We all like to eat cheese from a local region, eat an apple from a neighborhood farm or drink wine from a favorite winery. That’s why, historically, food and beverage companies have a strong local foot print. However, today, many medium size food and beverage manufacturers grow outside of their country or continent by building new plants or more often by “merger & acquisitions” of other local companies. That’s one of the results of the globalization and product margin reduction.
Typically food and beverage manufacturers come to a new place with their OEM and System Integrator partners in order to reduce the project risks, maintain a high level of standardization and more importantly, maintain the trust and benefits of the partnership.
In such an environment, OEMs have the opportunity to export their machines into areas of the globe that they may have little or no service capabilities. Here comes the dilemma…
– Should the OEM take the order, keep the relationship and trust of the manufacturing end user but face the risk of maintenance response time and cost issues
– Should the OEM refuse the order, jeopardize the relationship and trust of the manufacturing end user but reduce the after sales risks?
In today’s struggling economy, this can be a very difficult question.
I have so many examples in mind:
– An Italian OEM selling a machine into Indonesia. When a small piece of electronics breaks, how long would it take to get there with the replacement part and get the machine back on line? As long as this machine is down, the complete production process is stopped …
– A New Zealand OEM wanting to enter into the South America, China and Russia market, but they don’t have the infrastructure in place to know how to do business there or who to contact quickly for spare parts.
– A German OEM that has to revamp an old machine in Australia. Using local integrators can help reduce the cost, but how do they know who are trusted and qualified local integrators?
One possible solution is to build a joint business support agreement between an OEM and a large international technology provider. Some call this a MOU (Memorandum Of Understanding) that can be implemented worldwide by the 2 parties. Benefits of such an agreement could offer a win win for both parties such as:
– The technology supplier will provide easy access to the local distributor and his own stock immediately
– Basic End User maintenance at the request of the OEM will be operated by the technology supplier on behalf of the OEM and charged back (full transparency for the end user manufacturer)
– The technology partner will involve the OEM in roadmap and field test processes for him to benefit from the very latest technologies
– Multi form business development information will be shared
– In case of any issues, an agreed upon “C Level” sponsor will be there to smooth the way.
Obviously, such an agreement would not include “exclusivity” because the real world does not allow for such a dream. This would be just a “very preferred” partnership agreement.
According to your experience, does this type of initiative make sense to you? If so, in what form do you envision this type of business partnership?