Operator/Manufacturer Collaboration Model (OCM): Relationship Pyramid
Posted by IFMA January 30, 2015
What if there was some commonality or level of standardization in the "conversation" between the chain operator and manufacturer? While the Full Plate (TM) process focuses on collaboration between manufacturer and distributor to support the independent operator, a need existed to develop a similar framework between the manufacturer and chain account.
Similar to the Full Plate(TM) process, alignment is critical before continuing business conversations. The first step of OCM is determining the product category role, as manufacturers need to understand the role they are playing in an operator's units up front. The operator/manufacturer relationship varies greatly between operational enabler and differentiator or core and seasonal/LTO.
After a chain and manufacturer agree on alignment, discussions begin on where they fit on each other's "pyramid". This pyramid has become the structural cornerstone and can be viewed from both the operator and manufacturer perspective. As referenced on slide 5, there are four types of relationships outlined in this pyramid. One step is not necessarily "better" than another since realistically, every partnership can not - nor should be - running at the highest level.
- Transactional: The first level is a basic or transactional relationship. The basis of this relationship focuses on product and price; the product is not differentiated and the price has to be competitive. There are limited contact points and the relationship can be relatively short term.
- Preferred: This relationship is built on a good (or often better) product, a solid value for the money and a higher level of service. These relationships are longer term and have a deeper understanding of each partners' brands and needs.
- Collaborative: In this relationship, insights are shared, multiple contact points are engaged and custom products may be developed, thus increasing the need for organizational resources and multi-tiered contacts.
- Strategic: The top level of the pyramid is Strategic. These are typically long-term relationships with multiple people assigned. Risk and reward are explicitly defined for both the operator and manufacturer. This relationship has moved beyond strictly product, price and service; rather, it is characterized by alignment and transparency.
Learn how to utilize the OCM within your organization! IFMA is currently offering training sessions. For more information on an upcoming training and how to register, click here or contact Mike Schwartz, Director of Insights & Best Practices.