Distributor management program

Abstract

Ajinomoto Omnichem NaturalSpecialities identified a bottleneck in the collaboration with its distributors. The company currently lacks a clear structure to harmonize information flows, and to guide and follow-up on its partnerships. Therefore, this project aims to develop a formal framework to coordinate information streams from NaturalSpecialities to its distributors and vice versa, as well as to create an evaluation system to assess the partner’s performance and finally, design an action plan for Ajinomoto Omnichem NaturalSpecialities on how it can implement these changes in the company. The research questions steering this study probe for: (1) the variables needed for the development of a formal framework to harmonize information flows, and (2) the elements required in an evaluation system to adequately assess the distributors. Methodology: The research initiated with several in-house interviews to get acquainted with the NaturalSpecialities’ team and its current way of working, and to identify possible points of improvement. Afterwards, qualitative interviews with distributors (N=5) were conducted to gain insights into their preferences and view on the collaboration with NaturalSpecialities. The five interviewed distributors were chosen based on the sector, the geographical location, the percentage of NaturalSpecialities’ products in the total product mix and the company’s size. Based on these qualitative interviews, a quantitative survey was composed and sent out to all forty distributors of which twenty-one responded (N=21). Since this sample was too small to perform regression analysis and other statistical examinations, the survey was predominantly scrutinized based on correlation analysis and logical reasoning. Results. The results indicated that the overall level of trust between NaturalSpecialities and its distributors is very high. Also, a trustworthy relationship is regarded as extremely important by mostly all respondents. The distributors are also very open to share information with NaturalSpecialities regarding clients (type and name), new innovations or applications, sales volume, and prospection work. Only with regards to sharing the sales price, the respondents answered a bit more reluctant. Although the results show a relatively positive picture concerning sharing information with other distributors, the respondents were more hesitant to share client information (type and name) and new innovations. Almost all partners were open to work with an information sharing platform, providing it will only be used to share documents, such as technical data sheets, and not to replace daily communication via email and phone calls. Moreover, regarding the legal stipulations, respondents preferred drafting a simple contract with some basic clauses over an extensive detailed agreement, regardless of whether they already had one with NaturalSpecialities. Finally, the distributors interviewed were strongly against working with binding targets, although they did not close the door completely for non-binding ones. Conclusion. Based on the results, this study developed a framework to harmonize the information flows between NaturalSpecialities and its distributors. This framework is built on five pillars: (1) communication, (2) information sharing, (3) business review, (4) technical support, and (5) legal. As trust is the most crucial aspect in the partnership, it serves as an umbrella for the whole framework. In second order, this research worked out an evaluation system using the Analytical Hierarchical Process (AHP) technique that assesses and ranks the distributors’ performance over a year. This system is based on five objective criteria being the number of prospects, the number of projects in the pipeline, the sales volume, the presence on distributor and business review meetings and the personnel turnover. The judgement of the sales contact is also taken into account as a sixth subjective criterion to ensure all nuances about each distributor (size, sector, market situation, …) are considered. Important to note is that the information stemming from the framework is needed as input for the evaluation system. To finalize the project, an action plan to implement both the framework and the evaluation system is constructed and can serve as a guideline. Limitations. The research also faced some limitations. Next to the small sample of five distributors that were interviewed, only twenty-one distributors responded to the survey. Moreover, the distributor profiles differed significantly which made it challenging to create one general framework and an accompanying evaluation system. Also, the evaluation system is based on AHP, however it had to be altered for this project as AHP is not used in the literature as a distributor performance evaluation method as such. Lastly, the criteria possibilities for evaluating partners are limited as some aspects are too complicated to measure. Recommendations. When transforming the current way of working, this study proposes to always prioritize trust within the relationship, consider the distributors’ concerns and thus assess the impact of the decisions on the partnership. It is therefore crucial to communicate directly to distributors about all (possible) changes and explain thoroughly why these are necessary and beneficial for both parties. Next, this report advises to provide understandable and up to date documentation, such as technical data sheets and application leaflets. Furthermore, organizing (smaller, continental) distributor meetings or trainings more frequently could possibly enhance the exchange of information with NaturalSpecialities and among distributors. The company can also develop or establish a platform to facilitate sharing documents and tracking orders, providing it does not replace daily interaction with the distributors. On top, a simple legal agreement with some key clauses in which mutual expectations, the scope of the collaboration and the common goals are clearly stipulated should be sufficient to regulate the partnership. Lastly, NaturalSpecialities can work with non-binding targets, within reason and determined in consultation with the distributors, to spot early on, if and when a distributor faces difficulties.