Returning to Healthy GrowthReturning to Healthy Growthfor Li & Fung GNP Groupfor Li & Fung GNP Group

MGT0650 Consulting Skills for ManagersMGT0650 Consulting Skills for ManagersProject Dummy Pack - RevisedProject Dummy Pack - Revised

Class 2 – Team EClass 2 – Team EChan, Chiu Kit JeremyChan, Chiu Kit JeremyLao, Teng Chong KelvinLao, Teng Chong KelvinMau, Ka Ying AdaMau, Ka Ying AdaNg, Kai Li NoraNg, Kai Li NoraYuen, Melissa CieYuen, Melissa Cie

Executive Summary

• To be updated

Situation

• GNP Group prides themselves as a market leader in gifts and promotion trading – “Your gateway to a World of Consumer Products”

• [ ] of customers serviced by [ ] of teams producing more than 30,000 sku per year and revenue of over USD$600 million per year

Complication

• The growth in GNP Group has been stagnant in recent years.

• After global economic crisis in 2008, the Group faces great threat from recruiting new customers and meeting sales budget.

• As on Sep 2009, the total order has dropped by [ ] % and the total YTD sales has denoted [ ] % decrease vs. year ago.

Question• How can GNP Group return to healthy growth?

Li & Fung GNP Group is facing problem in driving business growth…

Gift & Promotions (GNP Group)Alice Lai

Executive Vice President

Gifts Group Promotions Group

Avon

USA

(GG

1)Su

sann

a N

g, S

enio

r Vic

e Pr

esid

ent

Catalogue/Direct SellingSusanna Ng

Senior Vice President

Family EntertainmentJoe Maher

Senior Vice President

Specialty Stores

Avon

Inte

rnati

onal

(GG

3)El

len

Ng,

Vic

e Pr

esid

ent

Publ

ishe

rs C

lear

ing

Hou

se (G

G1)

Susa

nna

Ng,

Sen

ior V

ice

Pres

iden

t

Bath

& B

ody

Wor

ks (G

G2)

Alex

andr

a Au

, Gen

eral

Man

ager

Dis

ney

Stor

es (P

DP)

Rita

Li,

Vice

Pre

side

nt

Crac

ker B

arre

l (PD

Q)

Alex

andr

a Au

, Gen

eral

Man

ager

JoAn

n St

ores

- H

ardl

ine

(GG

4)G

eorg

e Ye

h, G

ener

al M

anag

er

JoAn

n St

ores

- S

oftlin

e (G

GJ)

Elle

n N

g, V

ice

Pres

iden

t

Star

buck

s (G

G2)

Alex

andr

a Au

, Gen

eral

Man

ager

Coca

-Col

a (G

G5)

Satt

e Ts

ao, G

ener

al M

anag

er

McD

onal

d (G

G5)

Satt

e Ts

ao, G

ener

al M

anag

er

Oth

ers

(GG

5)Sa

tte

Tsao

, Gen

eral

Man

ager

Organizational Chart:

The merchandising support teams of Li & Fung GNP Group are divided by customers. Each team is highly merchandising driven. There is limited communication and sharing in-between different teams.

Source: Li & Fung Internal Information

48% of the customers are not satisfied with the current mediocre sales process

Source of data: 2009 customer opinion survey by Team E Consulting Group

Customer Satisfaction Level in Different Service Attributes

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Sourcing Capability

Quality of Sales Staff

Product Quality

Product Design

Production Facilities

Account Service

Product Cost

Sale Process

% of Customer

Service Attribute

Very Unsatisfied Unsatisfied Somewhat Satisfied

Satisfied Very Satisfied

GNP should improve the sales process in order to resume healthy growth.

Source of data: Benchmarking study by Team E Consulting Group

Relationship of Customer Satisfaction Rating vs. AnnualGrowth Rate of Consumer Product Industry

-10%

-5%

0%

5%

10%

15%

20%

25%

40% 50% 60% 70% 80% 90% 100%

Customer Satisfaction Rating

Ann

ual G

row

th R

ate

Greater customer satisfaction ratings results in greater sales growth!

