The expert’s voice on investments — Alexey Prokhorenko

Alexey Prokhorenko
Alexey Prokhorenko / linkedin.com

The vertically integrated agricultural holding “Ukrprompostach” has been on the Ukrainian market for 25 years. The company has been actively developing its own branded retail chain under the leadership of Alexey Prokhorenko (a founder and CEO of GTInvest) for eight years now. Ten branded stores with innovative software in place, excellent staff, business working like clockwork. The bottom line is the company has created an elite sausage brand and become the best player in the meat processing industry in Ukraine. Stakeholders can monitor the company’s activity and KPIs from a computer or a tablet. Alexey Prokhorenko has talked about how to utilize cutting-edge technologies to streamline the sales of meat products and build a huge distribution chain without losing quality.

- Alexey, what exactly was your role in building a branded retail chain and how quickly did the first results come along?

- We are talking about the development of a conceptual strategy, legal support, implementation of an operational and role-based business model, staff selection and direct management, as well as the company rebranding and brand promotion. We developed a clear plan for each period and took a very responsible attitude to each task: from selection of retail location and space, store design to hiring employees and sourcing equipment. The first results emerged a few months later when customers came up to our branded stores and saw quality products in our new packaging.

- What makes the agricultural holding unique for Ukraine? There are a number of similar businesses out there, but at this enterprise everything is running like clockwork. This is not typical for Ukraine. What are secrets of success and what are strengths of “Ukrprompostach” in the market?

- When I first started working at the company, we already had a time-proven quality product. On the one hand, it is easier, but on the other, it requires tremendous dedication and attention. However, we understood that both the marketing strategy and the business model had to be updated. So, we fine-tuned the reporting system and business management technologies with the help of software. Now it is possible to monitor indicators from anywhere in the world at any time from a computer or a mobile device. Besides, we can monitor not only sales statistics, but also comprehensive analytics with complex and valuable indicators in real time mode. For instance, the purchase order feature streamlines the ordering process by auto suggesting the quantity of products based on past data analysis. A salesperson has the ability to tweak the order if necessary and/or create a special order.

Inbound delivery of goods feature allows to accept goods without paper documents and invoices. The tab already lists the invoices that are about to arrive only on enter products weight into the program.

When it comes to innovations in shopping space, it is only our stores that are equipped with the most advanced scales with weighing accuracy up to a thousandth of a gram. Honesty and accuracy in everything are crucial to us.

Ukrprompostach employees

- Does this solution facilitate work only of C-level or the entire personnel? What other bells-and-whistles are there for your people?

- Sure. It was crucial for us to make sure our employees would spend their working time efficiently. The next challenge was to minimize the human error and to make things easier for a manager to set tasks, supervise and monitor execution.

Creating internal items transfer (with filling in quantity and weight) is done without paper, stamps and other hassle. It only takes to create an order to move the required products from one store to another. The weight and quantity of goods are also entered there.

Stock Balance feature allows users to see the products balance real-time in any store. The stock balance can be filtered by properties.

The log in to the program in a store is done by two users: employees of the first and second shift. All data entries are saved in history, and all data inputs can be traced back in case of emergency.

- Did you develop tailored IT solutions specifically for Ukrprompostach or purchased out-of-the-box software?

- There were no ready-made solutions that would meet our requirements on the market back then. Furthermore, we are consistently refining our accounting system to meet our ever-growing requirements. Now we are testing an artificial intelligence application. It is supposed to enable us to forecast the demand for products three days in advance and simplify the stocktaking. When salespeople are involved in this process, it is not error-proof.

The human factor comes into play: people can make mistakes, enter data in the wrong column, and it takes at least a day to find an error. Besides, the stocktaking process is also optimized. At the end of each shift, the entire inventory is entered into the program, after which the chief accountant checks all the data. Then the data are exported into related financial programs. Unlike papers, our software allows you to avoid inaccuracies and quickly search products by category.

The Traffic Lights feature is very handy for sales staff and for the backoffice. When entering the stock balance, the program displays the accuracy of the data, highlighting a small gap in yellow, and a very large gap in red colors.

Each product has its own unit of measurement (gram, kilogram, piece, liter). These data are recorded upon the receipt of the items. The sales stats are displayed by weight, allowing for the inaccuracy of product properties due to moisture and meat cutoffs.

Any business must develop continuously. If it makes no headway and shows no improvement, everything gradually falls into decline.

- What can you say about your team, the people you have to work with?

- Large-scale project is not a one-man show, although a bold decision of a single person is enough to get off the ground. When though existing technologies allow us to function faster and efficiently, but the greatest asset is our people. Personal qualities of an employee are essential to me, regardless of whether he/she works in the marketing, accounting department or sales. Honest and positive people are vital to a great team vibe and are an integral element of success. We pay a lot of attention to the staff selection. And it is vital that colleagues share values ​​of our company, adopt new things easily and grow with us.

- How do you motivate and incentivize your salesforce? What compensation system is put in place?

- Our software calculates bonuses based on daily sales metrics. On top of that employees in stores rated 1st, 2nd and 3rd get an extra bonus. The formula implies quantity of items plus product weight devided by the number of baskets.

- In Ukraine, there is a very large market for meat products. How do you attract your customers?

- The market is large, but quality goods are not abundant. People often do not believe that sausages can be of high quality, because many unethical producers have flooded the market with low-quality goods. Our assortment includes elite dry-cured sausages made from 100% meat. Some of the items that customers love can only be found in our stores. When it comes to trade in branded stores, our main edge is the freshest meat delivered directly from the manufacturing facilities. Our vertical integration ensures consistently high quality of all our products. Unlike supermarkets, a customer at our stores must have no doubts that all products are fresh.

- What about the marketing campaign: what is your strategy and what activities do you opt for?

- We tend to play for a long time rather than bothering customers with annoying special offers on TV screens or billboards. At the stage of opening a store we did use flyers, announcements, videos, but then customer reviews and word of mouth took over. We run social media with over 60.000 subscribers, talk about our products, show how different types of meat and sausages differ, and why buying natural food is healthier. All this resonates with buyers and encourages them to recommend us.

Store design

- Tell us about your store design. What are the key principles and how many efforts have been put in this project?

- The main principle in design was modesty to make it understandable for our buyer. An interior with flashy details where a visitor’s attention is captivated by our products.

- What is your daily production output and how many product types are on sale?

- About 20 tons of products and more than 100 types of meat types.

- Is it possible for a foreign investor to set up the same successful business in Ukraine with the help of GTInvest and what does it involve?

- We help investors choose the best business model, handle legal issues, develop a strategy and launch marketing campaign. Sure thing, if we make commitments, then we tackle all the tasks set by an investor. We already have positive experience, knowledge and credibility in this area. We aim at long-term partnerships based on trust free of corruption. Business transparency and comprehensibility is one of our core principles. If an investor shares these values, then we will make a good team.

- What would you recommend to those considering to open a business in Ukraine, but are still wary of local realities, judicial system imperfection and other issues?

- Ukraine has an excellent labor potential, inexpensive raw materials and a relatively easy procedure for starting a new business. Moreover, our government have been taking solid steps towards investors by improving tax legislation and the judicial system. It is investor’s decision what standards and approach to apply. At Ukrpromstach, we initially set a high bar for ourselves, working according to international standards. I am sure that in any endeavor, alongside the idea, the main thing is the business system. And in Ukraine there are opportunities to implement a great deal of ideas.

CEO of GTInvest