January 8, 2009
RSR Research: Collaboration – Now More Than Ever
By Brian Kilcourse, Managing Partner, RSR
Research
Through a
special arrangement, presented here for discussion is an excerpt of a current
article from Retail Paradox, Retail Systems Research’s weekly analysis
on emerging issues facing retailers.
There have been many
inhibitors to collaboration between retailers and their partners – technical,
attitudinal and philosophical. But as assortments grow larger and more
complex and companies spread their networks globally, there is much less
room for error.
Retailers and manufacturers
both must operate with a greater degree of precision and greater responsiveness
in order to accommodate the twin pressures of greater, more granular assortment
and decreasing inventory levels. For that reason, there is a more willingness
to address the collaboration agenda than ever before. What gives this special
impetus is that literally every penny counts in these economic times.
“We’re moving forward
as an industry,” said Joe Andraski, CEO
of VICS and a long time collaboration advocate to retailers, suppliers.
“Everybody realizes that it has gotten much more complex than when we
were manufacturing products in the States and had relatively short lead times.
If you don’t have a collaborative strategy, you’re going to have one hell
of a time competing, whether you’re building cars, or are into medical supplies,
or apparel – whatever it is, nobody can do it by themselves.”
The extent to which collaboration
strategies are being executed depends on the retail vertical, according
to Mr. Andraski.
“When people say ‘retail’, they tend to throw a retail blanket over
everything. The fact of the matter is that some of retail is struggling and
taking pretty dramatic steps to take costs out and make numbers. Others are
in fact moving along, taking collaborative steps to do things differently.”
But this behavior extends
to whole verticals, according to Mr. Andraski.
“Take the Sporting Goods vertical, for example,” he said.
“They’ve hooked up with EDIFICE, which is a company that provides point-of-sale
information along with other mission critical information like inventory-in-transit,
inventory-in-storage, inventory at distribution centers
– they help trading partners answer questions like, ‘how can we get
more hot selling products to the stores that are selling them?’ or ‘if something
isn’t selling, how do we slow down and stop shipments to those stores?’ Sporting
Goods is a good example of a vertical that has seen that there are advantages
to doing business differently and taking more of a collaborative approach.”
According to Mr. Andraski, “Some
retailers have said, ‘we’ve got to change, and we need to get to our top
suppliers to get them to help us change’, but then they fall off the wagon.
But then you’ve got companies like H&M and Zara who
have taken lead times down to 6 weeks (compared to 9 months). They call
their programs ‘runway to rack’ and they’ve done it by re-engineering their
businesses. They use the same material but they cut it differently with
different designs, while other companies start over every time.”
Discussion Questions:
What’s the likelihood that the tough economic times will lead a push
toward more collaboration in processes between vendors and retailers?
Which of the inhibitors mentioned – technical, attitudinal and philosophical
– are the biggest hurdles to improved collaboration?
BrainTrust
Recent Discussions
Discussion Questions
Poll
Collaborative planning among the biggest and best retailers and their vendor partners is much more commonplace than even five years ago. It extends to logistics, space management, assortment decisions and margin goals. Smart retailers should have made the cultural changes long before now in order to adapt to this mindset. Given the retail shakeout already happening in 2008 (likely to accelerate in early 2009), it’s important that the “last ones standing” on both sides of the store/vendor relationship become even more collaborative.
Quick additional note: Is the real question: How do we collaborate to solve the problem of collaboration (21st century style) so that we don’t have to go to that hotel again?
Collaboration is a big word with many meanings–let’s try to make it smaller by asking some questions:
1. Where do we collaborate today? (expand on CFAR)
2. Where might we collaborate? 3. How did we collaborate in the past (uncover the tacit methods that are implied by Doron Levy’s note above)
4. What is the business case for new collaborations?
5. What are the gaps: technical, standards, etc, to collaboration?
6. What are the new business models that new forms of collaboration might require?
7. How will this change product road maps for current ecosystem facilitators (read: SAP, etc).
8. What are the new boxes and arrows of global business and how do they compare to the existing diagrams?
Collaboration is good, change is good, but the reality (your tough reality to be sure) is that it is messy. VICs has the know how in its DNA. VICS has done amazing things–Joe has done amazing things.
Tip: Get the right people together in a bad airport hotel with a marker board. Serve cold pizza and warm beer. Ditch the high level white papers pushing motherhood and apple pie.
New Questions:
Does DFW have a Hilton?
Do they have a marker board and marker pens?
What’s Ted Rybeck doing these days?
Does Kevin Turner want to spend a weekend in Dallas for old times sake?
