Better Retailer-Supplier Collaboration Impacts 20% Of Revenue For Each

  • June 8, 2020 at 5:21 PM EDT
  • By Marie Griffin
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A large majority of global grocery/CPG retailers and suppliers report that collaborations between the two parties have improved during the past two years, according to a new Coresight Research report titled “Winning with Retailer-Supplier Collaboration in Grocery and Drug Retail.” The report calculates the impact of business operations improvements stemming from these better collaborations at approximately 20% of total revenues for both suppliers and retailers.

“In an environment where consumer demand is changing by the hour, and with the high potential upside of affecting up to one-fifth of overall revenue, it’s critical for retailers and suppliers to identify ways in which they can further strengthen collaboration and their lines of communication,” said Weinswig in a statement.

In March 2020, Coresight surveyed 210 senior executives from retail and supplier organizations with revenue of $3 billion or more that are headquartered in the U.S., UK, France and Germany. Equal numbers of retailers and suppliers responded.

Among retailers, 85% reported that their collaboration with suppliers had improved; among U.S. retailers, 93% cited improvements. Among all suppliers, 92% said collaboration with their retail partners had shown progress.

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For retailers, the concrete improvements included:

  • More productive meetings (74%);
  • Higher customer satisfaction (65%); and
  • Improved time management (62%).

Among suppliers, 56% cited higher customer satisfaction, 55% chose more productive meetings and 52% identified improved business planning as top benefits.

As heartening as these benefits are, there’s still plenty of room for improvement. The report identified two primary opportunities for taking retailer-supplier collaborations to the next level:

  • By leveraging predictive analytics and customer-centric data collaboration, retailers and suppliers could build more responsive supply chains, to serve customer demand more quickly and foster a more customer-centric business overall.
  • Retailers and suppliers could embed a results-oriented collaboration into their business decision-making processes to bring about substantial changes in business operations.

Lack Of Trust Remains A Key Challenge

Nearly two-thirds (63%) of retailers said lack of trust and communication remained a barrier to better collaboration with suppliers. Similar percentages cited lack of product availability to meet shoppers’ changing demand (63%), and limited data transparency across the supply chain (62%).

For suppliers, limited data transparency was the biggest challenge, at 56%, followed by lack of product availability to meet shoppers’ changing demands (55%) and lack of trust and communication (52%).

One of the major hurdles blocking improved collaborations is that retailers and suppliers consider different characteristics to be critical to the success of their partnerships. For example, suppliers delivering what they promise was classified as either important or very important by 75% of retailers, but only 55% of suppliers called the reverse important or very important.

Nearly three-quarters (73%) of retailers called having a vision for the future important or very important, compared to just 50% of suppliers. Among retailers, 70% cited suppliers having appropriate resources as important/very important, and the same percentage value the ability to quickly respond to market and consumer events and trends. In comparison, these factors were considered important/very important by just 60% and 58% of suppliers, respectively.

The study was sponsored by Precima, a retail strategy and analytics company acquired by Nielsen in January.

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