P-O-P Logistics: Getting from Point A to Point B

When it comes to the logistical aspects of placing point-of-purchase displays at retail, the phrase "getting there is half the fun" might not always apply. Shipping costs, waste costs, damaged or lost displays, the use of third-party merchandisers, final setup in stores and encouraging retail compliance are just some of the issues marketers face once their displays are created and ready to ship. Logistically speaking, getting displays there efficiently may not be half the fun, but it is half the challenge in guaranteeing a program's ultimate success.The methods that marketers use to execute their display programs in the field vary based on several factors including the type and importance of the campaign being launched and the individual needs and preferences of specific retailers. Some marketers drop-ship pre-assembled displays directly to retailers, while others ship to a distribution center, which then allocates the displays to stores. Some rely on merchandising field forces to deliver and assemble displays, and some ship directly from the manufacturer and then use their own salesforce to coordinate activity in stores. Others do a combination of all of the above on a case-by-case basis.Nearly all marketers seem to agree on one logistical point -- retailers must be presented with programs that require as little effort as possible in terms of locating and identifying components and assembling materials. Usually, that means shipping a display in one piece -- or at least in very few pieces -- so it's just about ready to go out of the box. Considering the size and complexity of modern P-O-P, shipping something pre-assembled can significantly add to freight costs. However, if it makes stores more likely to use the displays, then marketers are more than happy to spend the money. (Again, this depends on the individual promotion.)"We pay very close attention to shipping, whether we want to ship something fully assembled or have it as a knock-down unit to save costs," says Bob Brisky, manager, marketing services for ICI Paints, Cleveland. "We always look at time-efficiency and costs. Sometimes, if it's too brokendown and takes too much construction time, there is no benefit in the cost-savings in shipping. We weigh one side against the other to make sure that we're basically using our reps' and dealers' time efficiently."Once an ICI display is in stores, the company's salesforce takes charge of any required assembly, mainly because they are able to devote more time to the product and ensure proper execution.However, if something is shipped in pieces with set-up to be handled by store staff, marketers will often go to great lengths to make the job as easy as possible. "A display should come as fully assembled as humanly possible," says Scott Greenberg, vice president of visual merchandising for Skechers USA, Manhattan Beach, Calif. "Shipping it in one piece is more costly, but not in the long run, because it gets put up in stores. However, when I do ship things that have to be assembled, our manufacturer will include an instruction sheet and we will also include a screwdriver or the flat open-end wrench that is required for set-up."When instruction sheets are prepared for retailers, Greenberg always reviews them first, and if they are too complicated or involve too many steps, they will be rewritten. "I keep it to four steps," he explains, "with the fourth step instructing: 'Have fun.' I keep it as simple as possible." This is not meant to be a slight against retailers, but merely an acknowledgment by marketers that managing a store's operations can keep a staff busy enough. Display assembly shouldn't complicate their jobs further."If I, as a store clerk, open a Skechers box and out falls a packet of screws and a screwdriver, when am I going to get to that? Another day," Greenberg says. "If it comes fully assembled, I want to get it out of the box because I want to throw that box away. Now I've opened the box and put the display up. I put the corrugated box in the trash bin, and I did my job today."At Madison, Wis.-based Rayovac Corp., shipping procedures vary according to the program. The company will either drop-ship to stores directly from the display manufacturer, or will ship displays through its distribution center and then allocate them to stores from there.According to Larry Bauer, director of merchandising and package development for Rayovac, using a distribution center makes sense if product is being shipped along with the display. "Then we can wrap everything on one pallet and ensure that the whole product and display load gets there," he says. "We don't pre-fill displays, but if there is any way we can put a product stack next to the display, wrap it, ship it and get it into the stores as one bundle, that makes it a lot easier."Rayovac has an internal staff of merchandisers that regularly visit some major accounts, and the company contracts with national agencies to visit the other accounts. Those third-party merchandisers are also used if a promotion is particularly important and Rayovac wants personnel dedicated to ensuring store compliance. Either way, shipping pre-assembled is key and Rayovac will usually have its merchandisers meet the display at retail."We used to have displays that had to be assembled at retail," Bauer says. "What would happen was that a merchandiser would come in. He may have driven three or four hours to get to the store. Then he'd find the display: something was broken inside, something didn't match up or hardware was missing. He's just wasted a whole