For the major retailers and Brand owners, the cost of not finding ways to collaborate is high. With retail owned Private Label Brands, CPGs are fighting hard to maintain position, competing with their retailer clients for shelf space. At the same time, retailers know they depend on brands in many categories to retain shoppers who expect these products in the store, as well as the promotional incentives they carry that contribute to margin. I believe there is a philosophical understanding of the benefits of collaboration but working to find the larger perspective is still in progress. There are published examples of cooperative rationalization of SKUs within a shelf set of a major brand and retailer, but it is in its early days.
In my view, technical obstacles are slowing the move to closer working relationships. From agreement on “trustworthy” metrics for tracking sales and the investment required to make the right choices about selection and merchandising, it will take time for the game to change. But definitely, a common front in tough economic times will focus the issues for all.
Cooperative efforts should be embraced to gain new efficiency…but dominating the show stage is self-preservation, nature’s first great law, and all its creatures, including man, doth awe. Still we should be hopeful that wisdom will prevail over ego and united us in a better future process.
Collaboration, like partnering, is being used to claim a state of nirvana. Mostly we hear consultants claims and little or no real results. Yes, buyers and sellers should be talking to each other about more than just “take this item; we want a promotion and where are the deal monies?”
The real problem is that each side is stuck in their own old business model. The majority of collaboration achievement to date has been cost transfer from buyer to seller. The greatest problem for collaboration and partnering is that they are big company programs. For the average retailer with 3 to 8 thousand suppliers, maybe they can collaborate with 10. No program that cannot be successfully implemented by every suppler will succeed. It took EDI years to become the standard.
It is time to embrace a completely new approach like Demand Management. We should stop wasting everyone’s time forecasting (which is always wrong) and drive operations off consumer takeaway. We simply don’t need to forecast as there is more than sufficient time in the supply chain to absorb variations. Total supply chain visibility from POS to raw material provides ample information to resolve issues.
The second element is to eliminate schedules. Action should be based on demand, not because it is Tuesday. Adjust daily to real world demand, not a schedule.
As usual, I find myself on the the same wavelength–but without anywhere near the eloquence–of Ian Percy.
The best motivation for collaboration is a common threat. When you are both about to die, you jump in a foxhole together and guard each others’ backs–until the threat disappears and you see a common prize on the horizon. Then we pay lip service to collaboration/coalition while we start angling to get a disproportionate share of the gain when the prize is attained. Behavior that, in general, prevents us from attaining the prize at all.
Why is it that the hardest questions always seem to have the simplest answers? The strategy for world peace can be summed up in three words–Eliminate Human Greed. Now if only we could find someone to execute….
Collaboration is not linked to difficult economic times. It is linked to trust and the value that participants see as a result of collaboration. Without trust, participants don’t try. Without trying, there is no way to see the value.
Yes we’ll all become more collaborative but the deeper question is whether that’s a desperation move or if it’s driven by real understanding. If you want to unite the country, go to war. Throughout history that strategy has always worked…well until recently anyway. The point is that adversity makes us reach toward each other. You get to know your neighbor after the hurricane. When times are good the team motto becomes “Every man for himself.” Dumb? You bet. The natural way of the universe is synergy and interdependence. Only humans insist on pushing against that principle.
I’m working on a book with the working title of “How to Lead Your Organization Into the Quantum Age.” One of the quantum principles I’m translating into organizational performance is the “It’s all one thing” principle. Most organizations are collections of parts. And most managers treat their ‘part’ as a separate and distinct entity. In reality “it’s all one thing” and nothing happens independently. The entire universe is all one thing–energy and light. “Collaboration” is not a strategy or technique, it’s a state of being. And frankly calling it “collaboration” is like calling the Mona Lisa a nice picture. One of these days, probably in spite of ourselves we’ll begin to ‘get it’.
This should be an obvious YES. Think of the upside opportunities…WOW. I really hope this happens, and by the way, RSR is a great resource in my opinion. Always good learning, and they serve as a good, neutral communicator.
Why is it that it takes ‘tough economic times’ to bring partners together? Vendor/retailer relationships are important all the time and are crucial to the success of any product line or launch. I can remember some ahem years ago when I was a lowly merchandiser for Shoppers Drug Mart. I knew by first name the sales reps for P&G, Colgate-Palmolive, Cheeseborough Ponds, and Unilever, which at the time were the big HBA players. I don’t see that kind of interactivity between vendors and sellers now.
Granted, most big chains are on a direct distribution platform, I still believe in the importance of sales reps showing their mugs and helping out at the store level. All the store managers I’m working with now are complaining about one thing: no labor dollars. Prior to Christmas, I asked them to hit their sales reps for help on the floor on some key selling days. Guess what; all showed up with smiles on their faces. Vendor/Retailer partnerships are a must and now since resources are thinning, they will play an even more important role at the store level.
