Customer-Centric Manufacturing Right Approach for P&G

Manufacturers are working overtime to get closer to their customers.

Amid the pressures of global competition, economic uncertainty, and rising customer demands, manufacturing leaders know well that deeper customer insight and stronger connections are essential to success. Not surprisingly, they are investing in customer councils, reference programs, social media, and other methods to gain more and better customer understanding and collaboration.

The reality, however, as Jay Galbraith of USC noted in a recent webinar by Manufacturing Executive, is that organizational structure often gets in the way.

Manufacturers typically organize around products or product groups, with R&D, production, marketing, and sales all tied into product-based P&Ls. New product development is the organizational focal point and product groups seek to maximize market opportunities for their products.

In contrast, as Galbraith and others have explained, customer-centric companies start with customer needs and focus on creating solutions to address those needs. The solutions may include bundles of products and services from the company, additional capabilities and expertise from partners, and a fair degree of customization of standard offerings to meet individual customer needs.

To truly become a customer-centric business, a company needs to do much more than simply listen better. Perhaps most important, according to Galbraith, is rethinking the product-centric organization. It sounds simple, but the best way to ensure customer-centric manufacturing is literally to organize around the customer.

Procter and Gamble is a great example. Beginning about 20 years ago, P&G put a customer team in Bentonville, Arkansas, to get closer to its largest customer, Wal-Mart. Much more than just a sales group, the Wal-Mart team for P&G addresses a full range of product development, supply chain, and marketing and sales issues to ensure that P&G’s entire organization is aligned to Wal-Mart’s needs.

As the benefits to both sides emerged, P&G set up similar business teams for other key customers, including Target, Tesco, and Costco. Today, these front-end customer teams together provide one of the main pillars of P&G’s organization structure, with clear responsibilities for driving product strategy, production, customization, supply and more for each of their largest customers.

The company still has central product groups and other back-end functions, such as marketing and IT, but the customer teams provide a great deal of direction to ensure the company’s overall customer-centric operation.

Organizational structure is certainly not the only aspect of customer-centric manufacturing. Companies still need to shift and improve overall operations in areas such as product design and customization, supply chain management, and analytics. But the way companies are organized says a lot about their priorities. Organization change should never be taken lightly but true alignment with customer needs is a lot more difficult if the boxes on the org chart flow in a different direction.

This entry was posted in Best Practices, Strategy and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s