results of an empirical study among the leading fmcg ... · madrid, october 29, 2003 1 results of...
TRANSCRIPT
1Madrid, October 29, 2003
Results of anempirical studyamong theleading FMCGmanufacturers
International Key AccountManagement –Status and perspectives
2
A. Introduction – I-KAM is one of the hottest topics in the FMCG industry1. Background – Increasing pressure on manufacturers to respond to
retailers' international sourcing demands2. Basis of the study – Strong participation among world's leading FMCG
manufacturersB. Key results of the study – A champions league is emerging
1. Strategic focus – Best practice players focus on opportunities and haveclearly defined international sales strategies
2. Organizational set-up – Best practice players have powerful dedicatedI-KAM teams
C. Outlook – The game is kicked-off, are you prepared?
Contents
33
A.Introduction –I-KAM is one of the hottest topicsin the FMCG industry
44
A.1Background – Increasing pressure onmanufacturers to respond to retailers'international sourcing demands
5
Leading retailers set the rules of the game – sometimesslower than announced, sometimes surprisingly quick
International sourcing developments of retailers (examples)
> Announcement to implement broad cross-country annual negotiationswithin the 4 country clusters led by "Lead buyers"
> 2003, reduction to joint German-Austrian negotiation pilot
> Own distribution of German goods from Ehingen tointernational subsidiaries
> Not even information to suppliers
6
Schlecker is currently the most aggressive player ininternational buying
International sourcing developments of retailers (example Schlecker)
• bought in Germany
• sold in Spain with solelyGerman labeling!
German Henkel product "Sidol":
77
A.2Basis of the study –Strong participation among world's leadingFMCG manufacturers
8
Response rate
The high survey response rate confirms that "I-KAM"is a hot topic in Europe
Outline of the study
TARGETGROUP
> The world's 60 leading consumer goodsmanufacturers
> Interviewees' location: European HQ48%
KEYQUESTIONS
> What do international retailers expect from their suppliers?> What can suppliers expect from international retailers in return?> How can suppliers manage international retailers most efficiently?
STUDYMETHOD AND
PERIOD
> 28 multiple choice questions> Targeted experts interviews before and after written survey> May to August 2003
9
European and US-American companies are both stronglyrepresented in the survey
Participating companies – Origin and regional sales split
GLOBAL HEADQUARTERS OFRESPONDENTS BY REGION [%]
Europe
Rest ofworld
USA
38
10
33
5
10
4
14
6
66
6
7
1
North America
Central/South America
Western Europe
Eastern Europe
Asia/Australia
Africa/rest of world
TOTAL AVERAGE
24
8
52
5
8
3
Average for US companies Average for European companies
54
4
42
REGIONAL SPLIT OF TOTAL SALES [%]
1010
B.
Key results of the study –A champions league
is emerging
1111
B.1
Strategic focus –best practice players
Focus on opportunitiesand have clearly defined
international salesstrategies
12
Growth, improved competitive position and bestpractices transfer are seen as the major opportunities
Perceived opportunities of I-KAMNotimportant
Somewhatimportant Important
Veryimportant
2.4
2.3
2.2
1.8
1.4
1.4
1.3
Improvement of account profitability due tosales increases
Overall sales and market share growth withretailerImprovement of competitive position withretailer (e.g. preferred supplier status)Improvement of business with retailer throughinternational best practice transfer
Retailer support in entering new markets
Improvement of account profitability due torealization of cost synergies with retailerHarmonization of international pricesand terms
13
All companies most fear the reduction of accountprofitability due to I-KAM implementation
Perceived risks of I-KAM
Reduction of account profitability due toadditional terms and conditionsReduction of account profitability due toreduction of net prices
