Why industry collaboration has surged in importance

Anyone on the industry conference circuit knows this fact: The focus on industry collaboration efforts is heating up.

It was high-profile at the FMI Midwinter Executive Conference in January, including awards presented for collaboration-related activities.

It was also evident at the NGA Show in February, both during a number of educational panels and in the mention of new directions in the Trading Partner Business Sessions.

Now FMI is launching a major new project called Total Store Collaboration that builds on the substantial successes of the industry’s Trading Partner Alliance but expands the focus to a much wider range of associations and industry segments.

This is explained in the first installment of a new quarterly special report called Industry Collaboration in Action.

The extreme focus on collaboration may make it seem like a new topic for the food industry, but it really isn’t. It was central to the landmark Efficient Consumer Response initiative in the 1990s, and it has emerged in various forms since that time.

INDUSTRY COLLABORATION
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• Shifting landscape drives deeper partnerships

• FMI launches Total Store Collaboration

• Trading Partner Alliance drives initiatives

• GS1 US makes contributions

• Industry honors achievers

Nevertheless, things are different now. The driving forces are more intense, which leads to bigger exposure for this topic.

Here are some drivers of collaboration today:

• Retail competition: The proliferation of food at all kinds of retail outlets has changed the collaboration calculus for suppliers and retailers.

• Efficiency needs: The extreme nature of competition today requires collaboration around improving the supply chain and removing costs from the system.

• Technology: A range of new technologies is available that wasn’t on the scene during earlier phases of industry collaboration.

• Consumer changes: This is the biggest driver of collaboration. Shoppers are far more diverse. They demand more information, value and transparency. They don’t care how the industry defines retail channels, they just want a good shopping experience.

As just one example of the new dynamics, manufacturers need to rethink how they work with different types of retailers. That point was made at FMI Midwinter by Steffen Lauster, VP, consumer and retail, and practice leader, North America, for Booz & Co.

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As he explained, current business systems are geared for large retailers and manufacturers, but were created before emerging retail segments, like dollar stores, gained bigger footprints in food. Suppliers now need to figure out how to customize ways of doing business with fast-growing retail segments, while making sure the approaches are profitable.

The solution may be to take more than one approach, as he concluded. This means tailoring strategies for different retailers and demand levels, whether for scale or customization. This will require new skill sets, metrics and working processes, he added.

Here’s one thing we can be sure of. In the past, the collaboration topic seemed to go in and out of prominence for the industry. Now, with all these influencers and new initiatives, it’s a safe bet that collaboration will be on the front burner for a long time.