Executive Update

Not Just More Collaboration – Better Collaboration

This session featured CPG supply chain leaders who discussed maximizing the benefits of supply chain collaboration and what factors contribute to a successful manufacturer-retailer partnership. The panel included Michael Bargmann, principal, Collaborative Logistics, LLC; Gary Badrick, vice president, global logistics, Mars Petcare, US; Scott Craig, director, replenishment, Delhaize America; Robert Mooney, group vice president, distribution, Meijer, Inc.; and Daniel Swan, partner and Luis Benavides, associate partner, McKinsey & Company Inc.

Swan presented a study that was conducted in 2011 by McKinsey and focused on collaboration, which included more than 70 retailers and manufacturers from the food and beverage industry. The study found that 83 percent of retailers and manufacturers participated in some sort of collaboration in 2010. However, only about 20 percent of those collaboration efforts were driving significant results that both partners were happy with.

According to the panel, some of the underlying factors that may have contributed to that 20 percent of successful collaborations include planning, strategic alignment, transparency, and communication.

“The internal preparation is imperative,” explained Bargmann. “You’ve got to start with getting the right team together and then decide exactly what the project is you’re going to work on. “

Strategic alignment is another principle that all collaborations should require. It’s not just the size of the organization that will benefit a partnership, but the willingness to work together and share similar values, and being committed to getting results that are a win-win for both retailer and manufacturer.

“One of the guiding principles we use is to ask - how do we look at the supply chain now, and how would we if we were truly one company,” said Craig. “We take a look at the whole business with a group of people who really understand the issues from both companies and decide what are the redundancies we can drive out of the system to be more effective in this partnership?”

“Make sure you’re working with a business partner that shares the same values, but also someone who is willing to think outside the box,” added Bargmann.

With any partnership, some of the most important factors are transparency and communication. Few partnerships will have success without being open and trusting that your partner will have both of your best interests in mind. According to the panel experts, the best way to gain that trust, is by starting small.

“Start small with tangible benefits to get a quick win and get alignment. Sometimes when you reach too far, there’s disappointment, and there aren’t results to measure from,” said Bardick. “You need to have a commitment on both sides of the partnership, not only because you need the resources but also the empowerment from both efforts.”