DUSSELDORF, Germany — The industry stood on the verge last week of entering a new era of trade association cooperation as the first of three groups voted on whether to align itself into a new entity designed to set global priorities and standards to help everyone operate more efficiently.
If the new organization gets the go-ahead and is actually in place by next year, it is likely to share its ideas for more effective and efficient global trade practices by cascading those ideas into various regions of the world, including North America, an industry source told SN.
“It's a matter of trying to find better, more effective and more efficient ways to operate,” he explained.
“This will not be an effort to tell other associations what to do, but an attempt to find ways where it makes sense for the industry to deliver better results using the guiding principles of the new entity.”
The three groups that will vote the new entity up or down are:
The Global Commerce Initiative, whose executive board was scheduled to vote on the proposal late last week. GCI is a group of manufacturers and retailers concerned with implementing global technology standards and best practices.
CIES, the Paris-based trade group whose directors are expected to vote in mid-June. CIES is comprised of 400 retail and manufacturer members from 150 countries.
The Global CEO Forum, whose board is scheduled to vote in June after CIES. The forum is a group of top retail, manufacturing and trade association executives from around the world.
The proposal they are voting on would create a single body that combines all three organizations, with parity in decision-making between retailers and manufacturers and a revenue model based on dues, not events.
If the new entity is created, the U.S.-based trade associations that would potentially be impacted would include the Food Marketing Institute, the National Grocers Association, the Grocery Manufacturers Association, the National Association of Convenience Stores and the National Association of Chain Drug Stores, among others.
While the new entity is not seeking to add these associations to its organization, “it's likely the associations will be asked to look at the variety of activities they offer, and determine whether those activities would serve the industry better if several groups came together as sponsors or whether continuing to run them by channel would serve the total industry better,” the industry source said.
“For example, several associations hold sustainability conferences,” he said. “Do we really need all those conferences, or would the industry be better and more efficiently served with a single sustainability effort?”
Another industry observer said associations often hold meetings just to boost revenues from registration fees. “But if you set global priorities for these meetings, everyone can discuss issues of real importance, and resources can be allocated more effectively to really make a difference,” he told SN.
If CIES, GCI and the Global CEO Forum all approve the proposal by the end of June, then specific details on the governance and finance models for the new entity are expected to be developed and a working model presented in the fall when the Global CEO Forum holds its next annual meeting, with implementation planned for next year.
A source told SN there have been no decisions on where the new entity will be headquartered. It is still also unclear what the new organization will be called, he added.
The spark for creating the new global entity grew out of a presentation at last fall's Global CEO Forum dealing with ways to make trade associations more effective and efficient, one industry source told SN.
“That speech got people talking about how much duplication there is in the work trade associations do — including some degree of competition among them — and how many meetings people are asked to attend that do redundant work, and the question came up of what we could do to drive more effectiveness across all associations.”
A landscape project memo, a copy of which was obtained by SN last week, said the prospects for an association realignment are encouraging.
“There is more common ground on the approaches to building this entity than differences,” the memo said. “The [project] team feels the outlined approach will enable us to demonstrate how retailers and manufacturers can come together in the spirit of collaboration.
“While there is full alignment to the end-state vision of a single, global, parity-based body, there are currently two paths to that end-state,” the memo noted.
“We need to recognize that the CIES board will undergo the most substantial change. As such, the board has requested that the path to a new entity be more evolutionary than revolutionary.
“The CIES plan would see six manufacturers participating in the strategy committee, joining the retailers on the board at the June 2008 meeting, and begin working on the new CIES structure and model.”
Industry sources said the six manufacturers will be Procter & Gamble, Coca-Cola, Unilever, Nestlé, Danone and L'Oréal. They would represent the first non-retailers on the CIES board in the association's 55-year history.
“This is the first step toward more retailer-supplier collaboration and inclusiveness,” the memo continued. “Higher degrees of trust will be developed when more retailers and manufacturers can participate in the design, rather than having it handed to them.”