How can food product portfolios be standardized?

The standardization of a food product portfolio is a significant change for a company in the food or beverage industry. All the more so if not only a national portfolio is to be standardized, but an international one, and if not only individual products, but also the recipes, the number of ingredients or additives, and if not only the packaging, but also the design or artwork are put to the test. The perspective on this therefore varies greatly, both in individual departments and in the countries in which a manufacturer operates.

As a rule, manufacturing, supply chain and development-related departments are in favour of standardizing and simplifying the portfolio. This is because their focus is very much on the resources to be used for the value creation process. They expect standardization to provide more room for innovation in concept and strategy, but also to improve processes in development and production as well as time-to-market, and ultimately to reduce costs.

In contrast, brandeteers and distributors as well as the parts of the company operating in other countries focus more strongly on consumers and the market: brandeteers and distributors do not want to jeopardize shelf space or sales and want to continue to be able to serve the wishes of niche customers, which is why they often view more complex food portfolios more positively. And the country-specific objection to standardizing the product portfolio, especially in the food and beverage industry, is often:

"I agree with standardization in principle, but everything is different here."

Standardization shakes up decisions from the past and calls into question familiar behaviours. Considerable friction is therefore to be expected. But this friction is positive because it poses two elementary questions:

1. What degree of portfolio standardization makes sense, i.e. creates more benefits than costs?
2. At what point does standardization fail to meet the needs of markets and customers?

In other words, a standardized product portfolio brings the entire company together and challenges many departmental and country-specific convictions. This requires leadership and collaboration in equal measure. A standardization project must therefore be prepared for the diverse challenges and stumbling blocks so that companies can reap the rewards of simplification:

• Understanding and fundamental resistance from many stakeholders
• the attempt to influence decision-makers and stakeholders
• lack of cooperation
• poor preparation of the content of recommendations and decisions
• questioning of the decisions and recommendations
• the attempt, Special treatment
• criticism of non-transparent and incomprehensible communication
• the lack of knowledge and understanding of the benefits of a simplified portfolio

So how should you proceed? to successfully standardize your food portfolio? In my experience, the following seven steps have proven successful:

1. Determine the consequences of portfolio standardization.
2. Communicate the objectives of the project.
3. Define clear responsibilities.
4. Define the project steps for decision-making.
5. Develop the project decisions.
6. Plan the implementation of the project decisions.
7. Control the success of the implementation.

1. Determine the consequences of portfolio standardization.

Ideally, the project starts with a preliminary assessment of the positive consequences that portfolio standardization would have on food or food processing and quality, time-to-market, production costs and growth. The objectives for the project and the strategy for implementing these objectives are derived from this still rough analysis. Experience shows that setting a goal of simplifying the portfolio by 50 percent is not only possible, but also promotes the decision-making process.

2. Communicate the project's goals.

The company management should consistently support the goals and strategy of the project throughout the entire project. Above all, this means communicating the objectives as well as the aforementioned reservations or objections. Ideally, the objectives of the project become part of the objectives of those involved and thus part of their bonus calculation. This ensures that everyone is on board.

3. Define clear responsibilities.

Responsibilities should be clearly defined as early as possible, with roles and responsibilities for stakeholders, decision-makers, project managers, portfolio managers and other project members. After all, portfolio standardization is a challenging project that can only be a success that justifies the resources used if it is clearly structured.

All those responsible must necessarily have the ability to

• carry out clear analyses,
• contribute department-specific expertise and
• listen to others to develop clear recommendations and make decisions.

After all,an understanding of the importance of trust in the project team and

• stamina
• are also essential

• ,
  • to complete all tasks on time,
  • defend correct decisions and
  • coordinate with all parties involved.

4. Define the project steps for decision-making.

The process of the project with its individual project steps must be clearly defined and transparent for all participants. These steps can be roughly marked with the following milestones:

1. Determining the decision criteria
2. Analysis of the portfolio
3. Development of recommendations for portfolio standardization
4. Agreement on portfolio simplification with those responsible for the portfolio

The following questions must always be clarified when defining and describing the individual steps:

• Who has to make what contribution by when?
• How are the stakeholders, the steering committee, the project members and, above all, the portfolio managers informed?

Building trust starts here.

5. Develop project decisions.

The development of project decisions along the above steps usually looks like this:

Determine decision criteria for portfolio standardization

The first step is determining the decision criteria for the intended portfolio standardization. These criteria consist of an answer to the question of what justifies standardization and harmonization of the product, including preliminary products and packaging. This can be used to decide at what point the existing product, whether in terms of the recipe or the ingredients and additives, or the existing primary, secondary or tertiary packaging should be dispensed with.

