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A New Collaboration Game for Retailers, Suppliers

A New Collaboration Game for Retailers, Suppliers

It's a new ballgame for collaboration — literally.

At last week's Grocery Manufacturers Association Executive Conference in Colorado Springs, the state of trading partner collaboration was described using lots of baseball language, and a play-by-play discussion focused on new insights about hitting home runs.

Two McKinsey & Co. executives presented findings of a study called “Collaborate to Win,” which was based on the 2010 Customer and Channel Management Survey of Manufacturers co-sponsored by GMA, McKinsey and Nielsen. The results, which also leveraged insights from McKinsey's client work, offered a more precise scorecard of the collaboration game.

“Thirty percent of collaboration efforts are foul balls that don't prove substantial,” said Kari Alldredge, McKinsey senior expert. “Fifty percent are on-base efforts that have moderate impact. And only 20% are home runs that have extraordinary impact beyond what each partner would have achieved on their own.”

This analysis quantifies the outcomes quite nicely, and the obvious next question is what makes for initiatives that clear the fences?

The research found that manufacturers with the greatest collaboration success tended to cast wider nets in seeking retailer partners and eventually chose those with the greatest success potential (sales, profitability, growth outlook). The best partnerships “define a bold ambition” by pursuing growth efforts as opposed to just addressing performance issues. They also create joint teams that cut across functional areas and track performance.

A panel of industry executives at the conference provided their own lessons on collaboration, including the need for focus that holds despite distractions. Richard Cohen, chairman and CEO of C&S Wholesale Grocers, said that when fuel prices surge everyone wants to collaborate on improving the supply chain, but he added that unfortunately the commitment wanes when prices fall.

Other panelists emphasized the need to appreciate differences in company cultures and to foster trust between partners. “Personal relationships between leaders count,” said Donald Knauss, chairman and CEO, the Clorox Co. “You need to have relationships with trust.”

There was even discussion, sparked by an audience question, about whether a home run is the right analogy. Is winning collaboration best described as a quick hit out of the park, or is it the result of a long-term battle?

Perhaps the better baseball analogy is winning a pennant, something that takes a long time and involves lots of fits and starts. Or maybe baseball is the wrong sports comparison altogether. It's a relatively genteel sport, while collaboration can be rough and tumble when things go wrong or partnerships sour.

It's best to avoid getting lost in semantics. Let's agree that collaboration is a game of some sort, and everyone benefits from identifying successful plays. However, we also need to understand that guidelines for winning can never fully cover the specifics of every situation. There are lots of unique factors that contribute to the final scorecard.