Catching up with Steve Marosi, The Procter & Gamble Company
Because manufacturers are always looking for new ways to influence what occurs in the store, CGT Executive Editor Kara Romanow asks Stephen Marosi, the IT manager of Global Merchandising Solutions for The Procter & Gamble Company, to offer his take on the current state of retail execution. He pinpoints key challenges and opportunities that exist between the manufacturer and retailer, and proposes methods for capturing value from joint business plans. Plus, find out how he thinks software vendors can better deliver value to consumer goods companies.
What keeps you up at night?
MAROSI: Closing the gap between headquarter agreements and store realities: There are still too many losses that chip away at perfect store conditions for the shopper - distribution voids, out of stocks, ghost inventory, and failure to fully execute promotions, displays and planograms. We don't run the stores, but we do share responsibility with the retailer to capture all the value in our joint business plans. It's a complex, multi-faceted problem that will require new levels of focus and investment, but the manufacturers and retailers that get this right will surge ahead of competition.
MAROSI: Closing the gap between headquarter agreements and store realities: There are still too many losses that chip away at perfect store conditions for the shopper - distribution voids, out of stocks, ghost inventory, and failure to fully execute promotions, displays and planograms. We don't run the stores, but we do share responsibility with the retailer to capture all the value in our joint business plans. It's a complex, multi-faceted problem that will require new levels of focus and investment, but the manufacturers and retailers that get this right will surge ahead of competition.
How can manufacturers and retailers better collaborate?
MAROSI: My work for the past five-plus years has been focused on retail execution. Manufacturers and retailers suffer from inconsistent (or, in some cases, non-existent) metrics to gauge success where it matters most - the store, aisle and shelf. We have a huge opportunity to measure how well a store presents and makes available our products - and to reward retailers accordingly. However, we can't fix what we don't measure. Shared, objective metrics on store conditions (or Shopper Based Objectives, if you like) and jointly setting targets will go a long way toward making step-change improvements. It's just a matter of treating the store like any other business area.
MAROSI: My work for the past five-plus years has been focused on retail execution. Manufacturers and retailers suffer from inconsistent (or, in some cases, non-existent) metrics to gauge success where it matters most - the store, aisle and shelf. We have a huge opportunity to measure how well a store presents and makes available our products - and to reward retailers accordingly. However, we can't fix what we don't measure. Shared, objective metrics on store conditions (or Shopper Based Objectives, if you like) and jointly setting targets will go a long way toward making step-change improvements. It's just a matter of treating the store like any other business area.
Based on your experience, what advice can you give to software vendors that are looking to improve offerings to the consumer goods market?
MAROSI: An opportunity for software vendors is to radically change their selling structure. Consider how archaic the current approach is: I can buy software to support my business, but I still have to find a way to host it, install it, test it, deploy it, run it, support it and upgrade it. Those are all distractions from running a consumer goods business. Software vendors can capture a greater slice of revenue and deliver better value to their customers if they provide the entire solution. They can also turn it on in new markets nearly instantaneously. Success stories exist in limited scope (for example, Salesforce.com). But for more complex business models, the approach is not spreading far enough or fast enough.
MAROSI: An opportunity for software vendors is to radically change their selling structure. Consider how archaic the current approach is: I can buy software to support my business, but I still have to find a way to host it, install it, test it, deploy it, run it, support it and upgrade it. Those are all distractions from running a consumer goods business. Software vendors can capture a greater slice of revenue and deliver better value to their customers if they provide the entire solution. They can also turn it on in new markets nearly instantaneously. Success stories exist in limited scope (for example, Salesforce.com). But for more complex business models, the approach is not spreading far enough or fast enough.
What big challenges await consumer goods companies in 2008?
MAROSI: The U.S. economy is under stress in several areas: the weak dollar, credit crises and rising energy costs. That translates into belt tightening for U.S.-headquartered companies and their suppliers. Some vendors are surprised when Procter & Gamble plays a tough role at the negotiating table even on small contracts. Tens or hundreds of thousands seem miniscule compared to billions in annual profits. But the reason successful companies can make profit through economic downturns is exactly by being meticulous with every dollar. The year 2008 will reward innovative approaches to doing more with less. CG
MAROSI: The U.S. economy is under stress in several areas: the weak dollar, credit crises and rising energy costs. That translates into belt tightening for U.S.-headquartered companies and their suppliers. Some vendors are surprised when Procter & Gamble plays a tough role at the negotiating table even on small contracts. Tens or hundreds of thousands seem miniscule compared to billions in annual profits. But the reason successful companies can make profit through economic downturns is exactly by being meticulous with every dollar. The year 2008 will reward innovative approaches to doing more with less. CG