Collaboration key to tomorrow's retail supply chain success
Retailers and suppliers that collaborate effectively will enjoy better control of the supply chain and a fatter bottom line.
Staff -- Modern Materials Handling, 8/1/2002
What's the key to future success in retail distribution? According to several panelists at the Retail Systems conference held in Chicago in late June, success may hinge on a company's willingness to collaborate with other participants in their supply chains.
Although studies have shown that companies that collaborate can greatly increase their profits and have better control of their supply chains, the panelists said, most retailers do not yet have collaboration on their radar screens. Even if they have thought about it, many have decided against collaboration for a number of reasons.
One of the most common reasons they don't collaborate is a lack of trust. "We still have an island mindset," said moderator David Cole of Kurt Salmon Associates (www.kurtsalmon.com). "We build bridges of collaboration, but they are increasingly drawbridges."
"There needs to be trust between the partners. That can only be built over time," added speaker Ton van der Laan from Unilever.
Another barrier to working together is incompatible software systems. Companies that want to collaborate need to develop compatible visibility systems that will let all parties in the supply chain gain access to information that would help them become more efficient and reduce costs.
"It should be as easy to plug into others' systems as plugging a radio into the wall," suggested Mark Hansen of Fleming Companies. "We need to get to a Web-based, easy-to-use technology. The simpler we can make it, the more effective it will be."
The panelists also discussed the role that collaboration plays in meeting customers' needs. Tom Cole of Federated Logistics, the distribution arm of Federated Department Stores, said that focusing on meeting the customer's needs instead of competing for that customer is possible when all parties in the supply chain can view information completely and simultaneously.
"There has to be a change in attitude as to who owns the customer," he said. "Basically, the product owns the customer and we have to find ways to efficiently deliver it."
The panelists agreed that working together, developing compatible systems and focusing on the customer would only occur if key company leaders make these issues top priorities. They say the technical capabilities exist, but there are insufficient human resources being devoted to these important objectives.
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