Company ACompany B

Company C

Company DCompany E

Company F

Company G

Company H

Company I

Company J

GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year.

The marketing process is not standardized, causing long turnaround time for customer pitching.

Communication on products is inadequate, results in limited product offering & untapped sales opportunity.

Historical data is not readily available. Many sales opportunity are not identified and captured.

• Merchandisers could not effectively pitch to customers with existing resources• Costs savings resulting from product modification not captured• Cross selling potential not captured due to unknown products by merchandisers

• Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data• Ineffective budgeting and trend analysis due to scattered information

• Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality

GNP should improve the sales process in order to resume healthy growth.

GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year.

The marketing process is not standardized, causing long turnaround time for customer pitching.

Communication on products is inadequate, results in limited product offering & untapped sales opportunity.

Historical data is not readily available. Many sales opportunity are not identified and captured.

• Merchandisers could not effectively pitch to customers with existing resources• Costs savings resulting from product modification not captured• Cross selling potential not captured due to unknown products by merchandisers

• Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data• Ineffective budgeting and trend analysis due to scattered information

• Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality

GNP should improve the sales process in order to resume healthy growth.

Customer enquiries that are completed in 2 weeks have a much higher chance to close the deal!

Source of data: 2008 GNP Group (Division GG4) internal data– account servicing team

Sales Presentation Completion Time & Success Rate

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Successful Rate for presentations completed in 2 wks

Successful Rate for presentations completed in 4 wks

Sales Presentation within 2wk

Sales Presentation within 4wk

Source of data: 2009 trade interviews with customer – JoAnn Stores

Marketing tools constraint reduces quality of sales presentation.

“LF has no catalog for me to easily browse through for products that I would like my team to purchase.” – JoAnn Stores VP of Sourcing & Product Development

“The turnaround time for product offerings is slow as compared to other services that LF is able to provide.” – JoAnn Stores VP of Sourcing & Product Development

“The displays at the showrooms are very nice, but there is no product information that I can readily obtain and team always has to go back to vendors to requote the same items.” – JoAnn Stores VP of Sourcing & Product Development

Showroom Preparation Time

0 5 10 15 20 25 30 35 40 45

Showroom prep time forGNP Group (GG4 Division)

Showroom prep time forcompetitors (w. Fixedproduct showrooms)

A shorter showroom preparation time will lead to more efficient and increased sales

Source of data: 2008 GNP Group (Division GG4) internal data– account servicing team

GNP Group has limited space for vast variety of product, so each time prior to customer visit, the showrooms are reset to showcase only relevant items. Competitors tends to have fixed showrooms due to their focus on narrower product offerings.

GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year.

The marketing process is not standardized, causing long turnaround time for customer pitching.

Communication on products is inadequate, results in limited product offering & untapped sales opportunity.

Historical data is not readily available. Many sales opportunity are not identified and captured.

• Merchandisers could not effectively pitch to customers with existing resources• Costs savings resulting from product modification not captured• Cross selling potential not captured due to unknown products by merchandisers

• Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data• Ineffective budgeting and trend analysis due to scattered information

• Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality

GNP should improve the sales process in order to resume healthy growth.

Source of data: 2009 salesperson opinion survey by Team E Consulting Group

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Increase understanding of customer need

Building professional image

Reliable internal knowledge for reference

Are

a of

impr

ovem

ents

% of salesperson in survey

Improved Somehow the same Impaired

Merchandisers could not effectively pitch to customers with existing resources

• Salespersons believe better product information improves their sales performance

Comprehensive product information brings about strong sales support.

• Salespersons said:

– “If product database is available, I can easily obtain information about the product and vendor which are new to me so that I can spend more time on understanding the client’s needs and building relationship.”

