Outsourcing efficiencies for FMCG brands

With over 500 employees and operations across Denmark, Sweden, Norway, Finland, Switzerland and Austria, Conaxess Trade is one of the largest European FMCG distributors of its kind. Specialising in sales, marketing, financial services and physical distribution, the business guarantees a route to customers for more than 200 international and local brands.

Here, Conaxess Trade CEO Uwe Thellmann explains why outsourcing is one of the biggest challenges as well as opportunities for FMCG brands today.

The increasing transparency of FMCG and retail value chains, together with the rise of private-label goods across all categories, means brands are under pressure to improve efficiencies, costs and ways of working. “The game has completely changed during the last decade,” says Uwe, which represents a “tremendous opportunity” for organisations like Conaxess Trade.

Ongoing tenders, tough trade negotiations and aggressive retail sales can make it difficult for manufacturers to achieve healthy profit margins. Uwe is clear: sales, marketing, financial services and logistics are important cost elements, as well as complex functions to manage. These two factors can make outsourcing them an attractive solution, as he explains:

“FMCG companies need dedicated teams to understand local requirements, design adapted marketing communications and address the needs of local retail and other channel customers. In addition, they require different sales coverage, key account management and logistics services for each market. Resourcing and managing a combination of these elements can cause financial pressures for brand owners – especially when multiplied across several smaller territories.”

Standard “in demand” projects for Conaxess Trade include full or partial outsourcing of brand management, key account management, retail sales, logistics, warehousing and finance. These, as Uwe highlights, are areas where Conaxess provides the highest value. Services are target-focused and customised by brand owner and country. An approach, Uwe says, which ensures Conaxess Trade “leverages competitive advantages for brands and their customers.”

Based on aligned targets and business plans, Conaxess Trade “tailors to brands and markets.” The business, Uwe explains, seeks various synergies with potential partners including values “that resonate with our beliefs,” professionalism and high standards – as well as passionate teams, strong product development capabilities and a willingness to adjust to local requirements. Transparency, too, is absolutely key for cooperation. In Uwe’s words:

“Whether the challenge is growth, profitability or a product re-launch, as a trusted external partner, we require detailed insight into brand KPIs, sales KPIs, market share, logistics requirements, MOQs (minimum order quantities), stock control, payment terms, etc. to fix things that might be wrong. Market share is the most important KPI we track. And when it comes to regaining market share, our SWOT analysis is honest and transparent – we offer a brutally honest picture of a brand’s deficits with no sugar coating.”

Conaxess Trade works with brands across all FMCG channels comprising retail, wholesale, HoReCa, travel, convenience, pharmacies and bars. Brand partners range in size and include ‘big players’ like Ferrero, Kellogg’s, Barilla-Wasa, Fisherman’s Friend, Procter & Gamble and Bacardi, as well as selected challenger brands such as Swedish confectioner, Nick’s.

Savings, Uwe emphasises, can be up to 40-50% compared to a standalone setup, with a significantly improved performance and better coverage for brands and customers. The biggest savings occur during full-service outsourcing, where Conaxess replaces all local operations. And, according to Uwe, a full-service outsourcing project will ensure “ongoing profitability and the most cost-efficient marketing and sales penetration in the market.”

Uwe was keen to highlight that the most successful partnerships are with brands that prioritise innovation. While Conaxess control large functional areas of the value chain, FMCG brand owners are still responsible for all product development and creative marketing endeavours. Creativity and innovation are critical for long term survival. And it’s the traditional brands, says Uwe, that are being replaced by private labels because of inaction in these areas.

Digital innovation and infrastructure, in particular, is key to successful outsourcing arrangements. Digital technologies have of course been the biggest disrupter in the industry during the last few years. As well as changing the way brands communicate and engage consumers, digital has impacted operational management too. Live reporting, constant communication, KPI tracking, and demand, purchase and sales planning all enjoy increased flexibility thanks to digital tools. And while brand owners might outsource sales, marketing, logistics and finance teams, companies still require live data to achieve penetration and scale at speed.

Uwe recognises that scaling and adjustments are only possible in a fully digital environment. That’s why Conaxess Trade seeks to connect with – and augment where it can – partners’ existing digital infrastructure to maximise opportunities.

On the operational management side, he explains, the most developed players are companies with large insight budgets. This enables a deep understanding of sales KPIs as a basis to develop better sales and marketing activities. Smaller organisations tend to offer the most innovative social media strategies, while some partners use out-of-date systems and only have a rudimentary understanding of these areas. Regardless of digital capabilities and infrastructure, however, Conaxess Trade must find a balanced approach to sync with brand owners and customers.

Improving its own technologies is a major focus for Conaxess Trade moving forward as Uwe explains:

“There’s a detailed road map to further upgrade and roll out digital technologies and systems over the next few years. An advanced brand and sales management system, for example, offering almost unlimited scalability linked to live-reporting is currently being rolled out in Denmark. Other countries will follow during next year. We’re also upgrading and futureproofing all our ERP and CRM systems. External communication and social media is another critical investment area, allowing us to achieve closer alignment with our brand partners.”

And, Uwe says, the recent refurbishment of Conaxess’ Danish, Norwegian and Austrian headquarters will lead to even more collaborative and “optimized” activities, as employees and partner-teams benefit from open-plan spaces and the latest equipment.

He added: “We want Conaxess to be the preferred employer for a new generation of high performers. We’re very keen to attract talent and upgrade teams across all our markets this year.”