Samsung goes SMS way to keep tab on sales

From stocking a month's supply of goods, Thai Samsung Electronics had reduced its inventory to a week, then to "days" and now is aiming to cut it even further.

Regarding time-to-market certain products, particularly cellphones, the company is currently able to serve its retailers within four hours and is aiming to cut that time to within an hour, Thai Samsung Electronics deputy managing director Arnut Changtrakul said.

Lowered inventories and faster time-to-market have been enabled with the introduction of Samsung's Channel Sales Information system (SCSI).

Through SMS (short messaging service), most of Thai Samsung's 1,200 "product consultant" staff, stationed at retailers' outlets nationwide, can now report sales and inventories on each item to headquarters in Bangkok, Seoul and Singapore on a daily basis. Thai Samsung's own sales people, who oversee each dealer and shop, also use SMS to order their products.

The information is accessible to and used by various departments at the headquarters, especially by those in planning, production and marketing.

Arnut said supply-chain management (SCM) is critically important to today's businesses, particularly for products that are of high value and whose features are fast-changing, such as of electric appliances and cellphones. An efficient SCM enables companies to have the right quantity of products for customers and delivered when they want. "[What is] important is the ability to anticipate future demand, the ability to find out which products are rising in popularity and which are falling," he said. 

Thai Samsung already has real-time access to major retailers' sales and inventory database, but the information is not as detailed for each product as in the case of SCSI.

Nevertheless, Arnut said it will take some time for Thai Samsung to fully implement the new system and reap its full benefits, as it depends on many factors, including technology and knowledge and its manpower capability. At present, 500 mobile-phone shops, which account for 80 per cent of the company's mobile-phone sales, have deployed the SCSI system. The deployment rates of other product groups are lesser.

The supply-chain overhaul comes as Samsung has realised the growing importance of retailers and their sales force. Since early last year, Samsung has changed the incentive system for the sales staff from measuring their "sales in" to calculating their "sales out", Arnut said.

"In the past, our salesmen would try every [method] to meet their targets, sometimes by passing on the burden to the shop, which then had to stock too many goods and the impact would later be upon us. But with the 'sales-out' [way], the sales people's performance is measured from actual sales at the store they are responsible for," Arnut said.

Next, "the capability to accurately forecast market demand" has been added as a component on the KPI or key performance index for evaluating the performance of the sales teams. Also, the SCSI has been applied and the product consultants and sales staff have been obliged to report daily sales and inventory through their mobile phones and computers.

Lastly, but most importantly,  Arnut said, is the change that will occur in the "mindsets" of the sales people, which will help them realise the importance of SCM and what it means for them. The feeling of shared responsibility in making it possible can make this the most efficient supply-chain system. Thus, Samsung has begun programmes to help its product consultants (PC) become professional retailers who feel proud of their profession. "In the past, PC staff were the ones who did not know what else to do," he said.

The company has provided training and is developing a career-development plan for the PC staff, who are no longer called PC, but "Sambassadors". Also, for a few years now, Samsung has renamed its sales staff as "client executives" to reflect the new mindset of "I accomplish when my customers are satisfied", instead of  them pushing for "sales-in" figures.

"Regardless of how good a brand is, we found that at least 50 per cent of customers switch brands at the [retail] sales outlets," Arnut said, citing one of the ideas behind upgrading retail staff.

Thai Samsung has outsourced its retail business management to Mantech Communication, which employs Sambassadors who are stationed at shops nationwide. The number of Sambassadors had grown from 100, about ten years ago, to about 800 to 900, last year, and is 1,200 today.

Thai Samsung reported sales of Bt24 billion last year from its four major product categories - electrical appliances, audio-visual products, mobile phones and IT products.

Earlier this week, the company held the Samsung Sambassador Conference 2008 at Bitec Bangna, getting together 1,200 Sambassadors from retail outlets nationwide.