Remember the Beatles song “We Can Work it Out”?
The Fab Four weren’t exactly singing about industry collaboration, but that tune nicely describes the spirit in which trading partners have worked to improve relationships over recent decades.
However, the beat would need to be quickened to adequately describe the faster pace of today’s collaboration activities.
“There’s no doubt the industry is stepping up collaboration on all fronts,” said Scott Schnuck, chairman, Schnuck Markets, and co-chair of the Trading Partner Alliance (TPA) of Food Marketing Institute and Grocery Manufacturers Association.
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As a case in point, Food Marketing Institute has just launched an ambitious effort to build a bigger collaboration tent for the industry. Called Total Store Collaboration, it will strive to build out existing efforts on the grocery side to include a wider range of categories across the store, including fresh, private brand, general merchandise, health and beauty care and pharmacy.
TSC is about “looking at the issues wall-to-wall, across all these categories, and then creating a parity-based infrastructure model to address those issues,” said Mark Baum, FMI’s SVP of industry relations, and chief collaboration officer.
The effort will bring all parties to the table, including retailers, suppliers, wholesalers, distributors, service providers and industry associations, he added.
This initiative will build on the recent foundation laid by the TPA while reaching out to a wide range of associations and suppliers that haven’t been involved to date. TPA has been making recent strides with initiatives ranging from Rapid Recall Exchange to Facts Up Front.
Stepped-up collaboration comes at a time of changes in consumer behavior and the nature of retail competition, all of which are sparking discussions about new ways of doing business.
As one example, the emergence of new retail growth channels, including dollar stores, has forced manufacturers to consider how to customize business relationships for different demand levels, according to a presentation by Steffen Lauster, VP, consumer and retail, and practice leader, North America, for Booz & Co., at the FMI Midwinter Executive Conference in January.
“We’re so trained to operate on an efficiency level only, that we see growth in club, dollar and other channels, and we meet it in ways that aren’t so profitable,” he said. “We need to meet demands from growth channels profitably.”
Don Knauss, chairman and CEO, The Clorox Co, and TPA co-chair, said trading partners are operating in a competitive environment that requires changing approaches.
“Consumer spending is down and the macroeconomic environment around the world is challenging,” he said. “Consumers are also more knowledgeable, more demanding and more connected than ever before. Being more responsive and operating more efficiently is paramount. One of the ways companies can do this is by working with their trading partners to take costs out of the supply chain and creating a collaborative environment that enables innovation, which benefits consumers.”
Jim Flannery, GMA EVP, operations and industry collaboration, said that while collaboration has been an important topic for decades, more recently, “There’s a recognition that you need to build the commitment from the top down and have it penetrate to all levels. It’s more connected now. The salespeople understand the need as much as the CEOs. Buyers understand the need to work with trading partners.”
Retailers of all sizes, including independent operators, are more committed to changing how they interact with trading partners.
“Thirty years ago, a lot of us were transactional with trading partner relationships,” Rich Niemann, Jr., president and CEO of Niemann Foods, said during a presentation at the recent NGA Show in Las Vegas. “Today it’s about collaboration, and we’re excited about these relationships.”
During that same presentation, Joseph Sheridan, president and COO, Wakefern Food Corp., said, “Collaboration is key but not easy. CPGs have to grow everywhere, and independent grocers bring differentiation. We have to collaborate to find sweet spots.”
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