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Chapter 14 Supermarket Performance Network • 265
being a trustworthy customer. Being a trusted customer lowers the trans-
action costs of doing business, as the supplier feels comfortable with less
stringent monitoring systems, payment agreements, and other control
processes. These lower transaction costs translate into a higher margin.
Managing Joint-Value Relationships
In joint-value relationships, there is no strict customer/supplier
dynamic anymore. Both partners contribute unique characteristics to
codevelop products to a mutual set of customers. Particularly with pri-
vate labels, there is an opportunity to cocreate a unique supermarket
label with products that are not sold elsewhere, effectively lifting a
supermarket label to an A-brand level. Both partners, of course, meas-
ure profit of the joint initiative. From the supermarket’s point of view,
the profit margin should be compared to the margin on other products,
and other suppliers, to optimize the margin of the overall portfolio. The
more successful the partners are with building the private label, the
higher the margin created by asking A-brand prices.
A true measure of success is revenue growth within the product cat-
egory. The private label should substitute for unbranded or lesser-
known brands, and grow its market share within the particular product
group. If the private label introduces a completely new product, that
has no alternative, it is a product group by itself, with 100 percent mar-
ket share. Less market share and other brands entering the market are
good things. They are a validation of the strategy, and all brands col-
lectively grow the overall market.
Next to profit and growth, the partners seek each other’s opinion and
trust. Opinion is not based on customer satisfaction surveys, or any
other once-in-a-while initiative. Opinions are shared continuously on
an operational level, with people working together on a daily basis, as
well as on a managerial level, as a continuous theme through com-
bined management meetings. Trust grows from contractual trust to
goodwill or relationship trust, in which the partners feel that each
would make the right decisions while representing the joint initiative.
Of course both partners have relationship requirements as well, and
the interaction needs to be fast, right, and easy, and the price needs to
be right. Fast interaction leads to a low time to market, and a short time
for interorganizational decision-making processes, ideally as efficient