A lot has been written recently about changing relationships to support retailers in the ongoing development of private label growth. The changes of in-house brokerages; the introduction of systems and process management solutions to drive efficiency; the changing of trading terms, discounts and other supplemental charges — so much is new. The potential to draw manufacturers closer to the consumer is important, and having consumer feedback directly linked to R&D is a worthwhile ideal. Unfortunately, it is somewhat lofty, to say the least!
If we think of the thousands of SKUs launched by those clever folks at the brand companies, then link that thought to the multiple gazillions of dollars being spent on consumer research to prove the volume potential of all those SKUs, then think about the monitoring companies around the world feeding us all pictures and commentary about those great new products, and then think about the 90+ percent of those SKUs that crash and burn — well, so much for being close to the consumer!
So, what’s a person to do? Clearly, there are a lot of inefficiencies on both sides of the retailer/manufacturer relationship. There are too many firewalls — both system and human.
So we have to be smarter. If we think we will do better by replacing people with systems, we should think again. There is no question that we desperately need to improve our systems. Our project management skill as manufacturers and retailers is woefully slow, inefficient and a huge bureaucratic bottleneck. This means that once we identify a new product to bring to market, we miss the boat by many months most of the time. Certainly, we miss it in terms of potential ROI and replacing the sales of branded products that sell, but at lower margin than what we have in the pipeline.
So, what’s a person to do? One of our clients is asking us to bring three road warriors to the table by telling stories about finding great products around the world. And then by describing how the products got to the shelf. Oh yes, and then by explaining how big the travel budget has to be.
But ultimately, we do need to balance the numbers, the product potential and having the right folks to find these products. Great innovative ideas don’t fall out of trees unless you happen to be standing right underneath. No system in the world replaces the intrepid product explorer. Searching for nuggets — be they electronic or eclectic, functional or flavorful — is a skill that cannot be systematized. But taking out wasteful administrative resources is also a major part of improving the bottom line. Balancing the two is the name of the game. Redeploy resources by all means. But don’t replace people with machines and expect to win.
Don’t think the machine is always the best answer — there’s plenty of proof to show that simply isn’t true. The truth, as always, lies in the gap between. And it’s understanding the way to play in the gap that separates the good from the not-so-good.
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