Slot Management – Part I (New and Existing Products)
Warehouse axiom: “Not all slots are created equal.” As a result, manufacturers are continually challenged to manage thousands of slots throughout their distributor partners’ houses – existing products, balanced with introducing new products into distribution. Regardless of a product’s life cycle, it is key to achieve critical mass to sustain slots.
New product introductions represent a major undertaking when it comes to slot management. One major factor is most new product launches are front loaded out of the gate. Consequently, sales force attention wanes after six months before a product is firmly established. Rationale: 1.) Operator focused programs are terminated too early in the product launch cycle; or 2.) Limited targeted operator focused resources, a direct result of manufacturers ongoing struggle to achieve their fair share of sales attention due to the level of competition either at the broker or distributor level (inconsistent house by house execution).
Given that new product launches tend to be front loaded, based on historic Ryan/IBI Data analyses, most new product slots (70%) do not reach critical mass and flame out within a year.
Sample New Product Launch
Actual Product Sales
Distributor Slotting Overview
Note: An 80% reorder rate of the initial new product order within 60 days is key to hitting the critical mass needed to maintain a healthy slot.
Ongoing effective slot management is a tedious, data driven process. Manufactures need to evaluate mountains of data for both existing and new products. It is important to focus your attention and resources on the high value slots where you can have the biggest influence. Detailed below is a graphic example that illustrates product category’s slot health by key products.
Slot Health by Product
(Category Example: Soup Bases)
The Ryan Group/IBI Data has developed Slot Guardian™, a resource that can be utilized to better manage the distributor slotting performance of manufacturer products. Specifically, when it comes to new products, Slot Guardian™ will enable the upward trajectory of sales to prevent new product flameout. In addition, Slot Guardian™ is an ongoing resource that monitors distributor slot health by product with tactics to drive operator purchases. In our next post, Slot Management Part II (Slot Guardian™ Introduction), we will provide details regarding Slot Guardian™ as well a special offer for enrolling in our new program.