New Liaisons Not Necessarily Dangerous
Finding ways to maximize staff, facilities and technology by sharing them with competitors may be the new Dangerous Liaisons. According to a report in The Times, U.K. manufacturers and retailers are looking at creative ways to use what they have - or what someone else has - to mutual and cost-effective advantage. Fair, objective contracts can often reduce some of the expense, stress and chores needed to sustain in-house activities.
As the paper explains, "with mergers off the cards for all but the most cash-rich companies and the pressing need to make savings, companies are looking to less permanent liaisons that can bring mutual gain." Andy Tinlin of Accenture is quoted as saying,"Collaborative ventures are being seen very much as an alternative to M&A."
Explaining that shared functions such as procurement can provide synergy, Mr. Tinlin went on to describe "a fundamental shift from doing it all yourself to focusing on the customer proposition, brand and relationships."
Similarly, Stuart McKee of PricewaterhouseCoopers (PwC) contends, "Every business has some part on which it could collaborate...with a competitor." Although there are obvious challenges involved, especially avoiding disclosure of commercially sensitive information, PwC is so sure of its potential that it has created "prepack contracts" to cover the legalities for joint ventures.
One organization actively putting cooperation into practice is the Institute of Grocery Distribution (IGD) which has been playing matchmaker to retailers since 2006, specifically in terms of transport and distribution routes. A series of sponsored events has helped companies swap details of routes and look for opportunities to share transport. Tarun Patel, head of IGD's supply chain division, said they wanted to help reduce wasted time and energy from vehicles returning empty from their destinations. He cites Tesco and Unilever as an example, pointing out that they were sending empty trucks in opposite directions between two specific points. They now share.
Mr. Patel goes on to say that collaboration has enough benefits to outweigh concerns about secrecy especially when companies realize that they are saving both money and miles. Environmental savings can provide advantages to business as well as brownie points with customers.
Discussion questions: Are retailers ready to look at collaboration for cost-saving or environmental reasons? What areas do you think may be non-competitive enough for retailers to share resources?