New Liaisons Not Necessarily Dangerous
By Bernice Hurst, Contributing Editor, RetailWire
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
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?