Following the 2008 global financial crisis, it took until 2012 for universities to acknowledge that changes were required in the teaching of economics. Ha-Joon Chang, a developmental economist who teaches at Cambridge, remembers “students banging on my door, saying, ‘There’s the biggest financial crisis since 1929 going on around us and our professors teach as if nothing has happened.’”
Whilst universities are attempting to play catch-up, it is perhaps time for NAMs and their leaders to acknowledge that, eight unprecedented years on, the time has come to recast the National Account Management model to reflect current market realities…
We hardly need reminding that we are living in a post-crash market where supplier and retailer profitability has shrunk to unprecedented lows, where at least 20% of large retailing space is redundant, where 20% of a grocer’s products account for 80% of sales, dependent on retailers that are locked into 50 year shelf-life (2% annual depreciation) brick & mortar outlets while the ground continues to respond to seismic shifts beneath them, under an Amazonian sky. This new world cannot continue to sustain stakeholders that persist in operating in business-as-usual mode…
In the middle sits the NAM, potentially more influential than ever before…with integrity and credibility now their key attributes. As a business manager of a retail business unit, a NAM has to be responsible for all aspects of the supplier-retailer relationship, albeit in a radically changed business environment.
More than ever before, the NAM role needs light-touch co-ordination of a multifunctional, multilevel team, each member operating to varying degrees of their differing agendas, many of whom are equally confused by unprecedented development – or lack of it – in a market that continues to evolve seemingly independently of traditional forces.
Given that these functionaries all speak Finance – the only language in common for all business functions, supplier and retailer – it is vital that the post-crash NAM be able to identify the cost and value implications of every aspect of the supplier-retailer business relationship.
Whilst every supplier-retailer discipline has become so complex that functional experts are required to optimise each aspect of the relationship, nothing beats having one brain responsible for the entire package, a dedicated individual that never forgets the knock-on impact of any business function on other parts of the mix in the search for optimum profitability.
Moreover, given that the role continues to be one of total responsibility without designated authority – thereby lessening the potential threat to other job-functions – the NAM, as the company’s information expert on every aspect of the supplier-retailer relationship, wins authority by gaining approval of, and delivering planned results of realistic trade strategies, all by persuasion in both organisations. In practice, this means helping colleagues see personal benefits in every initiative, by identifying their functional needs, anticipating and overcoming their possible objections, involving them in the negotiating process, and giving team members full credit for any progress with the customer, all within a realistic acceptance of the changed market. The NAM’s reward can be increased authority each time the process is repeated…
A bit like dealing with a buyer, when you think about it… In other words, the NAM develops her real-world selling and negotiation skills by optimising colleague output in this way, in readiness for applying the enhanced skill-set with the buyer.
What has changed is the need to place these basic skills with a real-world context that resulted from the 2008 financial crisis. This means accepting and appreciating the implications of flat-line demand, where any growth has to be at the expense of the competitor, at least over the mid-term, hopefully. We need to know the positive bottom-line impact of waste-reduction, albeit at the expense of top line sales, needing to help identify and support the reduction of buffer-stock and over-lap by calculating the financing cost of any stock on its way to a consumer.
We need to appreciate the additional pressures on a buyer of having to live with a 2.5% margin instead of the 5% that was common before 2008, while suppliers, having suffered margin erosion from 6.5% to 5%, margins that are still double that of a retailer. Of course there are defensible reasons for the difference, but we now need to be able to explain and relate that difference to the buyer’s retail business model.
In practice, the NAM role has morphed into that of business consultant to the customer, with the main attribute, apart from a panoramic view of the market, being integrity and credibility in combining our breadth of vision with the very specific in-depth but narrow perspective of the buyer, to their mutual benefit….
