Collaboration between trading partners is essential in the food and beverage industry – but it is not always easy. This panel of retail and manufacturer industry executives, comprised of Don Knauss, Chairman and CEO, The Clorox Company; Scott Schnuck, Chairman and CEO, Schnuck Markets, Inc.; Randy Edeker, President, Hy-Vee, Inc; and moderators Jan Hanrich, Partner; and Kari Alldredge, Senior Expert both of McKinsey & Company, addressed how to create an effective and mutually successful collaborative partnership between retailers and manufacturers.
Henrich introduced the idea of the 80/20 rule; partners should receive 80 percent of the benefit, with only 20 percent of the effort. However, “as an industry, we haven’t fully cracked that code,” with research proving the point; in the last year, 83 percent of companies surveyed had participated in collaboration, but only 20 percent produced significant results.
So what are the components of a successful collaboration? According to Don Knauss, one element is trust. “One of the common themes is actually one word, trust. At the foundation of a lot of these collaborative efforts, if not all of these collaborative efforts, is a sense of trust. If that trust is there, things happen very quickly, and they move briskly ahead.”
Scott Schnuck added how important it is to get your own house in order before you can have a successful collaboration with anyone outside. Schnuck Markets has invested in technology, revamped its category management ranks and created a merchandising analytics center. “We’ve taken steps to get our house in order - we are no longer a company of baggers.”
The panel also discussed that it’s not only about how you collaborate, but with who.
Randy Edeker suggested “Be inclusive in who comes to these meetings. It's no longer just for operations folks. It should now include IT, procurement, distribution, marketing and even HR. It has to filter down to all levels.”
“We focus our approach of who we collaborate with on three things: focus, alignment and discipline,” added Knauss. Each company needs to decide on what their focus is, find a trading partner that they can align that focus with, and have the discipline from the CEO, senior executives, and down through the buying office into store level operations to follow through. “For us it starts with listening, understanding the broad strategic pillars and getting aligned on broad trends that are driving demand.”