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- What is global account management?
- The transition curve of global account management
- Greater polarisation of retailers and suppliers
What is global account management?
Global account management emerged as a major topic for the grocery industry in 1999/2000, as a direct consequence of an acceleration of retailers’ international expansion. Since then, it has been evolving and rapidly gathering pace, and today most of the leading multinational suppliers have set up a global account management team to service global trading relationships with their key accounts.
These teams manage the key retailers on a top-to-top basis, negotiate international contracts with retailers and look to create a more co-ordinated business-wide approach towards these customers across all markets.
There are two key aspects to global account management:
- The term global account management itself can be defined as the internal account management structure that facilitates international best practice transfer and customer knowledge within a supplier.
- The global trading relationship between a supplier and a retailer on an international level, where both parties have dedicated resources to manage the relationship.
The transition curve of global account management
As with any change that a company has to undergo, the implementation of global account management can be mapped out on a transition curve. Our research has revealed that there are many common actions and re-actions which a supplier engages in over this period of evolution.
Although on average, suppliers will allow five years to reach a point where they feel they are effectively managing their key accounts globally, there is no set time frame which covers the full extent of the learning curve, indeed the end stage is only a viable option for a handful of suppliers.
The speed at which suppliers will travel along the transition curve will also vary considerably. The factors governing this can include:
- Size of the company
- Level of support from the Board
- Financial resources supporting global account management
- Level of decentralisation
- Expansion history of supplier (acquisition or organic growth)
- Company culture
The five stages of development that most global suppliers will go through, whilst establishing global account management are summarised as follows:
Transition curve of global account management
Source: IGD Research
Greater polarisation of retailers and suppliers
Our research indicates that global trading relationships will continue to evolve as both retailers and suppliers decide how to develop their strategies. We believe that there will be a greater polarisation of retailers and suppliers in the area of global account management in the future. As a result, we have used the transition curve to developed three future scenarios of global account management:
- Back-tracking
- Focus on facilitation
- Moving to the next stage
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Back-tracking |
Focus on facilitation |
Moving to the next stage |
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A number of retailers and suppliers will decide that global account/customer management is not the right solution for their business. They will 'back track' on the transition curve and pursue a strategy which does not involve negotiating on a global level. |
Some retailers and suppliers will continue to have global relationships but the main focus will be on facilitating negotiations at a local level, sharing best practice and
developing a coherent approach rather than focusing on meeting specific financial objectives. |
A small number of retailers and suppliers will move to a new stage on the transition curve. In this stage, the range and scope of collaborative projects will increase and there will be greater pressure on suppliers to negotiate trading terms, at least at a regional level. |
It should be noted that these scenarios are not mutually exclusive. A given retailer or supplier may follow a different scenario with different categories of trading partners.
In order to be successful, global account management must be part of a company’s long term vision and be closely linked to its strategy and culture. It often takes several years for suppliers to develop an efficient global account management team and to reap all the rewards associated with global account management. In turn, there are obstacles that retailers need to overcome to make global supplier management a success, and where suppliers decide that it is not the right solution for their business, they may need to offer an alternative way of working.
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