Commodity Handling Agents or Carrying and Forwarding Agents (CFAs) act as the bridge between the company and customers. Companies need them because they cannot manage the logistics in all the markets. Handling agents need to have a good liaison with the local labour unions, transporters, godown owners and often with the wholesalers.
Responsibilities of Commodity Handling Agents
The handling agents are responsible for receipt of material from the factories, upkeep of good stock in the godowns, data entry in ERP system etc.
They are responsible for the timely dispatch of goods to customers & invoicing.
If the material arrives by rail, handling agents also need to coordinate with local Railways Department officers for unloading of material from the wagons and transportation to the godown.
In case of damages in material during transit to the godown, commodity handling agents are responsible for the salvage or disposal of damaged material.
CFAs also have a role in controlling infiltration of material meant to be dispatched to one area but unloaded in other area, especially if CFA is also responsible for arranging the transport.
Commodity Handling Agents versus Distributors/ Wholesalers
A few large companies do not allow their CFAs to do wholesaling of their product or other brand in the same industry. This is done to avoid conflict of interest as the CFA might start using the godown premises or company’s transportation vehices to favour his own retailers over other those of other distributors serviced from the godown.
However, this has been implemented by a very few building materials companies as at the time of entering a new market, companies want to outsource the material handling work to someone who knows the product and industry well and an existing Distributor of the product in the area is well versed with the nature of the product. Also, it gives quick access to the retailers of that Distributor if he becomes his CFA also.
Data is a collection of numbers, labels, or symbols, collected through observation. It can be qualitative or quantitative variables about one or more persons or objects. When there is no structure to data, nobody can make meaning out of the numbers and names. Data organized in rows and columns carry specific meaning. A commodity company with a data driven approach takes decisions basis the data. Its transition to a brand will be faster than one which ignores data, other factors being constant.
To look at data and to make meaning out of it needs focus. It has to be inculcated as a culture in the company. It is necessary that all decisions are based on a data driven approach. All reviews must be backed with data.
Types of data
Types of data available with the company fall in three categories:
System data: This includes data registered in company’s system through a standard software. Chances of error in data due to human estimation is minimal. A few examples of system data are sales volumes of customers, number of outlets selling our brand, purchase frequency of the customers, company’s production figures, number of quality complaints logged, etc. Company’s ERP system captures this data from the invoices.
Market data: This includes data where the employees make estimates of numbers like competitor brands’ sales volume or shop share, retailers profile, number of outlets selling competition brands, production volumes of competition, quality of the competition brands, competition pricing, etc. are examples where of market data where the employees make estimate basis the interaction of people operating in the market. This is often accepted with a pinch of salt by the management as the biases of the sales person creep into this data collection.
Agency data: This includes data collected by agencies either independently or for a commodity company when asked to do so. Data collection happens either by sample survey of consumers or through interaction of the trade partners/ influencers. Changes in consumers’ consumption behavior, growth trend of the industry, market share of the various brands, media consumption trend of the consumers, etc. are examples of agency data. This data is considered more credible by the management as there are no biases from the market research company.
Benefits of Data Driven Approach
There are several decisions which can be taken with more diligence if data is looked closely. They will yield better results. A few examples are below:
Sales planning- If the sales team closely follows the purchase frequency of trade partners/ consumers, seasonality of the product and recent growth trends, it will be able to predict the sales forecast with more accuracy.
Trade scheme devising- Last scheme’s achievement, timing of the last scheme, type of scheme influencing various types of trade partners, are important parameters, which if tracked will help in devising the next schemes. Often companies do not evaluate the scheme’s performance after scheme closure, thereby not learning from the failures.
Pricing decision- The pricing strategy of a commodity company will be successful only if it has information of the price waterfall existing in the market vis-à-vis competition or various element of the value chain.
New product launch or capacity expansion- Companies should invest in new production facilities or storage facilities only if it has concrete information on the existing market size and competition market share. Basis this information only, the company will be able to decide the positioning strategy for its product. Similarly, when coming out with new products, the company must have all market data including consumers’ changing consumption trends.
Advertising strategy- An important input is the media consumption data of the target audience. This data driven approach helps commodity company strategize media campaign diligently.
Importance of Data Driven Approach
In a nutshell, data driven approach avoids decisions being taken on a gut by an individual. In a way, the decision maker takes the responsibility of the decision.
Why do commodities company care for Internal Marketing? The sales employee of a company is the first brand ambassador of the product, even for commodities. He addresses both the aspects: speaks positively about the quality of the product and company in front of the customers and acts as eyes and ears for the company, feeding important information about recent trends in the market. That is why, internal marketing for commodity companies is a critical input to transition from commodity to brand.
Internal Marketing for Employee Motivation
Internal marketing programs fall in two categories: individual motivation & team motivation.
Internal Marketing- 2 ways
Individual motivation
Individual motivation programs can have one or many goals. They are towards promoting product sales of an existing or new brand, increasing the network or increasing market share. They can also be aimed to increase repeat purchase volumes, new customer acquisition and other criteria or any other short-term goal of the commodity company.
Trainings on technical specifications and uniqueness of the product are the basic know-how needed. Marketing Department often gives them tools which makes them better sales personnel and enable them to sound more convincing in front of the customer. Sessions on company plans, salesmanship, customer psychology, marketing activities of competitors and communication and negotiation skills are the major trainings provided towards achieving the individual goals. Company also provides them technical support assurance to customers and quick access to customer profile information.
Empowerment is equally important for individual motivation. To empower them in front of the customers, company gives them authority to approve modest price discount authority. At the end, rewards for better than average performance are needed. Rewards in this program include cash awards/ recognition, promotions, company stock, paid time off, salary hike, special bonus, etc. Rewards are majorly dependent on the individual’s performance and is generally in the form of monthly or quarterly sales bonuses. The sales manager has a key role in this and he has to steer each person to achieving his target.
Team motivation
Companies indulge in Group motivation programs to boost the morale of the team, inculcate team playing behaviours and achieve short term goal through the team. For instance, the aim of a company is to increase the sales in a market. A sales target is assigned to the sales team and periodic updates are sent to the sales team about the achievement vis-a-vis target. In case of shortfall from a salesperson, other salespersons either try to absorb the deficit quantity in their influence areas or motivate the laggard salesperson. Such programs lead to sharing of marketing ideas and instill a team spirit. The marketing, logistics and technical teams are also generally part of such programs.
Enablers towards achieving the team goals are the slightly different from individual motivation programs. They include trainings on team spirit, working across cultures, company profile and industry overview among others. Rewards in this program include team recognition, company stock, team outing, special training programs, etc. Regular communications from the management also help in internal marketing of the products, especially if the communication is about new markets entered, industry updates or product enhancements.
A larger motivation program includes activities addressing the entire organization. This involves building a good corporate culture, imbibing the company’s values into the minds of employees, following good HR practices, regular communications from the top management about developments in the company and industry, transparency in dealing with employees for promotions, entry and exit and following industry-standards compensation and benefits policy.
Companies focusing on sales keep reacting to competitive activities or innovating new campaigns but often forget to motivate their salesforce. They must not forget that internal marketing is one of the legs in the tripod on which product marketing rests, the other two being creating customer pull and increasing the channel network presence.
