Us vs. Them: Retailer-Supplier Collaboration

A strong retailer-supplier connection can provide big benefits for retailers, suppliers, and even the end customer, but how does one go from a perfunctory partnership to a more intimate relationship that allows for things like common goal setting and joint improvement strategies? The answer is simple. Collaboration. Unfortunately, building and maintaining said collaboration is a heck of a lot more challenging. I recently looked at two surveys examining the retailer-supplier relationship. The first, by SCDigest, gave an overall grade of B- to today’s retailer-vendor supply chain relationships. In its inaugural year, the 2016 State of the Retailer-Vendor Supply Chain Relationships survey focused on retailers and consumer goods manufacturers. What the results reveal is a very strong prevalence of an “it’s not us, it’s them” mentality coming from both sides of the equation. According to the survey, 98% of retailers rate their relationship with their vendors as average or above, with 96% of vendors feeling the same way. Seems positive, right? Almost. Where there’s a bit of a disconnect is how each side views themselves and the other in terms of willingness and success at collaboration. Retailers feel their own knowledge and skill in how to collaborate successfully is a non-issue, ranking it as one of the smallest potential barriers to good collaboration. Vendors however disagree. They rank a lack of knowledge and skill in collaboration among their retail partners as the biggest single hurdle they need to overcome for supply chain collaboration. On the flip side, vendors also rank their own knowledge and skill in how to collaborate successfully as a minor issue. Once again, the other side disagrees. Retailers cite the lack of knowledge and skill in collaboration of their vendor partners as their second greatest barrier to achieving successful collaboration, just behind difficulty on agreeing how to share gains. Level of trust was the third biggest barrier. Another recent study, this one by Peerless Research Group on behalf of Logistics Management and Kane is Able, Inc., examined retailer-supplier collaboration barriers and the impact on supply chain performance. Retailer-Supplier Collaboration: Identifying and Eliminating Barriers to Improve Supply Chain Performance, also interviewed retailers and consumer goods manufacturers. What it found was while retailers and suppliers both see the value of greater collaboration, neither group believes they’re doing a great job at it. The largest alignment gap between the two groups was the accuracy and timeliness of demand forecasts. On a scale of one to 10, where one is poor and 10 is excellent, retailers rated their performance at 7.35. Suppliers however rated those same retailers in the 5.50 range. The survey also highlighted a few key lessons coming out of the results:

• Collaboration takes time and commitment
• Communication is number one
• Mutual benefits of collaboration must be clear up front
• Issues with lack of trust still need to be overcome

I’d like to add one more:

• Don’t just point the finger at the other party, examine your own actions to ensure you’re doing everything you can to foster good collaboration

That’s what I found most surprising, and most disturbing, about the results of both surveys. In each, respondents seemed to think any issues with supply chain collaboration originated or were the fault of the other party. Since obviously both sides can’t be right on that point, I’d propose the real culprit is both sides don’t want to take accountability for the role they play in fostering positive and successful collaboration. When it comes to successful supplier-retailer supply chain collaboration, it is not a case of us versus them. That mentality is dooming you to failure. It’s more a mindset that it takes two to tango, and each partner needs to know their own steps, how they relate to their partners, and how to synchronize efforts to achieve harmony. There also needs to be a high level of trust among the partners, with each confident the other is doing what they’re supposed to.

How do you manage supply chain collaboration among your key stakeholder groups? Let us know in the comments.