Cementing market share in a challenging environment

How changing the rules of the game can unlock business success in Africa

Quick recap of grade 6 geography

No offence to Man U fans but…

The History of CIMERWA

100Ktpa 600Ktpa

Out with the old, in with the new…

Market “As was” overview

1. All CIMERWA volumes were sold ex works

2. Limited local manufacturer of cement, and all cement was

imported

3. 80% of the market was 13 hours away

4. Cement was imported from Uganda, Kenya and Tanzania by

the distributors who dominated the market

5. RHCAD was the cement distributors association that distributed

all the cement

6. RHCAD stood for: Rwanda Hima Cement Active Dealers.

Can you see the problem here?

7. 29 Active members of which 12 had transport capacity

8. All sales were managed through RHCAD

9. Price was determined by this “club”

Distributor

CIMERWA

MANUFACTURE SELL TRANSPORT LAKE WAREHOUSING < 350 BAGS COLLECT CASH CREDIT

Current state

34 years of doing business through distributors resulted in:

Not knowing who and where the end user was

Not knowing how to sell to him / her

Not knowing how we would get paid or if at all

Not knowing how to get the product to the customer

Critical review of the supply chain

Pitfalls of distributor strategy

• Disintermediation

• Additional cost layer

• Limited control over pricing

• High exposure to small customer base

• Power base sits with distributors

• Limited ability to increase sales

• Sales dependant on distributors cash flow situation

Benefits of delivered service • Ability to influence sales volumes

• Direct relationship with customer

• Ability to define the level of customer service

• Ability to implement effective loyalty / rebate program

• Diversified customer base

• Direct control over market pricing

Distributor model review

Distributor

CIMERWA

MANUFACTURE SELL TRANSPORT LAKE WAREHOUSING < 350 BAGS COLLECT CASH CREDIT

Current state

Distributors will have Strategic WH space,

Boats and ability to do small loads

Distributor

CIMERWA

MANUFACTURE SELL TRANSPORT LAKE WAREHOUSING < 350 BAGS COLLECT CASH CREDIT

Current state

Distributor

CIMERWA

MANUFACTURE SELL TRANSPORT LAKE WAREHOUSING < 350 BAGS COLLECT CASH CREDIT

End state

Change in operating model

Impact of change in operating model

18

500 +

Putting structures in place

Current state

Future state

MANUFACTURE SELL TRANSPORT LAKE WAREHOUSING < 350 BAGS COLLECT CASH CREDIT

Proposed state

Credit Facility

• Short term credit was a

smoke screen

• Bank hours

30 Days Credit

• Construction customers

• CPM customers

• Bank backed security

External Sales

• Expand resources

• Alignment in scorecards &

remuneration

Internal Sales & Back Office

• SAP B1 process change & disciple

(TMS)

• Bolster internal sales

• Improve office administration processes

TMS

• Implemented a TMS

• Migrate distributors to transporters

• Increase dedicated fleet

• Introduce Bulk Tankers

• Inbound synergy return loads

• Deliver against sales promise

• Introduced the virtual warehouse

Cash Collection

• Encourage cash deposits at banks

• Back office reconciliation team needs

to be bolstered

CREDIT SELL TRANSPORT COLLECT CASH

Brand revitalisation Simplifying the sales process

Critical success factors

Rebranding & product awareness

• Rebranded the bags

• Held a promotion with a “Launch Price”

• Promotion was still ex works basis

• Very successful - sold 27000tpm

• Not sustainable at the price

• Post promotion, the volumes slipped again

• Positive was Rwanda now knew CIMERWA

• Rwanda got to touch and feel CIMERWA

• Clients experienced the superior quality

• Achieved great learnings

• Marketing campaigns, activation events

• Structured to get market intel on end users

• Drove the delivered service model

Critical success factors

Business alignment

• Board, Exco, Sales team

• Realisation that cement does not sell itself

Resource up

• Increased sales reps from 2 to 6

• Internal sales coverage from 07h00 to 20h00

• Offer and manage credit

• Promotions and activation events aligned to strategy

• Reduced factory turnaround time

• Streamlined collection administrative process

• Value prop on a B2B basis for clients

• Branding, storage, technical support,

activation events

Critical success factors

Redefine distributor role

• Let distributor agreements run out

• Transitioned the biggest distributor to a transporter

• Use distributors that support the strategy

• Change rebate table to discourage large buying cooperatives

Critical success factors

Logistics Pricing

• Implemented a TMS (Transport Management System)

• Developed a new corporate transporter

• New trucks

• Fit for purpose

• Developed the local transporter base

• Introduced a dedicated fleet

• Increased cycles from 8 loads per truck per month to

20 loads

• Introduced the virtual warehouse concept

• Inbound synergy

• Radical restructure to rebate table

• Discouraged cooperative buying schemes

• Made it possible for the small retailer to

participate

• Regional pricing on a delivered basis

Critical success factors

Sales & Margin

Direct Relationships

Market Leadership Took Control

Customer Service Reduced costs Reduced Risk

Results