Talking to a range of companies recently about how collaboration in the supply chain has changed in the past few years provided some food for thought.
A few years ago collaborative planning, forecasting and replenishment seemed to be on everyone”s list. All sorts of portals were being unveiled. There was Safeway”s supplier information service, Tesco”s TescoLink and exchanges such as Transora, Worldwide retail exchange (WWRE) and GNX. And the list went on.
”They all failed because the big retailers are not going to share anything worth having,” as one IT vendor put it. That may be true, or perhaps, as another vendor described, there is a ”conspiracy of competence” – any suppliers successfully sharing data with major retailers are keeping shtum about their experiences so their competitors don”t discover the benefits.
Perhaps more significantly, three other discussion points emerged – the first had to do with green issues, the second the global nature of trade and the third focussed on payments.
On the green front there is a clear disconnect between how companies try to manage public perception of their carbon footprints and what goes on behind the scenes as Michael Lainas, executive director at Cert Octavian explained.
His company works for major suppliers of wine – mostly from Australia and California – to UK supermarkets. These shippers happen to also use Cert Octavian for local distribution but the merchandisers in the big supermarkets don”t seem to appreciate this. So when they want to call in supplies, they send instructions to the wine companies that in turn arrange deliveries for particular time windows with Cert Octavian. The result is often three visits a day to the same store. How much simpler it would be if the retail merchandiser had visibility into the shippers” distribution arrangements so all three consignments could go on the same truck?
Lainas says that only a catalyst such as road charging can bring about the necessary impetus for collaboration to develop greener solutions.
On the global front, collaboration issues today concern short-term relationships with trading partners that may have only rudimentary IT and no intention of investing in complex EDI links with retail customers that may be short lived.
Retailers, too, have become notoriously fickle when it comes to longer term partnerships as they seek out the best deals from the lowest cost suppliers regardless of national boundaries.
For some, the solution lies in short-term licences and easy access to web-based systems that require little training or investment.
For Chris Foulkes, chief product officer at Eqos, one option may be an e-Bay style website where would-be suppliers pay a nominal fee to pitch to the likes of Tesco, Metro or Carrefour. The nominal fee would discourage time wasters while still allowing European buyers to discover new Far Eastern suppliers fairly painlessly.
If this sounds like a slimmed-down version of something like WWRE, that”s because it is, but who has heard much from any of these megatrading exchanges in recent years anyway?
Finally, we come to collaboration on payments. Once, retailers did the honourable thing and helped arrange letters of credit for their offshore In-depth relationships may be a thing of the past but surely there”s still room for
a little cooperation?producers to help them obtain bank loans to finance production. Today it”s all open accounts and payment on delivery. Suppliers must fend for themselves. This is a model that can”t last.
Some retailers may take pride in squeezing their suppliers for the last penny but if producers in India, Vietnam or Romania can”t obtain the necessary loans to buy raw materials, agreements to deliver finished goods by a specified date are not worth the paper they are written on.
Collaboration in the supply chain may have started life as a way of improving forecasts to keep the shelves filled for mutual benefit, but today it is more about speeding the supply chain with electronic data exchanges, development of floor-ready merchandise and retail-ready packaging or improved category management.
In-depth long-term relationships may be a thing of the past but surely there”s still room for a little cooperation and consideration?
Penelope Ody is a regular columnist with SCS and is a retail market specialist