Finally, as global retailers push for global pricing, manufacturers will have little choice but to restructure their operations in order to develop globally competitive cross-border supply chains. Many "national" factories and warehouses lose their rationale for existence.
A difficult and painful transformation relates to Organisational Structure. The objective is to present a single face to the global customer despite multiple points of contact. Companies tend to choose one of three organisational orientations. First, some companies give primacy to the country organisation. For example, Coca Cola started and subsequently disbanded their European account management. In spite of being an international brand, bottlers in individual countries are independent companies and operate autonomously.
A second, and probably the most frequently employed, is a balanced approach where the local account manager reports to both the local country manager as well as the global account manager. Finally, a more recent structure is where global account managers have the power since it is believed that global customers are more important than any local sales. The company is therefore organised around powerful global customers. Regardless of orientation, most firms are moving to set up global customer development teams. These teams have representation from different functions, business units and countries. Their responsibilities include understanding the global retail customer's strategy, developing the joint P&G/customer business plan, and coordinating with the Global Business Units and the country organisations to deliver against the agreed joint customer plan.
The coordination demands on the supplier's global customer team are extremely onerous. The various functions, business units and country organisations have to be synchronised through common goals, information and compensation. Coordination is achieved through co-location, composition, and compensation.
There are advantages in being located next to the global headquarters of the retailer, Perhaps most important is the access and daily contact which helps build relationships at the individual level which then spiral up into a stronger relationship between the supplier and customer.
The composition of global account management teams is an important issue. Who should lead it? Who should be on it? What skills are important? While we have excellent moods within companies for allocating resources to investment opportunities, we are still struggling to learn how to best allocate people to teams.
Most companies still link customer team compensation to volume. Increasingly, suppliers are being asked to take some responsibility for the retailer's margins and profitability on the supplier's products. As one customer business development manager observed: "For years" we used to say, 'margins are not our problems, they are your problems' ... Now we are saying, 'we are accountable for that'.
Global retailers will continue to power ahead. To be successful, manufacturers will have to learn to work effectively with them. Clearly, the best approach is to develop strong brands that consumers demand and, as a result, have to be Stocked and supported by retailers. However; even those suppliers who achieve this will still have to work hard to control their channels.
A difficult and painful transformation relates to Organisational Structure. The objective is to present a single face to the global customer despite multiple points of contact. Companies tend to choose one of three organisational orientations. First, some companies give primacy to the country organisation. For example, Coca Cola started and subsequently disbanded their European account management. In spite of being an international brand, bottlers in individual countries are independent companies and operate autonomously.
A second, and probably the most frequently employed, is a balanced approach where the local account manager reports to both the local country manager as well as the global account manager. Finally, a more recent structure is where global account managers have the power since it is believed that global customers are more important than any local sales. The company is therefore organised around powerful global customers. Regardless of orientation, most firms are moving to set up global customer development teams. These teams have representation from different functions, business units and countries. Their responsibilities include understanding the global retail customer's strategy, developing the joint P&G/customer business plan, and coordinating with the Global Business Units and the country organisations to deliver against the agreed joint customer plan.
The coordination demands on the supplier's global customer team are extremely onerous. The various functions, business units and country organisations have to be synchronised through common goals, information and compensation. Coordination is achieved through co-location, composition, and compensation.
There are advantages in being located next to the global headquarters of the retailer, Perhaps most important is the access and daily contact which helps build relationships at the individual level which then spiral up into a stronger relationship between the supplier and customer.
The composition of global account management teams is an important issue. Who should lead it? Who should be on it? What skills are important? While we have excellent moods within companies for allocating resources to investment opportunities, we are still struggling to learn how to best allocate people to teams.
Most companies still link customer team compensation to volume. Increasingly, suppliers are being asked to take some responsibility for the retailer's margins and profitability on the supplier's products. As one customer business development manager observed: "For years" we used to say, 'margins are not our problems, they are your problems' ... Now we are saying, 'we are accountable for that'.
Global retailers will continue to power ahead. To be successful, manufacturers will have to learn to work effectively with them. Clearly, the best approach is to develop strong brands that consumers demand and, as a result, have to be Stocked and supported by retailers. However; even those suppliers who achieve this will still have to work hard to control their channels.
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