What is Collaboration and Why Collaborate?
The word ‘collaboration’ teams up the Latin words, ‘com’ (with, together, jointly) and ‘laborare’ (to work) to form the word collaborate and to mean working together. In the context of food waste prevention, we define collaboration as retailers and suppliers working together to co-create new interventions that prevent waste, in ways that would otherwise not be possible or imagined.
The Chartered Institute of Collaborative Working (ICW) noted, “Collaborative business relationships have been shown to deliver a wide range of benefits, which enhance competitiveness and performance whilst adding value to organisations of all sizes”. The premise and underlying assumption of this research is the same, and that collaboration can be an effective way of discovering and delivering new and innovative interventions to the problem of food waste and markdowns. This assertion is underlined by public statements by most industry leaders, including Dave Lewis, the CEO of Tesco.
The Role of (Better) Collaboration in Reducing Food Waste
There is much that retailers and suppliers can do to reduce food waste on their own and without the need to work with others. There is also much that can be delivered by working more closely with others outside of your own organisation. Four examples of how food waste can be reduced via collaboration between retailers and suppliers are shared below.
1. New Product Innovation: Retailers and suppliers can jointly develop new products that can appeal to consumers and at the same time reduce waste. Examples could be new products with an extended shelf life or new products that use ingredients that would otherwise be wasted.
2. New Packaging and Case Sizes: Retailers and suppliers can jointly develop different packaging and case size configurations that could help reduce waste without dampening the consumer proposition or add cost to the operation. Examples could be new packaging that better protects product from risk of damage, allows the consumer to use just one portion or smaller case sizes to increase distribution.
3. Joint Forecasting and Replenishment: Retailers and suppliers can jointly work together to produce more accurate volume demand forecasting that would minimise over-supply to the store while avoiding excessive levels of lost sales. An example could be retailers sharing a live feed of hourly EPOS sales data directly with their suppliers to help ensure supply and production can more closely match consumer demand.
4. Joint Short-term Demand Generation: Retailers and suppliers can jointly work together to manage crop flushes and to re-purpose the parts of the crop that does not meet the cosmetic standards demanded by consumers.
Case Studies in Collaboration
To illustrate the benefits and results from collaboration, the research team have started to collect evidence from joint projects in the public domain, below are three case studies:
Case Study 1: One manufacturer and retailer worked collaboratively to create a new product made up of unused raw materials, thus saving those materials from being wasted. This new line item is now being sold in the retailer’s stores.
Case Study 2: A manufacturer and retailer collaborated to improve the percentage of every crop that was consumed by re-purposing and processing the off standard and odd shaped products into other products such as ready-made meals and frozen varieties of the product that would then be sold in the retailer’s stores. This collaboration prevented significant quantities of product being fed to animals or thrown away, while also improving profitability for both organisations.
Case Study 3: To help avoid a possible high level of waste in the field caused by a bumper harvest of cauliflowers, and despite the risk of more food waste in the stores, one retailer responded to the cauliflower flush by introducing new in-store promotions (recipes, extra displays and price discounts) to increase sales and overall waste.
Despite these success stories in supply chain management, a greater adoption by more organisations of collaborative working, across more fresh categories, remains a significant opportunity. It is also the case that many organisations still report that their relationships with their retailer or producer partners are still adversarial; that data sharing is not smooth or regular, and that uncertainty in the relationship and a lack of trust remains high.
So, what is getting in the way?
Understanding the Barriers to Collaboration
The Five key barriers to collaboration:
1. Competing Internal Priorities
Competing internal priorities get in the way when interventions that for the total company may help the organisation improve waste can be blocked by any one function if it has a negative impact on their own objectives. An example could be case size reduction: For the store, a smaller case size can very often help to reduce waste by removing the risk that the product will not sell out before the shelf life expires. However, this adds cost to the supplier, leading to a higher cost of goods and a lower gross margin for the buyer, and increased logistics costs for the supply chain. If the priority is to lower logistics costs, then smaller case sizes may be de-prioritised.
As one retailer in the focus group stated: ‘we cannot collaborate internally, let alone hope to be able to collaborate well with external partners, which is a response that is not unusual for many managers executing collaborative ways of working. The practitioners and academics supporting this research underlined the challenges with internal collaboration with further examples, and that getting it right is an important pre-requisite for effectively collaborating in the supply chain.
2. Data Sharing and Transparency
Accessibility and transparency to meaningful data was also called out as a significant barrier, explained sometimes simply because there is no data, or a means by which to share. However, for some organisations, the principle of data sharing with others has either been considered and deemed not to be appropriate or a policy has yet to be established. The fear of the data getting into the hands of competitors and foregoing potential revenue from data sharing were two specific examples of reasons why data sharing was off the table for many organisations.
3. Joint Business Plans
The focus group discussions revealed that food waste, and collaboration on waste was rarely included as a metric for consideration in joint business plans. Unless prioritised at the highest level, and documented, the focus groups concluded that collaboration is unlikely to grow and deliver benefits other than those that can be achieved by just good coordination. Said differently, collaboration can be perceived as a process that slows down progress while coordination is seen as a planned activity that delivered results in a controlled way.
4. Benefit Sharing
While there are case studies that demonstrate that collaboration can unlock huge value for all parties, Tesco and Branston being an example , the research found that often projects failed to get off the ground at the very start as organisations fail to reach agreements on how to split any benefits that may be realised or additional costs that could be incurred.
5. Consistency and Capacity
Collaboration is about long term thinking however suppliers’ category managers and buyers are often tasked to think short term; they are often not that long in any one category role, sometimes less than 18 months, and very practically, with sometimes more than 30 vendors for any one category, there may simply not be the time to be part of any collaboration projects.
