Collaboration in the extended retail supply chain has been on a positive track over the past couple of years, and momentum is good. However, there is ample room for improvement across all aspects of business culture and business competency, according to a survey commissioned by Precima and conducted by Coresight.
Both retailers and suppliers have a great deal at stake with respect to shopper-focused collaboration. Conversely, the study also reveals four notable opportunities for suppliers — areas where retailers say their satisfaction lags most:
- “Deliver what they promise.” While 75% of retailers identify this cultural trait as important, just 62% indicate satisfaction with supplier performance in this area.
- “Has a vision for the future.” Overall, 73% of retailers identify this cultural trait as important, yet 59% indicate satisfaction.
- “Understands our customers.” While 70% of retailers identify this competency as important, 62% indicate satisfaction.
- “Ability to quickly respond to market/consumer trends.” Overall, 70% of retailers identify this competency as important and 64% indicate satisfaction.
The study was conducted among executives from large food retailers and suppliers in the U.S., UK, France and Germany. Responses were collected from 105 retailers ($3 billion and larger) who sell grocery/FMCG/CPG products and 105 large grocery/FMCG/CPG manufacturer/suppliers.
What is most telling in the survey is the gaps between importance and satisfaction ratings. For example, when it comes to collaboration practices, retailers are slightly more satisfied with their supplier partners than the other way around. Both parties give partners modestly positive satisfaction ratings across the board –- which are equivalent to “C-plus” grades. This suggests that opportunities abound for companies that want to stand out from the pack. That said, how should retailers and brands respond?
Industry-wide, collaboration efforts are clearly improving, and retailers and suppliers generally concur that they are getting better at working together. When asked about efforts over the past two years, 92% of retailers and 85% of suppliers said collaboration has improved, while only 1% of either group said it had worsened.
The positivity belies a rather mediocre assessment by both sides related to many of the collaboration elements studied, however. While satisfaction rates ranging from 59% to 72% may not indicate great success, these are solid passing grades. They also signal multiple opportunities for further improvement.
Retailers indicate their satisfaction with supplier performance lags importance in five key areas, including delivering what they promise, having a vision for the future, being easy to do business with, understanding customers and responding quickly to market/consumer events and trends. On the plus side, retailers appreciate their suppliers’ ability to identify actionable insights and share information that can help guide merchandising and promotion decisions.
From the supplier perspective, retailers can also improve their collaboration practices across the board. Satisfaction on cultural traits ranged between 49% and 55%, while competency traits received satisfaction ratings between 46% and 61%.
Perhaps suppliers are tougher graders than retailers, but there were a few bright spots. Suppliers are satisfied with the retailer’s ability to work collaboratively. More work needs to be done by retailers in the areas of being easy to do business, delivering what they promise, understanding business priorities, having appropriate resources and the ability to quickly respond to market/consumer events and trends.
When every opportunity is significant and every measure indicates ample room for improvement, business leaders need to find an organizing principle to guide their actions. To facilitate a strategic discussion, the following quadrants focus on 14 collaboration factors from this study:
- Pursue Opportunity – More Important factors that earned lower satisfaction scores. These reveal that trading partners need to pick up their performance to build effectiveness and trust. Collaboration factors here are having a vision for the future, being easy to do business with and a strong brand.
- Stay the Course – Less Important overall, but earned strong satisfaction scores. Trading partners should pay active attention and maintain their efforts. Collaboration factor here is working collaboratively.
- Keep Striving – More Important and stronger satisfaction scores. Trading partners need to keep their effort levels high and look for more ways to differentiate or reduce satisfaction gaps in these areas. Collaboration factors here are delivering what they promise and understanding customers.
- Tackle Later – Less important and lower satisfaction scores. Trading partners may choose to focus on these areas after other priorities are satisfied. Collaboration factors here are absence of language barriers and innovating well.
Overall, the research findings suggest a generally healthy assessment of the state of collaboration by both retailers and suppliers. However, there are opportunities to get significantly better across the board –- both with respect to strengthening the culture of collaboration and upgrading technical competency.
Examination of the findings overall suggest several ways for trading partners to “give a little to get a little” when it comes to shopper-centric collaboration:
- Trade-off #1. Retailers who want suppliers to come to the table with a better understanding of their shoppers should provide more efficient, role-based access to store-level data and insights that they control. Retailer collaboration portals are an essential enabler for this.
- Trade-off #2. Suppliers who want retailers to better understand their business priorities should begin by communicating their vision for the future of their brands, categories, and consumers with greater clarity and consistency.
- Trade-off #3. Both parties are very concerned that their trading partners deliver on their promises. Retailers are a bit more skeptical about this than suppliers. Credible promises depend upon reliable information and mutual agreement on the facts about shopper responses.
The foundation of all these activities is accurate, reliable and accessible data. With that data, and the insights developed from it, collaboration in the extended retail supply chain will maintain its positive momentum going forward.