August is nearly upon us, which means its "reporting season" for the Advantage team and Drinks Association members.
This is the time when we are busy reflecting on, understanding and action planning against the 2020 Advantage Engagement Program.
It’s definitely not business as usual and we have seen this throughout our programs around the world in 2020. COVID-19 has thrown up some interesting perspectives on how retailers and suppliers are being impacted and how they are adapting. In every market we have found similar trends in our data and below is a summary of our findings from international markets.
I have no doubt the experiences of Drinks Association members will reflect what we see globally. The situation has provided a unique learning opportunity. A critical question we will be asking in our presentations this year is: “What have you learned and what will you be doing differently?”
Adapting in uncertain times puts a lens on partnerships
The need to partner in support of the same end goal - getting consumers the products they need - has strengthened cooperation between retailers and suppliers.
Simply put, the situation has led to a greater appreciation and understanding of the challenges that the other side faces in the retailer-supplier business partnership.
Collaborative relationships built on mutual trust have accelerated and reached new levels of intimacy while adversarial relationships have rapidly shifted into partnerships as both parties gained a real sense of “we are in this together”.
Through our research retailers and suppliers shared the key drivers of increased collaboration that have helped to deliver results in a difficult environment.
Let’s explore these in more detail.
1. Constant communication
Daily or real-time communications took the place of more structured and planned conversations, and phone or virtual meetings often replaced or supported written communications. Adapted mediums such as voice connections (phone or virtual meetings) often supplanted written communications to ensure clarity of message as there was no scope for misunderstandings and no time to waste.
Real-time communications have also helped retailers and suppliers exchange ideas with agility, reaching decisions with greater speed and efficiency. Alternatives to conventional communication tools such as messaging apps accelerated to make oneself readily available or more responsive as problems or issues developed.
“COVID-19 and panic buying have put enormous pressure on the entire chain. In these times it is nice to see how cooperation is strengthened by ‘over-communicating’, to be able to help each other where possible and to ensure that the shops remain stocked. This has certainly intensified the relationship with retail.” – Global supplier
2. Sharing and transparency
Real-time sharing of data and category insight, coupled with full transparency and visibility to the supply chain have been critical to ensure rapid adaptability on all fronts and to create trust between retailers and suppliers, strengthening partnerships in a time when retailers must partner with whomever they can trust to get them what they need.
Sharing updates openly and honestly became critical as retailers needed to understand lead-times with an unprecedented level of transparency. Although it is not always easy to deliver difficult news or even a message of uncertainty, this is mutually beneficial compared to avoiding the conversation or withholding information.
Retailers, for the most part, have demonstrated an understanding of the challenges suppliers are facing.
3. Focus on problem solving and compromise
A necessary outcome of the crisis has been that retailers and suppliers have had to focus on problem solving and be ready to resolve issues. This has required putting aside their agendas and reaching a compromise to make decisions and execute under pressure in the tightest timelines imaginable.
This has brought a new emphasis for working towards creative solutions, rapid ideation and a real demonstration of “fail fast” innovation in processes.
As an example, upgraded category insight capability has grown out of the need for enhanced processes for acquiring feedback and turning around requirements in real-time.
“A positive aspect is that we cooperate more closely in the logistics field than before and that we both better understand each other’s difficulties (e.g. out-of-stocks) and come up with creative solutions.” – Global supplier
4. Empathy to understand each other’s needs
No one wins in a time like this, and retailers and suppliers cannot afford to carry over some of the legacy business practices, such as making zerosum demands or working toward a one-sided outcome.
Retailers and suppliers have had to be flexible and understanding of one another’s needs and capabilities. It is not “business as usual,” so in some cases, this required a break from the usual ways of doing business, which may set a pathway towards stronger collaboration in the future.
When business partners demonstrate a desire to listen, learn and collaborate, win-win outcomes can be created without all the process and stress of negotiation. Supply chain flexibility and adaptability have been the predominant requirement with suppliers looking at all sourcing and delivery options with retailers to supply where it is needed most.
Suppliers have been appreciative of retailers who have withdrawn standard penalties for delivery and promotions non-compliance.
The outcome of the situation is what we are seeing evolve in real–time and what showcases the industry’s ability to respond to a crisis. The industry established capacity and capability for new ways of working with agility and efficiency and in many cases doing “better with less”, i.e. fewer people, less time and less information.
It continues to be a credit to the industry how well suppliers and retailers have each and collectively managed through COVID-19 – for the most part a shining example of how collaboration can make an impact for good – keeping economies, societies and households functioning during a time when much activity has come to a standstill.
Moving forward
The most important takeaway from our global findings is for the industry to look back at the learnings from recent months to plan for the next phase. Suppliers and retailers need to consider these learnings, not letting the wealth of insight available from this situation go to waste.
Collaboration is supported through listening and responding. From August onwards the Advantage team will be providing Drinks Association Members with data and insight on their key collaboration metrics for 2020. Our purpose is helping businesses be better together we look forward to working with you to achieve this aim.
Who will win Supplier of the Year?
The results of the annual Advantage Engagement Survey are used to decide the winners of the Supplier category at the Australian Drinks Awards.
The 2020 Australian Drinks Awards will be live streamed on Thursday, July 30, at 4.30pm, hosted by TV personality Shelly Horton.
Four trophies will be awarded: Supplier of the Year, Most Improved Supplier of the Year, Supply Chain Management and Category Management.
Click here to register
John McLoughlin is Managing Director APAC at the Advantage Group. He's pictured above presenting the 2019 Supplier of the Year Award to Lion National Sales Director Mark Powell. Pictured main: BevChain warehouse facility.
Advantage is a Corporate Partner of the Drinks Association.