Notimportant
Somewhatimportant Important
Veryimportant
Reduction of account profitability due toretailer volume bundlingIncrease in costs due to growingorganizational complexity
Increase in costs due to necessaryintroduction of new processes and systems
Neglect of local market and business needs
2.3
2.1
1.4
1.1
1.0
0.9
14
7065
5550
4535
302120
10
Retailers mostly aim for additional terms – advancedretailers ask more often for collaboration support
International sales agreements
% OF MANUFACTURERS WITHSIGNED AGREEMENTS
MetroCarrefourAuchanAholdIntermarché
Casino
Wal*Mart/Asda
RETAILER FORM OF MANUFACTURER INVESTMENT [%]
Schlecker
Tesco
Leclerc 10080
10056
5982
5769
5755
Additional terms Int. collaboration projects
20
4441
1843
314345
15
Generally, international sales agreements implysomething in return – and if it is just "peace"
International sales agreements –Types/shares of services offered in return [% of responses1)]
1) Multiple answers possible2) "peace", data exchange, sharing best practice, volume targets
Nothing
13
25
25
30Additional promotions
Additional shelfspace/displays
Internationalcollaboration projects
Other2)
4
96
Development in recent years
Nothing
16
Survey participants rate the counter-performancesto international sales agreements extremely low
International sales agreements – Rating of retailers' services offered in return
Casino1
2 Metro
Carrefour
4 Tesco
Auchan
8 Schlecker
Wal*Mart/Asda6
Ahold
RETAILER
Intermarché
7
9
Poor Satisfactory GoodRANK1.0
0.9
0.9
0.8
0.8
0.6
0.5
0.3
0.2
17
Only five retailers are broadly managed asglobal customers
7958 56
25
13
13
42
8
8 13 218
22 12 13
44
138
5836
13
33
48
26
254
21946
8
17
Account management scope – Top international customers[% of responses]
100% 100% 100% 100% 100% 100% 100% 100%
Carre-four
Metro Wal*Mart/Asda
Ahold Tesco Auchan Inter-marché
CasinoScore1)
1) Weighted average of responses: 1-national, 2-across several countries, 3-across Europe, 4-global
3.6 3.3 3.1 3.1 3.0 2.8 2.4 2.1
National account
Across EuropeGlobal
Across several countries
18
The "second league" of retailers is generally onlymanaged nationally or across several countries
2013
26
14 12
53 64 61 65 5980 71
84 91 86 88
7 4 54 451222
1420
155
3324
23
16
Account management scope – National customers[% of responses]
100% 100% 100% 100% 100% 100% 100% 100%
National account
Across EuropeGlobal
Score1)
1) Weighted average of responses: 1-national, 2-across several countries, 3-across Europe, 4-global
100%100%100%
1.8 1.5 1.5 1.5 1.3 1.1 1.1 1.11.21.31.6Aldi Lidl &
SchwarzSchle-cker
Kruidi-vat
Rewe Leclerc Del-haize
dm Tengel-mann
Edeka/AVA
Boots
Across several countries
19
Company growth targets
Three quarters of the respondents have an detailedoverall sales strategy
Existence and contents of international overall sales strategy[% of responses1)]
1) Multiple answers possible
EXISTENCE CONTENTS
Sales targets
International collaboration projectsAchieving preferred supplier statuswith all I-KAsPromoting innovative initiatives at the I-KAAchieving uniform net pricing/terms/allowances structureAllocating staff resources
Allocating financial resources
72
28
YES
NO
56
50
44
33
13
25
25
301
3
4
5
2
6
7
8
20
Limited scope of clearly defined sales objectives –Planning account profitability is a major goal
Parameters of internal International Key Account planning[% of responses]
48
28
12
20
4
28
0
16
16
28
40
48
44
52
56
68
68
721
2
3
4
5
6
7
8
9
Collaboration projects
Overall sales objectives
Sales objectives per countryHigh-level qualitative account targets(e.g. preferred supplier status)New product launches
Supply chain related objectives
Number of promotions
Account profitability per country
Overall account profitability
TODAY PLANNED
2121
B.2
Organizational set-up –Best practice players
have powerful dedicatedI-KAM teams
22
9
73
10 823
46
238
3-6 7-10 11-14 15-18
The majority of companies focuses on seven to tenretailers as international accounts
