Food Retail: It's a Jungle Out There
I was watching The Discovery Channel with my son the other day and saw a program about a group of cheetah hunting a lone springbok. Menaced from the front, sides, and rear the antelope leapt high in the air, and dodged from side to side to escape the jaws and claws of its larger, faster competitors. This time he gets away. But he knows they are still out there.
I saw parallels with a story in this issue about the challenges business logistics managers face in food retailing. Yes, food retailers are dealing with the same rapid rate of change we are—slimming margins, stringent customer demands, understanding and applying a blizzarding array of new IT applications, and selecting solid carrier and logistics partners. Then there is the economy. Like that lone springbok, food retailers are being chased by big, fast, dangerous competitors. Cheetah-like discount retailers such as Wal-Mart now sell food at their "super-centers." Worse yet, thanks to years of honing supply chain skills to a razor's edge in the discount retailing segment, these competitors are so agile and efficient they can run fast, with seemingly seamless product replenishment that goes on forever. As if that weren't enough, Wal-Mart's McLane Grocery Distribution subsidiary uses logistics excellence to empower convenience chains such as 7-Eleven—which weren't normally price competitive with supermarkets—to close that gap.
How can you fight the "mega-discounter-in-convenience-store-clothing" trick? You guessed it, logistics. As our story shows, companies increasingly turn to SC excellence to keep them nimble and efficient enough to stay ahead of the pack. But a basic problem hampers SC initiatives. "For years retailers and manufacturers have had a bad relationship, often at loggerheads when it comes to resolving issues," according to a spokesperson from the Grocery Manufacturers of America. Communicating, cooperating, and collaborating must be improved or true SC excellence will never be achieved.
Butting heads with your vendors often gets a bad rap in trade magazines, usually glossing over what the fight is about. It's about money and there is nothing wrong with that. Conflict can purify the vendor-customer relationship and result in some savings. It does, however, create a culture of distrust that makes the collaboration needed to drive logistics excellence pretty difficult to overcome.
But what if you could achieve more savings without being at loggerheads? The experts say it's possible. But there has been a culture of distrust for so long, what will it take to convince food retailers that your vendor, your solutions provider, your business partner need not be the enemy? It is happening, as our article shows. For the first time, the systems are available to share information but still maintain control. Working together for the greater good. Sharing the risks, sharing the benefits. We need more of it.
So how did that lone springbok escape his competitors? He melted into the herd and the cheetah lost their single-minded focus on him. Distracted, they chased many and got none. Working together for the greater good. Score one for collaboration.