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Huge savings result from greatly improved distribution network

Client situation & approach

The client was a leading global tobacco manufacturer based in Turkey and losing in GBP10m p.a. due to a lack of critical mass which was driving a high cost to serve. The issues to overcome were:

  • Small deliveries driven by traditional nature of Turkish supply chain
  • Cash only with high frequency to be first to obtain the outlet’s available cash
  • Every supplier delivered its own products separately with exclusive distributors
  • Client distributors delivered 3% of the tobacco on its own

EFESO supported by:

  • Carrying out an As-Is assessment including visiting distributors and outlets in both urban and rural areas
  • Modelling of the cost to serve
  • Identifying and assessing the tactical and strategic operational improvements needed to improve the situation
  • Developing alongside the client team a business case and implementation plan

Results

  • Gained the understanding and commitment of local management to the radical changes needed in their route to market
  • On-going implementation of the plan to achieve the benefits of GBP 9m, as committed to by local management, by:
    • Setting-up a shared distribution platform with a portfolio of complementary products
    • Rationalizing the distributor network, improving controls and optimising delivery frequency.