Number of internationally managed accounts [% of responses]
Average for European companiesAverage for US companies
23
Retailer's international presence innumerous markets
Top I-KA definition criteria are international executioncapability, future sales potential and broad presence
Retailer's ability to execute inter-national agreements with supplier
Future sales potential with retailer
Your group's actual sales with the retailerExplicit request for internationalcoordination/cross-border skills by retailerFuture profit potential with retailer
Retailer's sales in your category
Top criteria for defining international key accounts
Retailer's total sales
Notimportant
Somewhatimportant Important
Veryimportant
2.4
2.3
2.2
2.0
2.0
1.7
1.7
1.7
1
2
3
4
6
24
35
35
30
Almost 2/3 of participants have a exclusively dedicatedI-KAM resources at least for their major accounts
Allocation of I-KAMs to accounts [% of responses]
DEDICATED I-KAMInternational Management of the I-KA ona full-time basis without additionalnational responsibility for the KA
LEAD COUNTRY I-KAMInternational Management of the I-KAon a part-time basis with additionalnational responsibility for the KA
HYBRID I-KAMMixture of Dedicated and Lead-countryI-KAM model
Retailers usually managed withdedicated I-KAMs in hybrid models:
1
2
3
25
A central I-KAM support department is particularly impor-tant for lead-country I-KAM, but also for dedicated I-KAM
Support functions for I-KAM [% of responses]
22
44
63
DEDICATED I-KAM1
LEAD COUNTRY I-KAM2
HYBRID I-KAM3
EXISTENCE OF I-KAMTEAMS
89
78
63
EXISTENCE OF A CENTRALI-KAM SUPPORT DEPARTMENT
26
A central I-KAM support team has an averageheadcount of 10 managers
Functions allocated to central I-KAM support departments[% of responses1)]
1) Multiple answers possible
BACKUP
20
30
40
40
45
55
55
65
90
Avg. headcount/function if applicable
1.6
2.3
1.4
1.3
6.4
2.5
1.3
1.3
Head of I-KAM
International Sales Coordinator
Int. Trade Terms + Pricing Manager
Sales Controller
International Account Manager
Category Manager
IT support
International marketing support
Logistics support 2.5
Avg. headcount/department
1
2
3
4
5
6
7
8
9
10.2
27
The head of the central I-KAM department mostly reportsto the Global Sales Director
Direct reporting lines to superior functions by organization model –Head of I-KAM [% of responses1)]
1) Multiple answers possible2) Management hierarchy level of Head of I-KAM with regard to Global CEO
REPORTINGLINES
0
33
22
44
22
11
22
44
0
14
14
711
2
3
4
Global Sales Director
Global CEO
Regional CEO
Regional Sales Directorof relevant division
Dedicated I-KAMs Lead-country I-KAMs Hybrid I-KAMs
52
20
20
8
HIERARCHY LEVELOF HEAD OF KAM2)
3rd
2nd
4th
5th
AVG. OF ALLCOMPANIES
28
Overall, I-KAMs mainly report to the head of I-KAM, lead-country I-KAMs mainly to their national SD or the CEO
Direct reporting lines to superior functions by organization model –I-KAMs [% of responses1)]REPORTINGLINES
HIERARCHY LEVELOF HEAD OF KAM2)
AVG. OF ALLCOMPANIES
0
00
0
18
9
9
18
45
7
7
21
36
7
2113
27
13
13
20
13
1 Head of I-KAM/internationalsales department 4th
2 Global Sales Director 3rd
3 National Sales Director inthe home country of KA 7th
4 National CEO in homecountry of KA 5th
5 Regional Sales Director ofrelevant division 4th
6 Global CEO 2nd
7 National head of KAM inhome country of KA 8th
1) Multiple answers possible2) Management hierarchy level of Head of I-KAM with regard to Global CEO
Dedicated I-KAMs Lead-country I-KAMs Hybrid I-KAMs
40
28
32
24
20
12
4
29
Monitoring the overall plan fulfillment and developingthe account strategy is mostly in the hands of the I-KAM
Source: Roland Berger I-KAM study, 2003
33
33
33
63
46
58 42
50
29
54
50
42
Continuously monitoring overall planfulfillment
Elements of customer management process for which the I-KAM is responsible[% of responses1)]
Developing the international customer strategy
Consolidating local objectives (bottom-up) 92%
