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Joint Business Planning Boosts Sam’s Club

COLORADO SPRINGS — Sam’s Club had a challenge the size of its giant-pack merchandise: How to retool its trade partnerships in a way that builds value for members, the club and its suppliers.

The resulting solution, its joint business planning program with some key suppliers, has met the challenge and is paying increased dividends, Charles Redfield, executive vice president and chief merchandising officer, said in a presentation last week at the GMA Executive Conference here.

“Joint business planning is a way to establish trust, which involves honesty and integrity,” he told the supplier-heavy audience. “We can’t be successful without our suppliers.”

The 3-year-old process involves collaboration, communication, openness and dealing with challenges, he said. It requires the involvement of senior-level executives on both sides and needs to allow for disagreements on the way to sustainable and profitable growth, he emphasized. It also involves the need to look at both long- and short-term time frames.

“This is not a short-term process, it’s not a quick win,” he said.

Moreover, it’s not a framework that will work across relationships with all suppliers, he added.

Redfield was joined on a conference panel by suppliers who lauded the initiative and said Sam’s Club’s investment and commitment have made it a success.

“The difference is that Sam’s has made a commitment with resources, infrastructure and other things,” said Melvin Landis, chief retail sales officer, Coca-Cola Refreshments. “We brought our general managers, brand leaders and others to the table. We got the right people in the room and really got strategic alignment. We now have a Coca-Cola/Sam’s plan and we’re accountable to it.”

Suppliers said the process was driven by insights into the needs and desires of Sam’s members.

“We looked at the in-store bakery to help optimize it, and we asked consumers what they liked and didn’t, and what they would like to see,” said David Dudick, senior vice president, and president of Bakeries and Foodservice, General Mills. “As a result, we got key learnings about category layout, product assortment and packaging.”

That led General Mills to make a number of changes, including accentuating the product freshness angle in its packaging, he said.

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Sean Fallmann, president, North American Consumer Business, Georgia-Pacific, said Sam’s executives met with his company’s design team and other associates to help focus efforts on what’s important to the club’s members.

He added that Sam’s business planning program involves a level of commitment that needs to be understood ahead of time.

“We got the right level of people in the organizations involved and we properly wired the organizations together,” he said. “A lot of interaction and senior-level engagement is needed.”

Redfield emphasized that the progress with suppliers was possible only because of the honest dialogue involved.

“This is not about being best friends,” he said. “It takes maturity, and is painful at times for both parties.”

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