Operator/Manufacturer Collaboration Model

Posted by IFMA May 01, 2015

Tagged in COEX Leadership Operator Collaboration Model Operator Collaboration Model (OCM)

Many operators and manufacturers wish there was some commonality or level of standardization in their conversations. This theme emerged as IFMA began its comprehensive strategic planning process a year and a half ago. In response, the strategic plan called for creation of the Operator/Manufacturer Collaboration Model (OCM). An OCM Committee finished the first phase of its work and presented their findings at IFMA COEX 2015, which included commentary from OCM Committee Members Bill McClellan from Dawn Foods and Rachel Rushing from Dave & Buster's presented.

KEY TAKEAWAYS

The Operator/Manufacturer Collaboration Model Committee has defined a framework for strengthening partnerships and driving consumer demand. 

Operators and manufacturers often experience disconnects when they discuss potential partnerships. The lack of a common language is a major barrier. Over the last 18 months, the OCM Committee has developed better ways to work together.

The OCM is a best-pCOEX 2015 OCM Pic 2ractice  framework focused on improving
collaboration between chains and manufacturers. The framework provides language, processes, tools, and metrics that operators and suppliers can use to effectively drive consumer demand. This common framework is designed to improve the efficiency of relationships and eliminate non-value-added work. OCM Phase One helps align and segment business partners.

The OCM Committee began its work by defining a fourstep
process:

1. Identify and engage.

2. Build frameworks in areas of situation analysis.

3. Joint business planning.

4. Execution.

OCM Phase One has focused on the first two steps. In the identify and engage phase, companies determine with whom to partner and how to partner, based on operator needs and supplier capabilities. Mr. McClellan and Ms. Rushing described the tools and insights that the committee has developed:

There needs to be mutual understanding up front about the roles that suppliers play and the operators’ strategy."                            − Rachel Rushing

  • Product category roles must be understood before relationships can be solidified. The OCM Committee identified four category roles. Operational enablers, for example, are products necessary for everyday management. Category roles can vary by relationship, however. In one relationship, a product may be an operational enabler, while that same product may be viewed as a differentiator by a different trading partner.
  • The structural cornerstone of the collaboration model is a pyramid. The pyramid shows operators the benefit of segmenting suppliers, aligning the strategy, understanding the degree of collaboration, and identifying where more or fewer resources should be allocated. For manufacturers, the pyramid provides a strategic segmentation model that identifies where companies must improve.
  • Within the pyramid, four types of relationships can be aligned. Each level calls for greater interaction, resources, and commitment.

1. Transactional relationships. The relationship focuses
on product and price. Since the product isn’t differentiated, the price must be competitive.

2. Preferred relationships. The relationship is built on a better product and higher level of service. These are longer-term relationships based on a deeper understanding of each partner’s brands and needs.

3. Collaborative relationships. The partners share insights and develop custom products. This increases the need for organizational resources and multi-tiered contacts.

4. Strategic relationships. Shared risk is spelled out as both parties operate collaboratively. These long-term relationships have moved beyond product, price, and service. They are characterized by total alignment and transparency.

  • The relationship support matrix defines manufacturer and operator involvement. As relationships move from transactional to strategic, the degree of collaboration and resource commitment increases in five areas of business: product, price, promotion, place, and planning. The matrix includes 11 sub-categories in these five areas.
  • Manufacturer and operator scorecards bring the model to life. These scorecards use weighted scales, as well as key metrics, to define relationships and populate the pyramid.

In 2015, OCM Phase Two will focus on joint business
planning.

“OCM Phase One helps with alignment and segmentation of
business partners. On behalf of those on the committee, trust us when we say it really does work.”                         − Bill McClellan

IFMA is offering OCM training sessions. IFMA has organized training sessions to educate both operators and suppliers about implementing and using the OCM to improve efficiencies. Each features interactive workshops and defined ways to incorporate OCM into business practices. Leaders from national chain operators will serve as guest speakers at each training session to
provide an overview of how they have used the OCM to address collaboration challenges. Contact Mike Schwartz, IFMA’s Senior Director, Centers of Excellence, at 312-540-4403 to learn more.

View a PDF of the entire Executive Summary covering Mr. McClellan's and Ms. Rushing's presentation at IFMA's 2015 COEX conference. 

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