Put the shopper at the centre of the manufacturer and retailer relationship. That’s the call of a new white paper from the Global Commerce Initiative (GCI), a voluntary body representing 45 major retailing and manufacturing companies including Wegmans, Safeway, P&G, Coke, Unilever and Smuckers.
In the study, New Ways of Working Together: Preparing Our People for the New World, the GCI argues the consumer goods value chain is plagued by waste and lists a number of key problems.
They include an overabundance of skus, unnecessarily high inventories, persistent out-of-stocks, irrelevant promotions, frustrating shopping experiences, inconsistent category growth and poor buying/selling productivity.
According to the white paper, these problems are caused by goal misalignment, lack of trust and poor information sharing.
“The need for trading partners to radically alter the way they think and work is made all the more acute by the severe economic turmoil wracking the consumer goods industry and driving shoppers themselves to pay more attention than ever not just to the value of what they buy but also to their experiences in the store,” said Mariano Martin, chief customer officer, Procter & Gamble global operations, and co-chair of the New Ways of Working Together project team.
“To remain relevant and financially viable, we need to be working toward common agreed goals using aligned business processes, and our people need to adopt new mindsets that place the shopper at the centre of the manufacturer-retailer relationship.”
The GCI paper, which is available at www.gci-net.org, offers manufacturers and retailers a framework for achieving alignment and commitment on four key strategic choices in the collaboration of trading partners:
Focusing on the consumer through the adoption of the ECR Europe “Jointly Agreed Growth” (JAG) methodology that encourages longer-term business planning and fosters trust;
Connecting business information through the establishment of common goals, common measures and common terminology for manufacturers and retailers;
Preparing people by adopting new organisational structures, success measures and incentive and reward systems to facilitate more effective collaboration along the value chain; and,
Sharing the supply chain by jointly identifying ways to address volatile energy costs and the need for more sustainable business practices.
“Manufacturers are only just starting to think of shoppers in a specific retailer’s store rather than consumers en masse as critical drivers of marketing and category strategy,” said Zygmunt Mierdorf, a member of the management board of Metro Group and project co-chair.
“The fact is we have all focused too long on aligning profit and growth strategies and too little on working together to satisfy the shoppers who will ultimately dictate our success. New Ways of Working Together addresses these and other structural flaws in our existing operating model, which will help us weather today’s storm and succeed over the long-term.”