HIDDEN FORCE

David Merrefield

One of the more successful multinational food retailers to be found today is Koninklijke Ahold, Zaandam, the Netherlands. And part of that company's success may be found in the fact that it has moved beyond the realm of being a passive investor. It's now an active sponsor of a global business outlook that calls for conservative but effective intra-unit cooperation.

Ahold, incidentally, is the company of which Fritz Ahlqvist is executive vice president. Fritz Ahlqvist is also chairman of CIES, The Food Business Forum. In the latter capacity, he is to offer the opening address at the CIES Executive Congress, which is to convene June 5 to 7 in Madrid, Spain.

But concerning Ahold itself, let's take a quick look at where and how it operates. Ahold derives nearly half its annual sales revenue -- $14 billion (U.S.) -- from its six chains in the United States. In Europe, Ahold is well-known for its Albert Heijn stores in Holland, as well as its other retailing, wholesaling, specialty store and food production entities in its own country plus Belgium, Portugal, Spain and the Czech Republic. In a section of Ahold's newly issued annual report titled "The Hidden Force of Ahold," it's shown how various cooperative projects at Ahold operating units are under way, of which "first fruits are now being reaped, and will without a doubt become more plentiful in the future."

Here, according to the report, is how it works: Management of each Ahold unit is expected to be autonomous and is held accountable for its own results. But at the same time, groups have been formed at many of the units that are charged with the task of meeting with their like-task peers in other units to talk about good ideas and spread them to other parts of the company where they might be useful.

In the United States, no fewer than 23 "synergy" groups have been formed, spreading good ideas. For example, one Ahold retailing unit that successfully used everyday low pricing talked it up, resulting in another unit picking up the same strategy. Other groups have talked about store brands and how they could be shared across operating units. Finally, Ahold USA is now constructing a central distribution center in Buffalo, N.Y., from which certain nonfood categories will be shipped to all Ahold-owned chains in the United States. In one especially long-distance action, a dough bake-off process that makes the in-store production of baked goods more efficient was developed by Ahold's Albro Bakeries in Holland and put to use by two Ahold food chains in the Unites States. Examples are springing up from other points on the globe, too, as various European units confer with their counterparts on matters such as own-label, logistics, computerization and distribution.

In encouraging actions such as these, Ahold's management shows itself to be a new model for multinational management. That's because it's no longer sufficient to invest cash thrown off by domestic operations in various safe havens elsewhere in the world: The day for enlightened and proactive multinational management aimed at rationalizing investment is called for now.