Insight Reports

The Future of Supply Chain Collaboration

Click to view report's table of contents
Click to print

The Future of Supply Chain Collaboration

What factors are slowing down collaborative development? What will encourage or delay development in the future? Is it now time for suppliers to take the lead in promoting more collaborative projects?

There is an increasing sense of frustration. In principle, both retailers and supplies agree on the need for collaboration. In practice, everyday commercial pressures seem to hamper progress, and there have been some uncollaborative initiatives, notably Tesco’s early campaign on factory gate pricing. What has changed? Has logistics been completely subordinated to the commercial function?

Tesco’s role is central. Tesco pioneered collaborative supply chain development in the UK. If progress is now slower, a major reason is that Tesco is no longer choosing to be as collaborative as in the past. The new Tesco attitude comes from greater bargaining power and price competition in the market. However suppliers must take into account that while Asda’s requirements have become more standardised, international, multi format Tesco are by contrast a business managing increased complexity. What Tesco most need from suppliers is resource to help them meet their goal of satisfying every type of customer in all formats from a 2,500 sq ft Express to a 100,000 sq ft hypermarket. This presents opportunities for suppliers willing to take the initiative.

In the market as a whole, encouraging progress is being made at the tactical level, where both parties have everything to gain by working together on forecasting and event management. The problem of the last 50 yards has received increasing attention, with some favourable results. VMI has made some progress. But the motive force for strategic development now seems to be lacking.

Supply chain collaboration is now more necessary than ever and in terms of technology, easier to achieve. Extranets have greatly increased levels of information flow from retailer to supplier. Distribution centre automation, RFID and the extranets themselves highlight the increasingly urgent need for agreed standards and systems. But progress is too slow. What factors are slowing down collaborative development? What will encourage or delay development in the future? Is it now time for suppliers to take the lead in promoting more collaborative projects?

Supply chain issues, for Tesco in particular, are no longer just UK grocery issues. For Tesco the global non-food retailer, supply chains are international, and standards and systems must be adapted to this worldwide role. At the same time Wal-Mart is using Asda to put Tesco under unprecedented pressure on its home territory.

Who will lead the way in collaboration in the future? Asda is currently adopting a much more collaborative stance than Tesco. The Wal-Mart extranet is setting new standards of information flow to suppliers. Worldwide, Wal-Mart will inevitably be at the centre of new logistical development. But collaboration can also be initiated from the supplier side, and our report concludes by examining this option.

This report is based on qualitative depth interviews at senior level with leading grocery multiples, manufacturers and logistics service providers. It features proprietary business-to-business interviewing and data analysis techniques. Interviews are transcribed and subjected to a systematic process of analysis. This yields a unique consensus on current practice and provides the industry with a management tool based on real issues and actual decisions.

Published: March 2004

Price: £ 495, US$ 795, € 750

To order online now click here

Insight reports are quality guaranteed. If you are dissatisfied, please return the report within 14 days and tell us why. Your invoice will be cancelled or money refunded.

Click to view report's table of contents