New Standards to Bear

The pride you once took in doing things your own special way may now be your own undoing. Standards, the common agreement on how things can and should be, are flooding your world. Fond nostalgic war stories aren’t too impressive if your listeners respond with, “Gee, I didn’t know humans actually had to do that! Every time you did a co-marketing event you had to get on a plane and fly all the way to Bentonville? Whoa, how pre-2K!”

If you’re comfortable enough to rest on your years of training and experience, don’t get too cozy. You may want to do some extra reading and surfing. Here are a couple of things to watch.

The 10 MILLION-Pound Gorillas:

Here come trading exchanges. Buyers bundled by the Web are joining forces in massive communities to smooth out the mundane transaction process. Sixty-six major manufacturers have combined their collective buying power to make things cheaper through eCPG.net. If your company makes something that is available in at least two supermarket aisles, then you’re probably involved.

Retailers are combining their own already formidable weight. Food Marketing Institute and Food Distributors International have formed their own trading exchange for goods and services.

The UCC (Uniform Code Council) are those folks who make the UPC rules and other transaction sets. (Not everyone thinks common coding and standards are important. Try deducting your hard-to-handle coupon fees from your agency’s creative bill and see how fast the art directors get fluent in EAN-128 standards!) UCC is going live with UCCnet. Its vision: “Be a global, independent organization to operate an open, standards-based industry Net-market where all manufacturers (that means you) and their partners (that also means you) can participate.”

Then there’s the group that has one territory: planet earth. Global Net Xchange is part of the Global Commerce Initiative (GCI) that plans to unify the global supply chain and all its participants with – you guessed it – new standards. Its charter? Create “a new level of efficiency, effectiveness, and consumer value through co-operation between manufacturers and retailers operating at the global level.”

Vendors and suppliers should be piling up sandbags for the first tsunami of clout that hits their category. Although most exchanges are initially focused on smoothing out the supply chain and delivering common pricing and item information, the big picture includes advertising and media. That’s the category the IT guys put promotion in.

What’s the Score?

Current wasteful practices need new standards too. Trade promotion, that huge unchartable sea of funds, has most manufacturers in denial. Even when it can be managed, there is still no real benchmark for performance.

“The fundamental issue with trade promotion is the lack of a common set of objectives, measures, and actions to allow the business system to maximize profitability,” says Jim Hertel, founder of DSC, a Winnetka, IL-based integrated information service provider.

“In many CPG companies, trade promotion funds are controlled by conservative brand marketers who respond to volume-oriented sales managers who are often measured on meeting case quotas. Marketers hesitate to challenge the conventional wisdom.” Relying on conventional wisdom without challenging it is an easy way to attach an anchor to your career.

Hertel sees a need for new evaluation standards. “Creating a scoring system will allow retailers to `equivalize’ manufacturer trade programs based on their ability to contribute category margin growth. Manufacturers’ fact-based selling efforts stress the consumer `pull’ exerted by their brands as rationale for merchandising support,” he says. “Retailers have no objective way to measure the difference between two national-brand promotion programs. Such a scoring system will facilitate better decision-making by both retailers and manufacturers.”

Your own event, evaluated against your own proprietary set of measures, won’t mean much. Grading on a curve could be the new standard.

Why is this happening? The overriding business philosophy has a lot to do with the wise adage of a kindergarten sandbox monitor: “It’s nice to share.” Not because people are getting nicer, but because they have to survive. Once, owning the entire value chain was power; now it’s close to stupidity.

And don’t be fooled by the technology. It isn’t making the change; it’s only the enabler. Someone still has to turn the computer on.

If you’re bored, then realize that there are only two types of people who don’t have to bother with this stuff: true creative geniuses, and drones destined to be replaced by a button. If you fall, like I do, in the vast 99 percent between these poles, then buy into these new standards.

Or better yet, help make them.