Surprising to us, the relationships and opportunities for collaboration between retailers and their vendors do not in our view receive a lot of attention from analysts, academics and other researchers and thought leaders in supply chain.
So it was nice to see a recent series of research notes from Gartner analysts Thomas O'Connor and Beth Coppinger on "Winning through Deeper Retailer-Supplier Collaboration."
Supply Chain Digest Says... |
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Gartner research shows that businesses that have leading collaboration capabilities are far more likely to have invested in dedicated supply chain teams that support collaboration efforts.
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Here are some highlights from part 1 of the series, in a refreshed in September note.
The retail sector is bifurcating, Gartner says, as leading organizations led by online giants such as Amazon and Alibaba see significant sales growth, while the majority of retailers either stagnate or lose revenue.
This challenges existing retailer-vendor relationships and necessitates new ways of doing business, Gartner says.
In an environment where many retail vendors are also selling direct to consumers and retailers are expanding private label goods, retailers and suppliers continue to struggle to identify how and where to work together beyond transactional collaboration.
The challenge for supply chain leaders in both retailers and brand companies is not a lack of understanding or recognition that collaboration is important, Gartner says, but often an internally-oriented mindset that has too great a focus on functional efficiency, cost reduction and process standardization.
"As supply chains advance their collaboration capabilities, they can find a better balance between transactional initiatives and collaborative relationships," Gartner says, adding "Supply chain leaders can more effectively determine with whom to collaborate through segmentation of their trading partners, building these relationships out over time to drive competitive differentiation."
Gartner offers a number of recommendations to improve collaboration in these dynamic times. That starts with honestly assessing where your company stands in terms of supply chain maturity. Less mature organizations will need to somewhat temper their collaborative efforts versus what companies with more advanced supply chains can tackle.
Companies also need to understand and assess the different opportunities. Gartner lists more than a dozen types of collaboration between retailers and vendors, from VMI to integrated digital strategies. Companies need to estimate the potential value from each and see if those with high value are also of interest to some segment of trading partners.
For example, a Gartner survey found about twice as many vendors saw a high value from VMI than did their retail customers.
Key though is to assess currently available resources that can be leveraged, redeployed within existing operating budgets or scaled to support new collaborative relationships.
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The lack of resources on both sides, but especially retailers, is a major barrier to collaboration.
In fact, Gartner research shows that businesses that have leading collaboration capabilities are far more likely to have invested in dedicated supply chain teams that support collaboration efforts with external trading partners. Conversely, lagging organizations are most likely to have collaboration efforts driven by other parts of the business, with the supply chain only being responsible for executing initiatives.
 "Building deep, ongoing relationships requires dedicated resources to deliver value," Gartner observes.
Gartner also recommends using a segmentation approach to identify high-value collaboration opportunities.
"Incorporate into your analysis characteristics such as the level of trust that currently exists between the parties, key capabilities or product offerings that partners can provide and the maturity of these partners own supply chain operations," Gartner recommends.
The researchers also say that retailers and vendors should assess how their organizations are currently structured to support collaboration efforts, with a view to building out defined supply chain resources focused on trading partner relationships.
They recommend staring by deploying specific resources, often from within the logistics and customer service team, to support trading partner relationships.
"Target people within your team who have an outside-in mindset and are customer service oriented," Gartner concludes. "Then look to expand these resources to a defined team dedicated to supporting collaboration efforts across both planning and execution."
We will have highlights from the second note in the series published in December in next month's Retail Vendor Performance Management Bulletin.
et useful data back in return at www.scdigest.com/state_retail_vendor_2020.htm.
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