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How Can Manufacturers and Retailers Better Collaborate?

12/1/2008
Retailer/manufacturer collaboration is a hot topic nowadays, but has anything really changed? Where does your company stand in comparison to the latest research findings on cross-industry collaboration? On Nov. 20, web seminar attendees heard perspectives from those in the trenches, including Frank DiPasquale, senior vice president, National Grocers Association, and Tom O'Toole, director, Go-To-Market Solutions, Brown-Forman. Moderated by Simon Ellis, practice director, Supply Chain Strategies Office, Manufacturing Insights, an IDC Company, panelists discussed the present and future states of collaboration based on research published in the 2008 Shared Strategy Report.

Here are some of the trends and insights revealed during the event:

> When it comes to the level of collaboration with top suppliers, Ellis predicted that both manufacturers and retailers will look to improve supply chain processes more and more. Report results support this prediction, with 50 percent of manufacturers and 80 percent of retailers saying they will collaborate for process harmonization 2010 (versus 0 percent in 2006).

> Report results indicate, unsurprisingly, that manufacturers and retailers concentrate their collaborative efforts on their big suppliers, which make up 80 percent of the supply base. "Interestingly, we are seeing some data that suggests this focus is now moving to include smaller, tail suppliers," said Ellis. "In order to improve overall market share and on-shelf availability, companies have to engage that last 20 percent in collaborative relationships/conversations."

> Many collaboration benefits exist, but they differ between retailers and manufacturers. "For consumer goods companies, benefits are centered on cost, with the majority of survey respondents identifying cost reduction or productivity improvements as important in addition to reducing time-to-market for new products," reported Ellis. "Meanwhile, customer satisfaction and increased loyalty are compounded by cost-related benefits." In contrast, increased quality and customer satisfaction are the biggest benefits achieved so far in the retail space.

> As for the future of collaboration, certainly the gloomy economic times will have an impact. According to Ellis, it will require a greater focus on cost control, while making sure the value proposition to the consumer is still compelling. In the retail space, DiPasquale predicted that those retailers that respond to price relief are the ones that will win, especially with private-label. Meanwhile, manufacturers may benefit from consolidation in the retail and distribution markets. "The upshot of this is that as you reduce the amount of carriers, you can get richer collaboration with the partners that you do have," said O'Toole. 

Click here to listen to a recording of this web seminar, and learn more about collaboration trends and predictions in the areas of innovation, private label, demand data and sustainability. Or click here to download the full Shared Strategy Report.
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