This blog contains highlights from CGT's 2013 Consumer Goods Business and Technology Leadership Conference and our IDC Shared Strategy report on the efficiencies, improvements, and roadblocks across the retail and consumer goods collaborative business and IT environments.
The last week in October, I attended CGT's 2013 Consumer Goods Business and Technology Leadership Conference to present highlights from our Shared Strategy report with a panel that included representatives from Clif Bar & Company, Frito-Lay Inc., and Sony Pictures Home Entertainment. Our IDC report on the state of collaboration between retailers and their suppliers will be available in the CGT December issue (followed by a longer January report for IDC subscribers with additional IDC Manufacturing Insights data and analysis.)
For this year's Shared Strategy report, we still find consumer goods (CG) manufacturers and retailers concerned about the economy as in past years, and they're both preparing for opportunities to improve their performance. Retailers are definitely in transition, serving the omni-channel shopper, and they need their suppliers' help. At the same time, CG manufacturers want to protect and promote the power (and value) of their brands and increase customer service and customer loyalty; their efforts also require retailer-supplier collaboration. Newer technologies will help the way these companies collaborate and serve customers and consumers. For example, product lifecycle management and material tracking tech investments will improve their ability to provide better traceability and increased product quality, as well as support more product-based collaboration.
But I also think a close review of collaborative processes including collaborative planning will benefit retailers and their suppliers. Based on our findings, collaborative planning is allowing CG manufacturers to improve their ability to become the retailer's partner of choice and to improve customer service. Certainly there will be cases where the intent of collaboration is to reduce the cost of relationship, but more frequently, CG manufacturers will drive cost savings within their own four walls or in those processes that they primarily own. One point that seemed clear from the panelists and in general at the conference is that technology may be helping us to do our jobs more efficiently and engage with the consumers more, but we also need to pay close attention to the people and process components of collaboration. After all, collaboration is based on a relationship, not a technology. Although I heard a number of manufacturers say in separate conversations how much they dislike having the call with retailers about out of stocks, having the relationship in place provides a means of collaborating on a solution.
One final thought: this is the seventh year we have produced this report about the state of collaboration, and while in some cases, collaboration has improved, it's clear it remains an ongoing challenge. Is collaboration getting more difficult or more critical? I think some of the complexity is a result of the fact that there are fewer traditional retailers and manufacturers every year. Most companies are hybrid in some way - retailers may take increasing responsibility for the products they sell either through private label, exclusive offerings, product designs, or even directly sourcing or owning manufacturing. Manufacturers are exploring their ability to improve their relationship with consumers, perhaps through new consumer engagement options or even through direct to consumer sales.
It's this change in the industry structure that adds to the collaboration challenges from a people and process perspective. Maybe we should look at technology as the easy part, and well worth the investment to support people and processes.