This point is given if the differences in the portfolio

• were either irrelevant and could therefore be leveled
• or would bring benefits for the consumer, greater than the costs caused by the complexity of the portfolio.

Analyzing the portfolio

The analysis of the existing portfolio is both the most important and the most comprehensive part of the entire standardization project. In accordance with the principle of "quality in - quality out", the quality of the analysis is initially based on the preliminary work of the portfolio managers, i.e. the determination of the current and planned portfolio.

The country managers must be briefed so well that they do not have to spend too much of their time, energy and motivation on providing the portfolio information. Of course, the country portfolios must be available to the project team completely and correctly at the start of the analysis. However, an incomplete briefing would not only be inefficient, but above all would not build confidence.

The basic work of the project team builds on this preparatory work. The project members are challenged to a high degree. They look for answers to questions such as:

• What does the portfolio look like in detail?
• What are the differences and similarities between the country portfolios?
• Which segmentations are suitable for structuring the portfolio?

The scope of these activities depends on the one hand on the objective of the overall project. Another relevant factor is the selection of the portfolio components to be considered, such as products including recipes and ingredients or packaging with design and artwork.

At this stage, it is also a good idea to ask the portfolio managers from the countries about their view of the portfolio and the success factors in their markets - which also creates a side effect of the project that should not be underestimated: new insights into the portfolio as a whole. In some cases, everyone will be able to learn a lot more, and the exchange may also lead to a revision of the decision criteria.

Developing recommendations for portfolio standardization

The third step, the formulation of recommendations for portfolio standardization, is essentially based on the first two milestones, the definition of the decision criteria and the portfolio analysis. Once the portfolio analysis has succeeded in preparing the segmentation of the portfolio in such a target-oriented way that the decision criteria can be easily applied, nothing stands in the way of deriving recommendations for portfolio standardization.

Agreing portfolio simplification

The final challenge is to agree portfolio simplification with the portfolio managers, often marketeers from the countries. This is where the final "oath" is made, which is why this step should be taken with everyone together, i.e. face-to-face.

This has a number of advantages:

• The project management can take the lead in this important step.
• They can demonstrate their expertise and secure their authority.
• She can explain the rules for standardization again and demonstrate them in a comprehensible way.
• Tactical flexibility is also important here, both in terms of the project goals set and the countries' specific willingness to compromise: after all, the aim is to simplify the portfolio, which ultimately has to be supported by everyone. If portfolio managers have justified objections to some of the recommendations, they should not go overboard. Project management can and will also make mistakes. What is needed here is the ability to learn quickly on the part of the project management.

The result of the vote or agreement is the so-called positive list.

In the end, trust in the project management or in the market conformity of the decisions also depends on how the results were achieved: Do the decisions result from a comprehensible derivation from the decision criteria? And were all relevant concerns from the countries at least heard and included in the decision in a comprehensible manner? This is important because this confidence in the quality of the decision has a significant influence on the next step: implementation.

6. Plan the implementation of the project decisions.

Parallel to the definition and development of the new portfolio, i.e. the positive list, the implementation of the project decisions must be planned. This is because the existence of the positive list is only the first, albeit necessary, step in the implementation of portfolio standardization. After all, you can only benefit from the results after successful implementation.

This becomes an independent sub-project with its own concept, strategy and schedule. The project structure must be rethought accordingly and the project participants must be redefined. It is important to separate the following in your mind: the actual decision to standardize the food portfolio and its implementation over time. This involves questions such as

• what is the right way, the right sequence and the right time to implement the individual changes?
• How can the different potentials and interests of supply chain and sales team can be optimally linked?

7. Monitor the success of the implementation.

Now all the relevant decisions have been made: The field has been prepared and the seed has been sown. However, the harvest will only be reaped if the planned progress of the implementation is also monitored and thus ensured. The controlling should be set up along questions such as these:

• Are all those involved, especially those responsible for the portfolio, adhering to the specifications and implementing what they have committed to: in terms of content and time?
• What challenges have come to light during implementation? What solutions can be used to overcome them?
• To what extent are the benefits that were expected from the portfolio standardization strategy materializing?
• Are there perhaps additional advantages?
• How can the experience and expertise that the company will undoubtedly gain from this project be used for other activities?

Some of these qualitative questions can be quantified and fixed in KPIs. Where not, they should be discussed regularly by the project management team.