SAN FRANCISCO -- Supervalu's chief executive officer is urging retailers to engage in greater collaboration with each other and their trading partners to compete against super-efficient supply chain leaders such as Wal-Mart Stores.
Giving the opening keynote address at Food Marketing Institute's 2005 Distribution Conference at the Omni San Francisco Hotel last week, Jeff Noddle urged collaboration in supply chain initiatives like data synchronization, and for logistics processes like backhaul.
"Technology will take us to a certain level, but at Supervalu we believe that to get to the next level [of efficiency] requires a lot more collaboration in the industry than we've ever had before," he said. "If as an industry we can have better collaboration and savings that aren't just the result of shifted costs, but costs that have been eliminated, we can better compete against Wal-Mart in our local markets."
Noddle bemoaned the costly inefficiencies that have resulted from the lack of collaborative efforts in the past. "If I went around this room and added up every dollar that's been invested in just logistics and supply chain and transportation technology over the last 10 years, I would venture to say it's in the billions. We can't continue to replicate all of that technology across the industry time after time."
He specifically cited investment in the Global Data Synchronization Network. "One of the things that we as a food industry did that continues to befuddle me is in the last 10 years we invested well over $1 billion dollars in [data pools] and trying to get to a single database," said Noddle. "Probably 80% of that investment we threw down the sewer because we couldn't get the collaboration worldwide that was envisioned."
Supervalu's chairman also stressed the need to work with manufacturers to improve backhaul of freight.
"At the FMI Midwinter conference, I made a plea to reinstitute a look at backhaul because at least in our numbers our backhaul revenues are down in the face of tremendously rising fuel and labor costs and a truck shortage in many parts of the country," Noddle said. "We're running empty trailers around, yet the manufacturers are paying premiums to get freight moved." Minneapolis-based Supervalu, he added, has asked for a study of how backhaul can be improved.
Noddle said he sees collaborative opportunities for Supervalu as a result of its focus on third-party logistics through its Advantage Logistics division and its recently acquired third-party logistics provider, Total Logistics.
"A lot of analysts who lovingly write about our industry were scratching their heads about this [acquisition], but I'll try to unscratch it for them," said Noddle. "We've invested in a logistics company to see if we can get ourselves into a position of broader thinking. [Supervalu] wants to share some of our [supply chain] competencies more broadly in the food business if we can, outside [the food retail industry] as well."
Noddle also referred to Supervalu's vendor and retailer online portal, SVHarbor, which will be adding new-item introduction to its array of vendor services (see story, Page 53).
"Our main objective with the portal is to rid the business of absolutely all of its paper," he said. "We've gone online with ordering, pricing and promotions. The Harbor allows retailers to see the status of their invoices and orders. We've moved almost all of our functionality to Supervalu Harbor and we're bringing a lot of new functionality on this year."
A focus on short-term goals may be inhibiting collaboration, according to Noddle. "All of us, myself included, are engaged in short-term goals and objectives," he said. "We're incented to find ways to make the next quarter's and the next year's goals. I think that sometimes that gets in the way of real collaboration."