Collaboration between FMCG suppliers and retailers as key to success

As consumers grow more demanding, retailers need to ensure products are available at the right time, through the right channel and at the right price. While it seems collaboration between retailers and suppliers has existed forever, it has become more essential for success. While today’s manufacturers and retailers are each facing significant but unique challenges, there is common goals that drives collaboration - higher sales, increased profitability, and stronger business growth. Indeed, an ECR-McKinsey survey shows that an effective collaboration between retailers and suppliers results in a cost reduction of 5.4%. and a 4.4% decrease in out-of-stocks. It also increases revenues by 3.7% more than the average company.

Retailer supplier collaboration : key topics

Even if many industries have already fully understood the opportunity of an optimized collaboration, Retail is still in the early stages due to both traditional past behavior and a fear of sharing sensitive information. Indeed, the retailer-supplier relationship has long struggled with distrust from both parties acting in self-interest. Retailers and suppliers can overcome this challenge by better sharing information and truly collaborating to exceed customer expectations. At its most advanced level, they are all part of a shared system, jointly pursuing opportunities to improve margins and growth across the entire value chain to benefit the end-consumer through:

• New Product Development : Collaboration eases new product development from the marketing brief (retail) to production (supplier) all along R&D and quality processes.
• Request for proposal and tender selection: Through an effective bidding process, retailers are able to choose best suppliers for product.
• Time to market improvement: It no longer simply consists of a new product a retailer is offering but also to the retailers’ ability to adapt and adjust to the changing marketing world around them. Suppliers are fully part of this new process.
• Range and product optimization: To optimize existing formula with less costly alternative or trendy ingredients, retailers have to involve suppliers in their portfolio categorization.
• New market access: Retailers must consider multi-language and localization (multi-regulatory) issues while setting up on a new marketplace. Collaborate with suppliers at this stage is essential to enter a new place in optimal condition.

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