ACOSTA DOES BATTLE AGAINST DOWNTIME 2004-08-23 (1)

David Merrefield

JACKSONVILLE, Fla. -- "Windshield time is downtime."

That short phrase is a little cryptic, but it holds big meaning. What it means is that time spent by field representatives sitting behind the wheel of an automobile contributes nothing to store coverage.

The aphorism is a favorite of Gary Chartrand, chairman and chief executive officer, Acosta Sales and Marketing Co. here. It's a favorite of his because it goes to the core of one of the key services that Acosta offers the consumer packaged goods industry, namely that it aggregates essential in-store services needed by a number of CPG manufacturers and efficiently deploys labor to execute against them in a way that maximizes in-store time and minimizes wasted motion.

Chartrand told SN in a wide-ranging interview that it seems as though the auguries are favorable for Acosta, one of the largest sales agencies in the nation, to increase the number of CPG manufacturers with which it partners to execute many supply chain functions on a single-source basis.

To be sure, many CPG manufacturers retain -- and will continue to retain -- what they view as strategic functions, such as the customer interface at the buyer level and at store level, too. Yet it's not difficult to predict that many will increasingly decide to seek greater efficiency by outsourcing tactical functions, at least, to a sales agency.

One of the functions that submits most easily to an efficiency quest is in-store fieldwork, work that is typically characterized by a high ratio of motion to activity, Chartrand said.

"When we do field work, we recognize that driving a car doesn't create value. It creates a liability," he said. "So the more time we can spend in the store and the more often we can get to the store, the more we are creating value activities for our manufacturer clients."

The efficient performance of fieldwork on behalf of a number of manufacturers is a reality because of the mass that Acosta has assumed in recent years. Acosta, although headquartered here, has operations throughout the United States and Canada. That fact signals the degree to which the sales agency business has changed in recent years. Chartrand noted that when he started in the business some 22 years ago, there were thousands of food brokers. Now, there are three big sales agencies doing a vast majority of the business. The privately held Acosta has been among the more aggressive companies when it comes to increasing its scale and geographical scope largely by means of acquisition.

"The sales and marketing agency industry has gone through tremendous consolidation over the last five or six years. Now, the three largest agencies do nearly 90% of the business. The other 10% to 12% goes to smaller, regional niche brokers," Chartrand said. "The need to consolidate is something we could see as essential in the late 1990s as retailers continued moving toward central procurement and engaged in their own merger-and-acquisition activity.

"We knew we had to expand nationally to be able to follow customers wherever they went, so that propelled us to build out a national agency, to put us in a position to service, say, Safeway from one coast to the other, or Albertsons through all its divisions, on behalf of manufacturers."

Acosta is still on the acquisition trail. Early in August, Acosta agreed to acquire Reliance Food Brokerage, a Cincinnati-based agency serving the fresh-food sector.

Currently, Acosta represents some 1,300 manufacturer clients that together account for sales at retail of more than $50 billion. Included in Acosta's client roster are manufacturers as large as Nestle, Clorox and Campbell's, down to niche purveyors.

Each client can choose from a variety of services that, according to Chartrand, consists of four core offers:

Headquarters selling: negotiating on behalf of manufacturers by working with key retailers.

Retail fieldwork: in-store work such as section sets and cutting in new products.

Order entry: such as order administration and deduction management.

Information technology: managing information with results such as category management recommendations.

Chartrand pointed out that as is increasingly the case in the sales agency business, any of the services could be obtained by a CPG manufacturer on a stand-alone basis, or in conjunction with other services.

As it happens, he said, many of Acosta's largest clients opt for a full-service array. "We're a little bit unique in this business because 22 of our top 25 clients buy all the services we offer. We do have manufacturer relationships that involve just a particular service. A client may want just category management service, or they may want retail fieldwork only."

Asked if field representation is the aspect of business that could grow the most in the future, Chartrand said that's probably the case. "Certainly, if I were a big CPG company that insourced today, the first place I would look to outsource would be at the field level, not at the customer interface level. So we do think field representation will continue to grow for us," he said.

Field representation is also the point at which investments made by Acosta in increasing its geographical spread together with recent upgrades in its technological sophistication can make a big difference. Here's how, according to Chartrand:

Acosta has sufficient mass to permit vertical retail coverage, meaning an individual field representative specializes in a sole retail brand. A field representative may call on, say, Publix, or Albertsons or Kroger. In any case, an individual representative would specialize in just one retailer.

Sales calls are scripted, meaning by the time a representative arrives at a store, he or she has downloaded to a handheld device a list of tasks that must be accomplished in that store, together with a priority order. At the completion of a day's work, the representative uploads a recap of activities to a central location so a record of what was accomplished on behalf of each account, at each store, can be maintained.

Finally, the fact that representatives have a script involving the interests of several different manufacturers in a single store means a call may take several hours, or up to an entire day, minimizing "windshield time."

When it comes to challenges to Acosta's projected growth strategies, it would seem that Wal-Mart Stores might be the chief one. Not only is the Bentonville, Ark.-based retailer the world's largest, but it is also moving quickly into food retailing. Wal-Mart has made little secret of the fact that it prefers to control its own destiny, which suggests that outsourcing functions to sales agencies would be precluded.

Notwithstanding that, said Chartrand, Acosta has a considerable business with the discounter at the field representation level. Acosta does no headquarters-level selling at Wal-Mart.

"We have a very nice business with Wal-Mart. Service is relegated to the retail field level. We have four vertical teams that work exclusively at Wal-Mart.

"We work closely with Wal-Mart to make sure speed-to-shelf [for new products] is correct, and we use data to understand no-scans in each store to make sure we correct product voids. One of the biggest challenges Wal-Mart presents, since the volumes are so high, is to keep the shelf correctly set and in stock all the time."