German farmer's 24/7 hour milk filling station a hit !

News of a new "Milchtankstelle" near Cologne dispensing the output of 78 cows from a stainless steel vending machine into customers' own empty containers could represent a potential breakthrough in partner-bypass by farmers. Given the freshness and customers' willingness to pay 70 cents per litre direct vs the 20 cents paid by grocers to the farmer, the business model has appeal, besides upping the negotiation ante….


Have a savvy weekend, from the Namnews Team!

When getting away means staying in touch

Reports that sunshine as a key criterion for choice of holiday-location may have been replaced by ability to keep in touch. This means that NAMs & KAMs routinely check mobile phone coverage and international data plans before travelling. A survey by Amex indicates that 77 per cent of Americans intend to stay connected while on vacation via Internet, phone, social media and other channels.
In fact, Bhutan, landlocked between India and Tibet, is one of the most isolated nations in the world. However, in the country's Amankora lodges there are no TVs, no radios, but if a guest needs it you can get high-speed internet access….
Whilst much of this traffic-watching is allegedly social, most of us know that the odd job-related holiday email, can be a career-maker, or breaker….


Have an intouch weekend, from the Namnews Team!

20/20 Hindsight reveals a quiet revolution…

A change of CEO in a major retailer has a radical influence on the customer, its key competitors…and especially suppliers' trade management strategies…

But how about three major multiples' CEOs moving on, and the resulting management team-changes reflecting similar changes in a fourth player likely to be taken over by a major shareholder…?

Add to this mix a need for 'new' to signal change, in the midst of global financial upheaval, and it becomes 'obvious' that the UK retail landscape is being quietly turned upside down….

Also, change of this degree means everyone can be equal, each at square one..

These unprecedented changes will have rendered obsolete your trade management strategies…

Unless, of course you anticipated these developments two years ago…

Have a 'what-if' weekend, from the Namnews Team!

Green Shoots on a Blue High Street?

Pic: Sarah Lee for the Guardian

News that 40% of Woolworths former stores are still empty, is possibly 'proof' of a spent business model, despite a possible resurgence of the brand online. The remaining 60% of outlets spread over several trade sectors, means that traditional Wollies categories will end up in increased trade concentration, adding to the negotiating muscle of the major retailers. Another result of a 10% over-capacity in retail space has been more realistic rental concessions from formerly 'upward-only' landlords, mindful of the impact of empty shops on consumer demand.

Meanwhile, this wake-up call for all retail business models has created opportunities for Pound shops, making them a permanent feature of the retail landscape, all in response to the demonstrable value-for-money demands of the savvy consumer.

Suppliers that have managed the transition to profitable management of a more demanding customer-mix have done so by stripping down their basic offering to meet real need, and ruthless elimination of all surplus, before the market did it for them.

Insisting on fair-share partnerships with the survivors then became a no-brainer..

In other words, if you are still here, as one of the strong players you deserve and must demand a game with equal trade-partners, ……or else!

Managing demands for extra credit via the customer's bank…

As retailers extend their credit periods, some are offering access to their banks to enable suppliers to present invoices for immediate payment.
This helps your cashflow, great! (But at what cost?)

However, given that banks are not in the free-lunch business, they will presumably take a discount off the invoice for the privilege.
Suppose you present an invoice due for payment in 60 days, and the bank takes 1% off-invoice, you are in fact paying 1% for 60 days money.
Given there are 365 days in a year, this 1% translates into a rate of 6% per annum for the money, i.e. 6 x % off invoice…..
In the same way, a 2% off-invoice = 12%, a 3% off-invoice = 18%, etc.

The above chart shows how to calculate the annual interest cost on different off-invoice rates and different payment period savings.
Each line represents a different off-invoice rate, and the left-hand axis gives the equivalent annual rate for the money.
Simply select the off-invoice rate being charged by the bank, then follow the line to where it crosses the line representing the number of days of the invoice, on bottom axis.
Then read the annual rate on the left-hand axis. This tells you the annual rate you are paying for the privilege of getting paid early.

This off-invoice charge thus becomes an additional cost of dealing with the customer, thereby unbalancing the status quo, the fair-share negotiation principle with your trade partner….
You owe it to yourself to really understand the money….

Have a 'get real' weekend, from the Namnews Team!

M&S extension of credit terms from suppliers

News from The Telegraph that the company has apparently told 860 companies that provide it with 'general merchandise' – clothing, shoes and household goods – that from next month, payment terms will be extended. Suppliers shipping goods to M&S and firms that help the retailer with storage and distribution, have been paid within 30 days of submitting an invoice. But from the start of September, M&S is promising to pay only within 60 days.

Impact:

Suppose supplier sells £2.5m per annum to M&S, 30 days credit

Cost of interest = 9%

Average amount outstanding = £208,000 i.e £2.5m/12

Therefore cost of credit        = £18,750 i.e. £208,000 x 9%

Credit period extended to 60 days

Average amount outstanding = £416,000

Cost of credit                        = £37,500

Therefore additional cost     = £18,750

= 0.75% of suppliers sales   = additional cost to serve

Incremental sales by supplier to cover of additional credit = £187,500, assuming 10% net profit
(See NamCalc for this & 33 extra tools to calculate total cost to serve)

Incremental sales by M&S to generate gain from supplier extra credit = £257,554, based on M&S Net Profit of 7.28%, latest published accounts

In other words, the supplier has several options:

1. Object to the new terms: if nothing else changes, the supplier is handing over £18,750 (see Fair share negotiation video) Not to object can send a signal that even more extra credit should have been requested.

2. Demand equivalent value from customer, ability to generate additional sales of £187,500 to customer, at no extra cost

3. Walk away…... (Work out incremental sales required from other customers to cover lost sales, conduct 'what-ifs on same additional credit period being extended to other customers ) and challenge basic business model.

The Ultimate Negotiation App.?

Have a compliant weekend, from the Namnews Team!

Global Account Management of Tesco: keeping it in perspective

Imagine a circle that contains all of human knowledge ref Tesco:

As a consumer, you know a little:

By the time you become a Tesco Account Executive, you know a bit more: 

As a Tesco National Account Manager, you gain some specialised knowledge: 

A Tesco Senior NAM role deepens that specialised knowledge/insight: 

Reading research and trade papers (Namnews?) takes you to the edge of human knowledge:

Once you're at the boundary, you focus:

You push at the boundary for a few years:

Until one day, the boundary gives way, allowing some original thinking: 

And, that dent you've made is called Global Account Management of Tesco:

Of course, the Tesco world looks different to you now: 

So, don't forget the bigger picture:

Keep pushing, and reading…...

Adapted, with apologies, from “The illustrated guide to a Ph.D” at

http://matt.might.net/articles/phd-school-in-pictures/