Our pharmacy client was operating with three independent brands in three different linguistic areas of Switzerland which together held a 30% market share. Culturally and procedurally they were struggling with complexity of acquisitions and achieving synergies.
They wanted to develop a consistent category management approach across all three brands that would drive sales and improve margins. They also wanted the central sourcing team to take better advantage of buying synergies. We were asked to help create and implement the new category management approach, with a revised organisation design to support it.
Our work began with deep diagnostics, informing the design of a new category management model, which we piloted in the three brands. We then created a new organisation design and rolled out the new ways of working across the organisation in tandem with the new organisation design.
Carried out in each format, our diagnostics covered the entire category management process, from initial strategy to execution in store. We looked at People (supplier interviews, staff surveys, culture survey and focus interviews), Process (lean process mapping, critical incident reviews and product lifecycle review) and Performance (financial and data analysis). From this analysis we created the story of the strengths and challenges for each brand. Working with cross-functional teams, we developed potential solutions to the challenges. We then fed everything into the design of a new category management model, the core of which was developed at a three-day innovation workshop.
Using one core product area, we trialled the new model across the three brands. The design and implementation of the pilots was underpinned by our proprietary DNA of Change methodology, training client team members in new change skills; challenging and supporting them to think and act differently. Constant collaboration with store and central teams enabled us to design an approach that was both highly effective and sustainable. The rich insights we got from the pilots informed the rollout design.
The new organisation design was also informed by insights from the diagnostics phase, from the brand pilots and from a head office pilot with suppliers. This was an approach tailored to the specific needs of our client. Using our organisation fit model to frame the right questions, we clarified the strategic direction, agreed a vision, created a set of design principles and analysed what was and wasn’t working, where accountabilities should sit, what the options for change were and how best to test them. Only when the structure was defined did we move onto detailed design (job sizing, roles, KPIs, competencies) and detailed planning (sequencing, assessment method, mobilisation plan).
Our pilots highlighted the need for a tailored approach to each of the three brands, which were all at different stages of category management development and which all had different cultural approaches to change. While the end goal was the same for each brand – one category management model and approach – the path to realising it was very different.
The organisation design work relied on a review and redesign of the category management model and a deep understanding of the cultural climate within each brand. Key to achieving this was close collaboration between the commercial and HR functions.
The results were felt across the whole retail value chain; there was far better collaboration with suppliers and therefore better terms with strategic suppliers.
There were significant reductions in product SKUs and suppliers and a sales increase in trial categories. Negotiation and buying for the majority of the range is now managed by a central function. With staff morale greatly improved, we received a lot of anecdotal evidence of improved motivation from stores.