FOCUS 7 4. Improve capability
In many cases, execution across European CPG businesses has been poor. On Time in Full (OTIF) performance across Marketing and R&D activity is often low and initiatives aimed at improvement have had little impact. Cost-reduction programmes, while well intended, often fail to deliver expected benefi ts and costs often creep back in through a lack of consideration for how these initiatives will be sustained over the long term.
Having the right people in the right place is fundamental to the success of any strategy, but never more so than when faced with challenges like those currently in Europe. To succeed in this environment, organisations must invest in acquiring and developing the right talent to win. This will require not only investing in the training necessary to align individuals’ capabilities with requirements, but also leveraging best practices and talent across the region. It will also require investing in new capability that can take advantage of data analytics and the impact of the digital landscape. Centres of expertise for skills that are common across all markets not only helps to reduce costs through operational synergies, but also ensures that common ways of working and best practices are deployed consistently across the region.
As current Developing and Emerging markets mature and begin to face similar challenges those faced in Europe, the experience and capability developed by European divisions now may also prove to be a key differentiator in supporting those markets address those challenges and continue to succeed in years to come.
5. Optimise for Europe as a whole
The federated nature of the European market means that the natural tendency of corporations is to make decisions, allocate resources and manage the P&L in a way that aims to maximise the performance of each individual market. While this may sound sensible, the consequence is that resources are often allocated to products and campaigns that, although signifi cant to an individual market, have little impact on the overall performance of the region.
Winning in this new growth-constrained reality will require organisations to change their way of thinking and operate under the principle that they must optimise for Europe as a whole and not country-by-country. In this environment, it is critical that organisations have the ability to expand categories, drive premiumisation of product and maximise the mix of portfolio at an aggregate level. Only by optimising for Europe as a whole will they be able to support the initiatives that actually make a difference and deliver the top line and margin growth that shareholders demand.
Achieving this will require a review of current governance processes and structures, and aggregating decision-making at the right level within the organisation to manage the trade- offs associated with placing fewer, bigger bets. Taking this approach will inevitably create winners and losers, with some markets losing some of the investment that has been so important to their growth in the past. It will also require a different way of thinking and managing the P&L, one that recognises that in modern, matrix organisations there
© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
can no longer be a single point of accountability for the entire income statement. It is more important for each line in the P&L to be managed at the right level in the organisation in order to maximise results.
EXISTING REGIONAL STRUCTURES DO NOT ALLOW DECISION-MAKING TO EFFECTIVELY OPTIMISE FOR EUROPE AS A WHOLE – RATHER THEY ARE TOO OFTEN CONSOLIDATION POINTS WITH LIMITED INFLUENCE AND ABILITY TO DRIVE COMPETITION-BEATING PERFORMANCE.”
Dr Mona K Bitar, Director, Strategy Group
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