In a recent survey conducted among 132 representatives of the retail industry by Affinity Logic, the business and IT solutions arm of UCS, the company found that players in the retail sector are concentrating on selective collaboration projects with key partners.
"This is a significant change from the early trade partner collaboration initiatives of the 90s, which were driven by industry- or marketplace initiatives," comments Wayne Toms, executive for strategy at Affinity Logic. He continues: "The key motivator behind this trend appears to be the achievement of joint benefits from bespoke solutions to specific problems."
The survey revealed that collaboration is very topical right now in this sector, with over half the respondents indicating that their companies are already involved in a range of initiatives.
"The nature of the collaboration varies depending on the area representing the greatest pain to the partners involved and include projects to automate order management, improve promotions efficacy, improve return on marketing spend, or geared towards new product introduction/innovation, migration to replenishment and vendor/joint inventory management," states Toms.
Chris Shortt, executive for collaborative solutions at Affinity Logic, adds: "At this stage, the bulk of the undertakings revolve around achieving transaction efficiency ahead of more strategic information sharing initiatives, largely because at this level competitive information is not shared, creating less issues of trust."
The most frequent collaboration projects revolve around automated order management (69% of retailers and 72% of suppliers), closely followed by specific product performance initiatives around product development, promotions and marketing.
"The areas with the least support for collaboration were replenishment (44% of retailers and 46% of suppliers) and vendor/joint inventory management (38% of retailers and 41% of suppliers) - possibly because both these relate to overarching merchandise strategies, which requires a significant investment in relationship building and trust levels not yet demonstrated in the industry before any collaboration can be broached," states Shortt.
Toms continues: "Interestingly, suppliers claim to be more advanced in their adoption of collaboration with the exception of promotions effectiveness, perhaps because of the greater maturity of supply chain implementations and the upstream links in the manufacturing sector."
The survey also showed that retailer-supplier relationships are taking on a more collaborative tone than in the past:
* More than 80% of respondents view their relationships as collaborative.
* They have specific requirements from these relationships - 50% of respondents see the collaborative relationship extending only so far as it benefits themselves.
Shortt adds: "What is clear from the high degree of correlation between the responses to the questions from both retailers and suppliers is that they are starting to understand each other on many of the issues driving trade partner integration. This is heartening because solutions in this area may well be able to help save costs in the near future as retailers and their suppliers face a deflationary environment for the first time in many years."
He elaborates: "The significant difference to the quality of this collaboration, however, is that trade partners are now investing in 'narrow and deep` collaboration initiatives, versus the 'broad and shallow` initiatives of the past. What this means is that they are addressing more complex partnership issues with a few key partners, as opposed to trying to develop superficial links with a wide range of partners."
Toms concludes: "This trend is driven by the fact that retailers and suppliers are increasingly realising that superficial interventions deliver limited returns, while real benefits can only come through targeting the unique process-level opportunities for improvement. This is a signal of the increasing maturity of this sector in SA and a strong move towards a partnership approach for all to maximise the opportunity to grow."
Share
Editorial contacts