If retailers, CPG companies and vendors are not already doing this it should be on their top goals list for 2009 and beyond. This is the only way to reduce and manage cost through the entire supply chain. Check the egos at the door and work together as a team with equal voices for a better, leaner and more profitable future.
There are a couple of reasons why this has not happened in the past; egos, resistance to change, poor leadership, and fear. The smart ones broke through the barriers and the others faltered. The biggest inhibitor is not information availability but the attitudinal change needed to truly define the word collaboration. But hey, it’s the year of change!
Who’s on first? (That’s a classic Abbott & Costello comedy bit for you youngsters, but could also mean “Who begins?”) In the “collabbing” bidness there can be four different leaders for each individual project. Is it the retailer, the manufacturer, the supplier/distributor, or a consultant? Who provides the desire, the rules, the execution, and the follow-through? If coins had four sides, it would be a coin flip. And therein lies the conundrum–who’s on first?
I was impressed recently by Obama’s establishment of a new White House job, Chief Performance Officer. The abbreviated job description is “to make existing programs more efficient while eliminating programs that don’t work.” Applying a similar job description and title to dedicated collaborative positions inside retail companies and larger suppliers would surely improve collaboration simply by answering the question: “Who’s on first?” Their only job would be to initiate, implement, monitor, and evaluate collaboration–to be on first.
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According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…Is Supply Chain Volatility Here To Stay?
Can we expect an ongoing volatility to remain in terms of retail supply chain?Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?
Collaborative planning among the biggest and best retailers and their vendor partners is much more commonplace than even five years ago. It extends to logistics, space management, assortment decisions and margin goals. Smart retailers should have made the cultural changes long before now in order to adapt to this mindset. Given the retail shakeout already happening in 2008 (likely to accelerate in early 2009), it’s important that the “last ones standing” on both sides of the store/vendor relationship become even more collaborative.
Quick additional note: Is the real question: How do we collaborate to solve the problem of collaboration (21st century style) so that we don’t have to go to that hotel again?
Collaboration is a big word with many meanings–let’s try to make it smaller by asking some questions:
1. Where do we collaborate today? (expand on CFAR)
2. Where might we collaborate? 3. How did we collaborate in the past (uncover the tacit methods that are implied by Doron Levy’s note above)
4. What is the business case for new collaborations?
5. What are the gaps: technical, standards, etc, to collaboration?
6. What are the new business models that new forms of collaboration might require?
7. How will this change product road maps for current ecosystem facilitators (read: SAP, etc).
8. What are the new boxes and arrows of global business and how do they compare to the existing diagrams?
Collaboration is good, change is good, but the reality (your tough reality to be sure) is that it is messy. VICs has the know how in its DNA. VICS has done amazing things–Joe has done amazing things.
Tip: Get the right people together in a bad airport hotel with a marker board. Serve cold pizza and warm beer. Ditch the high level white papers pushing motherhood and apple pie.
New Questions:
Does DFW have a Hilton?
Do they have a marker board and marker pens?
What’s Ted Rybeck doing these days?
Does Kevin Turner want to spend a weekend in Dallas for old times sake?
For the major retailers and Brand owners, the cost of not finding ways to collaborate is high. With retail owned Private Label Brands, CPGs are fighting hard to maintain position, competing with their retailer clients for shelf space. At the same time, retailers know they depend on brands in many categories to retain shoppers who expect these products in the store, as well as the promotional incentives they carry that contribute to margin. I believe there is a philosophical understanding of the benefits of collaboration but working to find the larger perspective is still in progress. There are published examples of cooperative rationalization of SKUs within a shelf set of a major brand and retailer, but it is in its early days.
In my view, technical obstacles are slowing the move to closer working relationships. From agreement on “trustworthy” metrics for tracking sales and the investment required to make the right choices about selection and merchandising, it will take time for the game to change. But definitely, a common front in tough economic times will focus the issues for all.
Cooperative efforts should be embraced to gain new efficiency…but dominating the show stage is self-preservation, nature’s first great law, and all its creatures, including man, doth awe. Still we should be hopeful that wisdom will prevail over ego and united us in a better future process.
Collaboration, like partnering, is being used to claim a state of nirvana. Mostly we hear consultants claims and little or no real results. Yes, buyers and sellers should be talking to each other about more than just “take this item; we want a promotion and where are the deal monies?”
The real problem is that each side is stuck in their own old business model. The majority of collaboration achievement to date has been cost transfer from buyer to seller. The greatest problem for collaboration and partnering is that they are big company programs. For the average retailer with 3 to 8 thousand suppliers, maybe they can collaborate with 10. No program that cannot be successfully implemented by every suppler will succeed. It took EDI years to become the standard.