96%
100%
True for all I-KAMs True for selected I-KAMs1) Multiple answers possible
Planning detailed objectives within thecontext of an international action plan
Monitoring reorganization of specific activitiesof the action plan on the national levelPlanning detailed targets on the basis of thecustomer strategy (top-down)
88%
83%
75%
1
2
3
4
5
6
30
On an international level, I-KAMs have a higher impact,but they still rather set guidelines than issue directives
Business influence of I-KAMs – International [% of responses]
8
25
18
24
38
17
27
33
17
12
32
19
12
21
14
14
25
25
9
10
Receives information Makes suggestions Sets guidelines Approves Issues directives
Overall core1)
2.1
2.0
1.7
1.5
1) Weighted average with 0 � "receives information" and 4 � "issues directives"
International collaboration projects inseveral countries1
National sales targets for internationalsales agreements2
National net pricing corridors3
International marketing activities inseveral countries4
31
On a national level, the I-KAMs can exert most influencein collaboration projects and in pricing issues
Business influence of I-KAMs – National [% of responses]
21
4
8
55
45
38
53
55
25
43
40
18
23
43
21
30
29
35
40
4
27
14
21
15
8
9
8
14
5
5
17
9
4
9
5
1.8
1.7
1.6
1.0
0.9
0.9
0.8
0.6
Receives information Makes suggestions Sets guidelines Approves Issues directives1) Weighted average with 0 � "receives information" and 4 � "issues directives"
Overall core1)
Prices1
Collaboration projects2
Terms and allowances3Delivery guidelines(e.g. minimum order size)4
Listing priorities5
Promotions6
New product launches7
Marketing initiatives8
32
Only 8% of companies do not have task/skills profiles andonly 21% do not provide personal development measures
Task/skill profiles and personal development measures [% of responses1)]
1) Multiple answers possible2) Including personal coaching; Category Management; Language skills
No taskor skillprofiles
92
62
8
TASK AND SKILL PROFILES FORI-KAMS
Detailedtask
profiles
Detailedskill
profiles
Notraining
pro-grams
Strategyand ne-gotia-tion
techniques
Projectmanage-
ment
Businessplan-ning
Pre-sen-tationskills
(Inter-cultural)commu-nication
techniques
Other2)
54 50 46 42 382521
TRAINING PROGRAMS FOR I-KAMS
33
Half of the participating companies have introduced anincentive system for I-KAMs – Main KPI is sales
Incentive system for I-KAM [% of responses1)]
Sales to the retailer
1) Multiple answers possible
EXISTENCE OF INCENTIVESYSTEMS FOR I-KAMs
OBJECTIVES ADDRESSED WITHININCENTIVE SYSTEM
Overall plan fulfillment with the retailerNumber of collaboration projectswith retailer
Achievement of defined initiatives
Account profitability
Customer-specific set of goals
Achievement of defined listing targets
72
28
YES
NO
1
3
4
5
2
6
7
73
53
33
33
27
20
13
3434
C.Outlook –The game is kicked-off,are you prepared?
35
A clear champions league in I-KAM is emerging – wheredo you want to play?
Conclusions – Manufacturer classification
Have clearly defined strategies, efficient structures,processes and systems, excellent people's skills
1 CHAMPIONS LEAGUE
Are committed to I-KAM, but show clear deficitsin the implementation
2 SECOND LEAGUE
Are opponent to retailers' international sourcingand seek to build barriers
3 SPOILSPORTS
36
PEOPLE
Four organizational dimensions determinesuccessful I-KAM
STRUCTURES PROCESSESREPORTS &SYSTEMS
Conclusions – Organizational requirements to manufacturers
WHAT DO/WILL THEACCOUNTS REQUIRE?
WHAT CAN/WILL AMANUFACTURER DELIVER TO
MEET REQUIREMENTS?
HOW CAN THE GAPBETWEEN REQUIREMENTS AND
DELIVERABILITY BE CLOSED?
37
> Delivering results.
38
Phone: +44 (207) 2904845Mobile: +44 (77) 4867 4845e-mail: [email protected]
CHARLES COATES
Partner
We are at your disposal for further questions anddiscussion at any time
Contacts at Roland Berger Strategy Consultants
Phone: +49 (0) 89-9230-8325Mobile: +49 (0) 160-744-8325e-mail: [email protected]
DR. HEINER OLBRICH
Associate Partner