trip. That's why we try to preassemble everything as much as possible so if a merchandiser isn't there, the store staff can set up the displays. Depending on the situation and how complex these things are, we'll also put labels on the box saying 'Hold for store merchandiser.' The merchandiser will call the store and say, 'Have you received this unit? I'll be in next Tuesday and I'd like to come in and set up that display.'"All this up-front attention to shipping and easing the store delivery process benefits not only marketers, but retailers as well. If someone else handles the P-O-P process, retailers are able to focus on running their stores."One of the big things we're worried about from the front end is making sure that we're putting our kits together in such a way that it's easy for stores to receive them, whether it's through their distribution center or we're walking them in," says Carolyn Hasker, manager for the worldwide channel marketing communications group at Intel, Santa Clara, Calif. "Also, we make sure that we've designed the distribution in such a way that it's going to work for the retailer. This is not only to encourage involvement -- we don't want to make it difficult for them. They've got a lot of other things to do; they're merchandising their stores. We try to design the pieces so they can be shipped preassembled or require very little additional assembly."One Size Fits All?Shipping and distribution is just the beginning of the logistics process because one P-O-P display size definitely does not fit all stores' layouts or needs. Keeping pace with the shift toward account-specific P-O-P, marketers are continually updating their display inventories to accommodate retail needs."One of our biggest issues is the varying formats of the stores," says Mariko Miyamoto, senior director, marketing communications for Benetton Sports Systems, Bordentown, N.J. "The areas that we're trying to merchandise in are always so different."As a result, for its Roller-blade lines, the company recently revamped its merchandising system -- from specialty stores to big-box retailers."Specialty store owners are more lenient in terms of what manufacturer-supplied P-O-P they are going to use," Miyamoto says. "The big-box locations tend to restrict that usage a bit more. So, we developed four different levels of merchandising kits. They range from a kit geared to the specialty dealers, which is the most comprehensive, down to kits for some of our different chain accounts that want only backer cards and not any other part of the system."ICI Paints also deals with big-box stores and smaller independent retail accounts. The company manages variations in store sizes by producing customized P-O-P. For larger accounts, ICI will customize pieces to fit the store's foot-print. When dealing with smaller shops, ICI will survey the dealers to determine their basic requirements and then try to create a program that takes into consideration the vast majority of smaller stores. "We may have a unit that is somewhat modular in nature and adaptable to several different sizes, areas and installations," says ICI's Brisky.Many marketers have versions of their P-O-P programs to fit accounts with A-, B- and C-size stores. "At Rayovac, we will have different-size displays for different-size accounts," says Bauer. "In other words, an account may request a large endcap and an island for its A-size stores. Or, B-size stores might just take the endcap. A C-size store might take an endcap but in a smaller version. In our line, we've got different-size units for different applications. We'll customize our existing programs to fit what the account wants and needs. If the buyer says, 'I like your display, but it's two inches too tall,' we'll create a smaller unit."Those Are the Breaks...For all the precautions used by marketers to protect displays, damages sometimes occur during shipping. Just as receiving a one-piece display makes life easier for retailers, so does an easy replacement process.Most marketers have a replacement process for damaged goods in place by which retailers can either contact their brand representative or the display manufacturer directly. Either way, providing some type of contact information is essential."We always include a letter with our P-O-P," says Skechers' Greenberg. "The letter introduces Skechers' visual merchandising department. The letter provides a human being's name; sometimes it's my assistant's or mine. So, rather than just getting a box with something that slides out -- and they know it's from Skechers only because of the return label -- they get a piece of paper that says, 'This is from Skechers' visual. Please call us if you have any questions.'"Rayovac also instructs its display manufacturers to include a card that provides similar direction for retailers. "It lets them know that if they have a problem with set-up or quality, they can call this toll-free number," says Bauer. "The store can then call the display manufacturer directly."At Benetton, since all P-O-P is done on a made-to-order basis, the company manages replacement parts by providing its sales agencies with extra pieces. "We receive forecasts from our sales agencies," says Miyamoto. "Then we produce the necessary quantities. On top of those quantities, we produce an overrun. We provide each one of our agencies with varying parts and pieces that may need to be replaced throughout the year."But, unfortunately, damages are also merely an occupational hazard that can't be completely controlled."You expect to have 5 percent damage, so you build it in and you run 5 