– “With the help of product database, I will be more familiar with the product range available to our clients. A thorough product knowledge demonstrates our company’s professional and expertise in the industry, which significantly affects the decision-making of vendor choice of the clients.”

– “If I am provided with reliable vendor and product information, I can substantially improve my sales performance. Less time is spent on duplication of product type, assessment of vendor capacity etc.”

Source of data: 2009 salesperson opinion survey by Team E Consulting Group

0%

20%

40%

60%

80%

100%

120%

Product Modification New Product Development

% o

f N

ew P

rodu

ct C

ost

Product Design Production Quality Assuarance Quality Control

33%

73%

Source of data: 2008 GNP Group internal data – product development team

Cost savings resulting from modification of current product types are not captured.

Cost advantage from modification products with similar spec (40%

reduction)

Modification of existing product types can be common

Percentage of new seasonal products in 2008 & 2009

78%

22%

Portion similar to other existing products

Portion without close resemblance of existing product

Source of data: 2008 GNP Group internal data – product development team

Another potential for sales growth if GNP better understands its customers.

Source of data: 2009 customer opinion survey by Team E Consulting Group

GNP Group's Sales Contribution in Top 10 Customers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total of Top 10Customers

Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Customer 9 Customer 10

Sales Contribution by GNP Group vs. Other Suppliers GNP Group Other suppliers

GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year.

The marketing process is not standardized, causing long turnaround time for customer pitching.

Communication on products is inadequate, results in limited product offering & untapped sales opportunity.

Historical data is not readily available. Many sales opportunity are not identified and captured.

• Merchandisers could not effectively pitch to customers with existing resources• Costs savings resulting from product modification not captured• Cross selling potential not captured due to unknown products by merchandisers

• Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data• Ineffective budgeting and trend analysis due to scattered information

• Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality

GNP should improve the sales process in order to resume healthy growth.

Source of data: GNP IT Department

Incomplete Sales/Product Information Hinders Sales

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sales data Product data

% o

f T

ota

l

• Missing piece leading to incomplete information and hinder the sales pitching process and business analysis

Sales and Product Data Availability in System for Team GG4

Source of data: Survey conducted by Team E

Inadequate Date Lengthens Preparation for Sales Pitching

0

1

2

3

4

5

6

7

8

9

All from System Partly from System, Partlyfrom other sources*

All from other sources*

Avg

. N

o.

of

Day

s

* Other sources e.g. information obtained from other teams, from documents etc

+200%

+700%

Preparation Time Required for Sales Pitching for Team GG4

• Preparation time will be lengthened if data are not promptly available in the system

Scattered Info. Leads to Ineffective Budgeting & Sales Analysis

Top Team/ Managers

Data are partly input to

the system

External reports e.g. ranking

Staff from all teams

Catalogue/ Direct

Selling Team

Family Entertainment

Team

Specialty Store Team

Promotions Team

Customers’ survey / feedback

Historical reports

I’m bombarded with information from various sources and have to spend tremendous time to consolidate them, what could make the target setting process easier?

Business analytical reports

• Same happened to business/trend analysis. Fail to effectively observe business insights

Source of data: 2008 GNP Group internal data – product development team

Recommendation

• To be written after finalizing all analysis

Implementation/ Phasing

• To be written after finalizing all analysis

Appendix

Appendix 2Sales Process of GNP Group

Customer Li & Fung Vendors

Creation of Trend Guide

Creation of Sourcing Brief

Trend Guide Sourcing Brief

Review and communicate

on requirements

Arrange Samples & Quotation

Quotation SamplesReview Quotation &

Samples

Is Quotation OK?

No

Yes

Review Quotation & Samples

Is SampleOK?

No

Yes Yes

Orders Issued

NoNo

Is Sample OK?

Customer Quotation

Customer Samples

Consolidate forBuy Trip

Presentation

Yes

Is Quotation OK?

Process Time: 20 weeks

8 weeks

2 weeks

4 weeks

6 weeks