OKLAHOMA CITY -- Fleming Cos. here said it is launching a major drive for new customers now that it has implemented re-engineering standards at more than 40% of its sales base. The new effort appears to signal a drive to improve financial performance at a time when re-engineering is contributing to increased costs and sending results lower. Securities analysts told SN last week the distributor may be delaying a rollout of re-engineering to more regions until it has time to refocus on new accounts to improve financial results after several quarters of disappointments.
Re-engineering programs have been introduced since late 1994 to Fleming customers in the West, Midwest and South, said Shane Boyd, a Fleming spokesman. He declined to specify when re-engineering would be implemented among existing customers in the Upper Midwest, the East and the Northeast.
Fleming's re-engineering is an effort to develop a new approach to selling, installing new systems and changing the company organization to create a more efficient distribution network in close cooperation with manufacturers and retailers. At the center of that effort is the Fleming Flexible Marketing Plan, an approach to wholesale selling that charges retailers Fleming's net acquisition costs for goods, plus the costs
of storage, handling and delivery, and for whatever services they use.
As for the new-customer quest, Fleming has created an organization called New Sales Development that will conduct the drive for additional customers.
That unit will be headed by Phil Kalivoda, formerly director of in-store marketing, who will report to Mark Batenic, senior vice president of the retail sales and marketing group (formerly the customer management group). It will include eight to 10 people with the title of manager of new sales development. Their jobs will be to focus on attracting new business within the company's re-engineered regions "by describing to prospective retailers Fleming's new way of doing business," Boyd said. The effort will be directed at customers who want to use Fleming as either a primary or a secondary supplier. Efforts to attract new customers in areas that have not yet been re-engineered will continue to be conducted by sales managers in each division, Boyd said. The sales effort in the re-engineered areas will be supported by a sustained trade advertising campaign throughout the year, Boyd said.
"In 1996 we will be more aggressive in balancing our re-engineering efforts with the company's financial performance," Boyd said.
Through the first three quarters of fiscal 1996 ended Oct. 7, Fleming's earnings declined 17% due to higher-than-expected re-engineering costs, among other factors, according to company financial statements. While year-to-date sales rose 21% because of the Scrivner acquisition in the prior year, sales for the quarter fell 6%.
Gary Giblen, managing director of Smith Barney, New York, told SN that Fleming apparently plans to slow down the pace of implementing its new marketing plan "because it wants to get profits out of its re-engineering effort before expanding it further." According to Gary Vineberg, a securities analyst with Merrill Lynch, New York, "Fleming has indicated it may slow things down [regarding re-engineering] to defend its bottom line a little better."