percent more," says Robin Parker, an assistant display manager at The Gillette Co., Boston. "If we wrapped everything in foam rubber and made the box 30 percent larger, we would get fewer boxes per truck and we would have a lot more packaging material to purchase. Yes, we could drive the damage rate to zero, but it would cost us 10 times as much for the excess packaging. It's cheaper to accept 5 percent damage, build it in from the start and go from there."As much as marketers survey their retail accounts and gather feedback from sales reps and merchandisers about store specifications, forecasting is generally viewed as an inexact process. But as they do with damages, some marketers adopt a "just deal with it" attitude."There's always the store that reports they are an 8-foot store when they're really a 12-foot store," says Gillette's Parker. "If you have a 12-foot store that has two 4-foot bays of pegboard and one 4-foot bay with shelves in it, the question is, 'do you call that an 8-foot store or a 12-foot store?' We're never sure. This is statistical scatter, so when we build 100, we're happy if we pay for 105 and have those five left over -- there is always a good place to put them."Other companies view waste costs more seriously and are putting programs in place to deal with the issue.At Schering-Plough Health-care Products Inc., waste costs are defined by the category heading "discontinue and obsolescence," or D&O. "Based on what POPAI tells us, we would concur that at least 25 percent of what we make is thrown away," says Ron Elowitz, national manger for display design at the Liberty Corner, N.J.-based company. "That is due to huge levels of custom displays for which orders may not come through, coupled with the fact that forecasting is not an exact science and is changing almost weekly based on our accounts."To better control these waste costs, Schering-Plough is implementing a modular display system, by which suppliers will manufacture at risk, based on product inventories. In that way, system components can continuously be re-used or re-siphoned for new custom designs."It's a matter of trying to continuously develop accurate forecasts, and to do so early on," says Elowitz. "Also, and I think you'll see this across the board, forecasts are very inaccurate. If a product is incidence-driven, it's almost impossible. We try not to make a lot of inventory up front and stage it, but there are safety stock levels we need to maintain. The worst thing you can do is short a customer. But even so, there will always be some waste costs. Our efforts are to eventually come to no D&O, or to as low a level as possible."Meeting Retailer NeedsThe best way for marketers to continually improve and streamline the P-O-P logistics process is to regularly take the pulse of retail accounts to find out what stores need, how they want displays delivered and how marketers can make retailers' lives easier."We absolutely do surveys," says Skechers' Greenberg. "We have account lists for our different brands that we randomly call. We try to get a manager or head sales clerk on the phone and the first question we ask is, 'Do you have a minute?' We understand these people are busy and we don't want them putting a customer on hold while they're chatting with us. We introduce ourselves and run through some questions. 'Do you have the displays? Do you need something? What kind of P-O-P do you use?'"Another vehicle that marketers use to monitor retail needs is the most direct link to the actual stores: the field sales representatives."We meet with retailers on a fairly regular basis, talking about what our campaigns are going to be," says Intel's Hasker. "We get input from them on what they want us to produce and what they would like us to do. We also get input through the field force, our sales reps. They talk to the people in the stores every day. We get reports on what they like, what they don't like, what's working and what's not working. We go through and adjust what we're going to produce based on what input we get from the field and from the retailers themselves."Keep It SimpleWhile there is no one formula to developing an efficient P-O-P logistics process, the best course of action for marketers is to understand what the retailers of today need from P-O-P and how new displays can best fit into an account's overall plan."The simplest things can have the greatest impact on retail compliance," says Tom Kukuk, director of marketing and research for Promo Edge, a retail consulting firm based in Menomonee Falls, Wis. "Many of the things that marketers can do to increase compliance are so simple. For example, ship everything in one unit. Either one box, one carton, or one pallet, depending on the promotion. That makes it easy to find and set up. Also, identify the boxes. It's often very difficult to tell the difference between merchandise and P-O-P."Sounds simple, but the numbers seem to tell a different story. According to Promo Edge statistics, optimal retail compliance rates are only between 40 to 60 percent, including direct store delivery (DSD) compliance rates. According to Kukuk, there are often misconceptions between marketers and retailers about who is ultimately responsible for getting displays up in stores, and about which party will step forward and get the job done. "It's amazing how the perceptions are often completely opposite," he notes. "I don't think it's a matter of communication -- it's about expectations. Expectations and execution."

P-O-P Logistics: Getting from Point A to Point B

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