Anyone believing that retailers and suppliers are in sync on key goals would have been jarred by an SN survey published a few weeks ago. Called "Industry Snapshot," the survey asked trading partners: What would you change about the industry if you could? (See SN, Feb. 16, 2004, Page 12.)
The answers made it clear that retailers and manufacturers are operating with different agendas -- and are quite possibly living on different planets. Suppliers said their ultimate wish would be to make retailers less reliant on slotting allowances and more willing to truly partner with manufacturers. Retailers had a different wish list entirely: They wanted to reign in Wal-Mart and reduce ballooning labor costs.
Given the disparity in agendas, it's not surprising that joint supplier-retailer activities suffer. One such initiative under a new spotlight is category management, which was highlighted at the Reinventing CPG Summit 2004 sponsored in San Diego recently by Information Resources Inc.
The summit, covered by SN's Bob Vosburgh and Elliot Zwiebach, underscored how trading partners sometimes undermine each other's efforts. Manufacturers push thousands of new products each year into the pipeline in a trend that clutters rather than manages categories, according to a summit presentation by Kim Feil, chief executive officer of Mosaic InterForce, Chicago. These suppliers are focused on the success of their brands and are acting on limited information about the total-store strategy.
Retailers, on the other hand, have access to information about store-level performance that suppliers usually can't get. As a result, retailers often override carefully crafted category management plans to build the most advantageous assortments by store, confounding suppliers in the process.
The result is that trading partners are left with relationships that leave much to be desired. For example, a recent survey by Coogan & Partners, Ossining, N.Y., found that manufacturers believe retailers are falling short on some of the most important category management aspects. These include a consistent process for evaluating and implementing category management, and an ability to plan and implement effective promotions.
Retailers and suppliers will never agree on what needs to improve if they don't see things in similar ways. Along those lines, Dr. Romesh Wadhwani, chairman of IRI, Chicago, cautioned manufacturers at the summit to shift focus to performance at store level rather than retail chain level. (See story, Page 29.)
Retailers need to see category building through the eyes of manufacturers so that collaboration can take into account the suppliers' goals, Feil said.
Let's not forget that all trading partners need to see the world through consumers' eyes. Ken Coogan, managing partner of Coogan & Partners, told me recently that some innovative suppliers and retailers are extending category management beyond data analysis to include shopper polling and other "consumer insight" programs.
Trading partners need to build relationships that take into account each other's goals while enhancing service to the consumer. That's a simple formula whose execution has been anything but.
