Our readers that want to, may try, for a 30 (thirty) day period, without any cost, any of the available apps or even all of them. For that, just register and use by going to our site: http://www.2bpartnersconsulting.com/site/index.php/en/management-tools and click on the bottom on the side of the app that will transfer to the registry page or go directly to: http://www.2bp.tecnologia.ws/cadastro.asp or yet, contact us by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it.  | Advisory Board | Interim Management | Consulting

 

 

Retailers are curious and competitive dealers. It means that every interaction or engagement will be based on trade and exchange. Curiosity is what stimulates the retailer to pose questions, with the aim of extracting information that may be eventually used to “bargain” on. Competitiveness is another characteristic necessary in the environment it lives. Thus, measuring and comparison are always present in all phases of the discussions.

Once this basis of engagement is understood, herewith you will find 10 tips that will help you improve your selling process to this industry:

1.    Retailers will welcome you if you have something interesting to show; or because of the brand you represent or, yet, if you have as a customer a "reference" in the industry!
2.    Retailers use these interactions as a learning opportunity!
3.    Retailers are not transparent! (Remember the “dealer” characteristic)
At the negotiating table" sales are invariably growing double-digit and profits triple digits! Their company is structured and receives weekly proposals from investment funds!
Except if you are already a supplier and your price and conditions are under review!
4.    Retailers have had previous experience that left “scars”!" Hence they are suspicious!
5.    Retailers will test your real interest in developing a relationship!
Be available! "Give them (for free) something of value!”
Retailers are observant! (They are measuring you, after all they buy you!)
6.    Retailers are generalists, not specialists - avoid technical jargons or Anglicisms! Be clear; make room for them to understand!
Retailers suffer from DAS: Deficit Attention Syndrome! If you cannot engage them in a discussion, the meeting will be interrupted by secretary bringing problems or incidents that require their intervention, therefore ending the meeting, that will be rescheduled in the future (not a chance!).
7.    Retailers are afraid of the "lion" (animal representing the tax collector in Brazil)!
8.    Correct posture: the potential customer (retailer) is already very good and you have knowledge to help extracting “more value"! They respect those who understand the industry even if not specifically their company! Their company is different!
9.    Never say: "I need to better understand your problem!!!” The real problem is that they do not know how to state the problem! After all, retailers are always busy trying to well serve and increase their share of wallet with their customers while looking for new customers!
10.    Do not sell large projects! Start small! Target Quick wins! Use Try & Buy (before purchase) or Risk sharing (compensation based on success)! This is the language that retailers appreciate! Selling to the number 1 and deliver with the internal team! Beware of the "school bus"! Often consulting firms have their partners selling the services, but the delivery – provision of the service - is made by an inexperienced team. Of course, economic reality rules, however, one should be careful in selecting the team. Store that is going through a remodeling or refurbishment wants to "hide" it! Hence, deliver without being seen! Ideally, the consulting firm must be discreet, if possible performing their activities outside the client’s office. The lesser the noise the better!

Good luck!  And if help is needed contact us

This email address is being protected from spambots. You need JavaScript enabled to view it. | Advisory Board | Interim Management | Consulting

Being on the buyer side of the "counter" – the retailer’s side – I have always been very critical of the suppliers and especially service providers approach and attempt of closing a sale. Here are some tips to increase their conversion success rate:

1.    Understanding the 3 columns of retail:
This is a business based on scale, product of a correct balance between the amplitude of the offer (assortment) and its depth (volume). Efficiency is an obsession and based on the following concepts: simplicity, consistency, repetition, automation and transference of activities to the customer. And finally, the third element of the tripod is control, which is manifest in the strict management of cash, margin, expenses and capex.

2.    Understanding the bases of relationship:
In a business whose essence is scale, efficiency and control, bargaining is inherent to the negotiation process. Therefore, it is natural that in a negotiation process the buyer uses its scale and purchasing power to their advantage. Of course, greater the proximity of the supplier to the end consumer, lower will be the retailer's bargaining power. Similarly, the greater the relevance (for the retailer) of the supplier in the category, lower the retailer's bargaining power.

To be successful in the negotiation process is necessary to understand the key performance indicators (KPIs) that monitor the retailer’s relationship with suppliers. These indicators are: sales growth, gross margin and invested working capital.

a)    Sales growth measured both in value (amount) and volume (units sold);
b)    Gross margin is the gross profit (selling price net of taxes less the net cost of the goods) divided by net sales;
c)    Working capital is measured by deducting from the inventory value, the amount of accounts payable. It can also calculate the stock turnover (in days) taking into account the current inventory and  dividing it by the sales at cost of the last 30 days obtaining the number of months of sales in stock and comparing it with the payment terms conditions.

3.    Understanding the positioning of your product and its role in the commercial retail strategy and also manage their numbers is essential and healthy. This means recognizing how your product or service will contribute to the retailer's business. Being it margin, a complementary/service or volume?

In the case of service providers is curious how they feel offended as they understand that their services cannot be purchased as "rice and beans". I never understood this reaction. After all, what is the real difference between buying a product or a service? The process itself is not much different. Of course, buying a service to be performed is more complex. However, in the negotiation dynamics are present the same basic elements: product specifications, price, terms, delivery time, payment term, the buyer and seller responsibilities etc. Additionally, the motive for buying a service is either to reduce costs, increase productivity or, at least, comply with regulations.

4.    The success in the aftermarket, which involves the management of returns, "rebates" price to increase the turnover at point of sale as well as the monitoring of goods receiving, is greatly dependent on the supplier's proximity to the commercial and financial areas. It should be understood that the financial area has power; however, the greatest power in regard to the relationship with the supplier lies in the commercial area. This means that problems should be, first and foremost, addressed with the commercial areas (Buying).

5.    Understanding also a basic truth: the higher the position in the hierarchy of your interlocutor, higher is their risk aversion. If in the course of closing the deal you do not notice this trait in your counterpart, you should be concerned, because you will end up losing money! So if something goes wrong, you – supplier - will be penalized!

6.    Other attributes valued by retailers:

a)    Organization and respect for the law;
b)    Ability to "explain" your industry and its biggest challenges;
c)    Availability and flexibility for emergency requests;
d)    Ability to innovate (differentiation);
e)    Being a customer of the retailer’s "financial services" area;
f)    Cultivating relationships at the top without "trampling over" the hierarchy. It can be done via Top to Top (business evaluation) meetings, events sponsored, and connecting on social networks (i.e.: LinkedIn).