SAN FRANCISCO -- With its acquisition of Snapple Beverage Corp. days from completion, Quaker Oats assured members of the broker community they remain welcome on its journey to become a customer-focused organization.
"Brokers have and will continue to play a key role in the growth of our beverage business," said Philip A. Marineau, president and chief operating officer of Quaker Oats Co., in words apparently meant to reassure its brokers regarding its planned purchase of a store-door delivered beverage company.
He warned, however, that Quaker's re-engineering under Efficient Consumer Response was proceeding swiftly and, based on his own company's experience, brokers should anticipate costs, both financial and human, as they evolve to keep up.
Marineau made his remarks during a keynote address before the National Food Brokers Association 1994 Convention here Dec. 3. (Last week, Quaker said its tender offer for Snapple was 96% complete.)
"We are transforming our entire go-to-market process to be on the cutting edge of ECR in the food and beverage industry," Marineau told the audience at the convention's general session. "Our goal is to be able to change," he said, adding, "faster than our competitors."
Marineau said Quaker is a solid proponent of ECR. Echoing a theme repeated several times during the convention, he said ECR "aims to maximize consumer and customer satisfaction by eliminating what does not add value, and expanding what does." He urged brokers to evaluate
their own activities in the same way, however painful it may be in the short run.
"What are you doing that adds real value to customers, principals and consumers?" he asked the audience. "What doesn't add value? How can you enhance the value creation activity and eliminate what doesn't add value? How can you demonstrate to your customers that a certain activity has value?"
He continued, "Our own experience convinces me that the broker community cannot expect to change without cost, risk and, yes, pain."
With three years of sometimes painful re-engineering under its belt, Marineau said his company is enjoying positive results from its new business practices.
"At Quaker, we did not realize, at first, how broad and deep the changes would have to be in our company. Now we know that a sweeping effort is required -- a total redesign of our work process. We are engaged in this work redesign right now."
In the initial phases, shifting promotion timing to "de-load" the supply chain caused Quaker to suffer a $100 million hit in revenues, he offered by way of illustration. Under its current demand-driven system, the company has surpassed its initial projection to save $10 million to $15 million annually and regain lost earnings.
"What's more, our productivity gains to date from the change in trade promotion timing have been even better than we initially expected," he added.
Marineau said that Quaker is now involved with 20 customers in continuous replenishment programs, accounting for more than 20% of its volume, a segment which is growing faster than the company's national average. "These CRP efforts cover our entire product line -- not just our fast-moving [stockkeeping units]."
Under its demand-driven supply chain system, he said, "We've significantly reduced inventories and increased product availability. We've improved our overall margins and return on assets. We're also providing fresher product to the consumer."
Quaker also significantly changed the structure of its sales force this summer, eliminating its field sales force and creating instead "a single U.S. grocery team," representing all its SKUs except Gatorade and food service, he said. It also closed 15 existing sales offices at a loss of 300 jobs and established eight customer business centers across the United States, each staffed by a team with cross-functional capabilities.
"We turned to brokers to handle retail store coverage. It is a step that ensures brokers a critical role in our implementation of ECR."
Marineau urged brokers to "accept complexity as a way of life," adding, "Not all customers and principals are changing at the same time or in the same direction."