Is your organisation ready for collaboration?
In the first instance, consider how waste collaboration fits with the company strategy and priorities
Does Food Waste Fit with CEO Priority?
Strategic priorities are set by the executive management with the CEO held accountable for the delivery of these priorities. When food waste and markdowns are a corporate priority for the Board and the CEO, and where that priority is communicated in public statements, collaboration will be a more relevant proposition, and one that can command resources and a sense of urgency for results. Conversely, where there is no clear priority for food waste and markdowns, it follows that collaboration will be less relevant as a strategy.
What is the Extent of the CEO Scope?
Food waste occurs at all points in the supply chain journey, from the field all the way through to the consumer’s home. Organisations, perhaps especially those with scarce resources, may choose to tackle those aspects of food waste that occur just ‘within their own four walls’ to deliver immediate improvements without the need to involve or collaborate with others.
Others, may choose a fuller scope, embracing aspects of the supply chain beyond their own four walls. This more ambitious scope will require the need to engage with other partners, which for retailers may be their suppliers or shoppers. The larger the scope, the more relevant collaboration will be to the delivery of improvements, and the more likely that resources will be allocated to foster and deliver that collaboration.
Understanding the Business Case for Collaboration/Perceived Value
Successful collaboration needs an investment in resources, a commitment to share proprietary data, possibly intellectual property or other early stage thinking that could be considered ‘company secrets’. Further, deep collaboration also requires the acceptance that progress may potentially be slower than with other less collaborative approaches to innovation. Organisations need to be convinced that the ‘prize’ from collaboration more than covers the cost of the investment in time and money. Those that have previously proven the value of collaboration or who have deeply held beliefs that there is a business case for collaboration will be more open to collaboration and new ways of working.
Conversely, collaboration will be unlikely to be relevant to those organisations who have yet to realise any benefits from previous collaborations, have had bad experiences from previous collaborations or who simply do not believe that any possible ‘prize’ from collaboration justifies the time and expense.
What about the Data Sharing Strategy?
Whether or not to share proprietary data with others as a strategy is a major decision for organisations. Some organisations elect simply not to share data at all, whereas others, for example Walmart, view sharing data with their vendor partners as a strategy for growth. The extent to which data can and will be shared with others will be the key to determining the value that can be delivered by collaboration. There needs to be a clear and agreed purpose for sharing data to enhance the collaboration.
Formalisation of Approach
What are the Business Guidelines for Collaboration?
Organisations intent on leveraging collaboration as a strategy will develop and communicate internally business guidelines on collaboration. These will identify the role that collaboration plays in delivering corporate priorities, and with which organisations any collaboration will be prioritised and the expected benefits. In the absence of clear business guidelines, organisations may hesitate and be unable to unlock the true potential of collaboration.
What are the collaboration Principles & Rules
Collaboration is an investment not only in resources and time but also trust. Clear principles and rules help ensure organisations are compliant, that all confidential data and company secrets are protected, and where there are gains, there are clear principles agreed up front on how those benefits can be shared between organisations. Collaboration in organisations where these principles and rules are explicitly stated are more likely to succeed than in those organisations where they have not been fully considered and made explicit.
Secondly, consider the Capability Readiness of your organisation for Waste Collaboration
Is there a Collaborative Culture and a place for Multi-disciplinary thinking in your organisation?
It is often easier for any single organisation, function and individuals to work in isolation on what matters most to the achievement of their own performance metrics. Collaboration in organisations where there is not a culture of working together and where incentives are misaligned is unlikely to prosper. For example, a buyer working in isolation of others may be unlikely to accept a higher cost of goods and lower gross margin for a product improvement that has a longer shelf life in the store if there is no direct benefit on their own scorecard from reduced food waste and where gross margin is being prioritised by the buyers functional leader.
Conversely, organisations where there is a culture of working together and where incentives are aligned, are likely to be very well set up for successful collaboration.
Do you have People Capacity and Dedication?
Collaboration requires leadership, dedication and capacity. Where this is all available, collaboration can thrive, where it is not, collaboration will simply remain an aspiration.
Do you have processes and KPIs to support collaboration?
Food Waste Measurement and Transparency
The extent to which organisations measure food waste and are prepared to share openly with others will be a significant factor in determining the health and productivity of an investment in collaboration. With data, organisations can have clear, unarguable metrics to guide the joint work. Without data, any joint work will be problematic as the benefits delivered by collaboration and any return on the investment will be hard to quantify.
What is your Level of Food Waste Data Detail?
The more granular the data on food waste, the greater the visibility to the possible reasons and root causes of the food waste problem, and it follows, the more likely that the right interventions can be identified, and their impact measured.
What is the Availability of Food Waste Data for Collaboration Efforts?
The design of data systems and hierarchies rarely consider the requirement at some point in time to share data with others, hence when requests for data sharing are received from another organisation, it is often very hard to extract the exact data required for the collaboration to succeed.
Data Sharing Capability
Collaboration between organisations who each have available the right data at the right level of detail may still not be optimised if the means by which to share that data cannot be made freely available, in a way that is simple and effortless. Conversely, any collaboration is made more difficult when every data request has to be submitted and then agreed on a case by case basis, with the data manually extracted and shared in a file between respective partners.
Proficiency of Volume Planning Capability
The extent to which organisations are able to collaborate together on one of the key levers of collaboration on food waste prevention: volume planning, will in part be dependent on the proficiency of the forecasting tools, and the sharing of information. Where organisations have dedicated ‘state of the art’ forecasting tools that can inform mid- to long-term volume planning, and a commitment to information sharing, collaboration can succeed.
This blog is based on a three year research project, click here to read and download the full findings and self-assessment model