It is time to embrace a completely new approach like Demand Management. We should stop wasting everyone’s time forecasting (which is always wrong) and drive operations off consumer takeaway. We simply don’t need to forecast as there is more than sufficient time in the supply chain to absorb variations. Total supply chain visibility from POS to raw material provides ample information to resolve issues.
The second element is to eliminate schedules. Action should be based on demand, not because it is Tuesday. Adjust daily to real world demand, not a schedule.
As usual, I find myself on the the same wavelength–but without anywhere near the eloquence–of Ian Percy.
The best motivation for collaboration is a common threat. When you are both about to die, you jump in a foxhole together and guard each others’ backs–until the threat disappears and you see a common prize on the horizon. Then we pay lip service to collaboration/coalition while we start angling to get a disproportionate share of the gain when the prize is attained. Behavior that, in general, prevents us from attaining the prize at all.
Why is it that the hardest questions always seem to have the simplest answers? The strategy for world peace can be summed up in three words–Eliminate Human Greed. Now if only we could find someone to execute….
Collaboration is not linked to difficult economic times. It is linked to trust and the value that participants see as a result of collaboration. Without trust, participants don’t try. Without trying, there is no way to see the value.
Yes we’ll all become more collaborative but the deeper question is whether that’s a desperation move or if it’s driven by real understanding. If you want to unite the country, go to war. Throughout history that strategy has always worked…well until recently anyway. The point is that adversity makes us reach toward each other. You get to know your neighbor after the hurricane. When times are good the team motto becomes “Every man for himself.” Dumb? You bet. The natural way of the universe is synergy and interdependence. Only humans insist on pushing against that principle.
I’m working on a book with the working title of “How to Lead Your Organization Into the Quantum Age.” One of the quantum principles I’m translating into organizational performance is the “It’s all one thing” principle. Most organizations are collections of parts. And most managers treat their ‘part’ as a separate and distinct entity. In reality “it’s all one thing” and nothing happens independently. The entire universe is all one thing–energy and light. “Collaboration” is not a strategy or technique, it’s a state of being. And frankly calling it “collaboration” is like calling the Mona Lisa a nice picture. One of these days, probably in spite of ourselves we’ll begin to ‘get it’.
This should be an obvious YES. Think of the upside opportunities…WOW. I really hope this happens, and by the way, RSR is a great resource in my opinion. Always good learning, and they serve as a good, neutral communicator.
Why is it that it takes ‘tough economic times’ to bring partners together? Vendor/retailer relationships are important all the time and are crucial to the success of any product line or launch. I can remember some ahem years ago when I was a lowly merchandiser for Shoppers Drug Mart. I knew by first name the sales reps for P&G, Colgate-Palmolive, Cheeseborough Ponds, and Unilever, which at the time were the big HBA players. I don’t see that kind of interactivity between vendors and sellers now.
Granted, most big chains are on a direct distribution platform, I still believe in the importance of sales reps showing their mugs and helping out at the store level. All the store managers I’m working with now are complaining about one thing: no labor dollars. Prior to Christmas, I asked them to hit their sales reps for help on the floor on some key selling days. Guess what; all showed up with smiles on their faces. Vendor/Retailer partnerships are a must and now since resources are thinning, they will play an even more important role at the store level.
If retailers, CPG companies and vendors are not already doing this it should be on their top goals list for 2009 and beyond. This is the only way to reduce and manage cost through the entire supply chain. Check the egos at the door and work together as a team with equal voices for a better, leaner and more profitable future.
There are a couple of reasons why this has not happened in the past; egos, resistance to change, poor leadership, and fear. The smart ones broke through the barriers and the others faltered. The biggest inhibitor is not information availability but the attitudinal change needed to truly define the word collaboration. But hey, it’s the year of change!
Who’s on first? (That’s a classic Abbott & Costello comedy bit for you youngsters, but could also mean “Who begins?”) In the “collabbing” bidness there can be four different leaders for each individual project. Is it the retailer, the manufacturer, the supplier/distributor, or a consultant? Who provides the desire, the rules, the execution, and the follow-through? If coins had four sides, it would be a coin flip. And therein lies the conundrum–who’s on first?
I was impressed recently by Obama’s establishment of a new White House job, Chief Performance Officer. The abbreviated job description is “to make existing programs more efficient while eliminating programs that don’t work.” Applying a similar job description and title to dedicated collaborative positions inside retail companies and larger suppliers would surely improve collaboration simply by answering the question: “Who’s on first?” Their only job would be to initiate, implement, monitor, and evaluate collaboration–to be on first.