Supplier Collaboration: How Sweet It Is

I recently penned a piece on my blog about customer-supplier collaboration between Hershey Foods and Kmart (part of Sears Holdings). A Kmart general manager and a Hershey Foods sales executive gave a talk at the AME Lean Conference about how the two companies jointly developed and executed very successful programs for the 1368-store Kmart chain. An example of one of these programs was the Heroes at Home Kisses (wrapped in blue foil with silver stars) which raised money for military families.

There are multiple challenges to implementing such collaborative programs between a retailer and a manufacturer, such as, for example, shipping constraints, inventory, financial issues, display space in stores, and the overall challenge of new product development and sales. Both companies had to put significant resources behind the programs to ensure success. Hershey needed to involve category managers, packaging, logistics, and manufacturing resources and invest in dedicated resources, advertising support, specific promotions, customer events, and sampling. Sears Holdings had to provide resource support, merchandising, television advertising and invest in new product launches and marketing initiatives.

The most fascinating part of the story is how a Hershey sales executive and a Sears Holdings GM were able to pull off such a highly successful collaboration that was not the typical sales-driven approach and was so complex and resource-intense. The answer is communications and trust. But how was this trust developed? It didn't happen overnight. And it began with the development of the relationship and mutual trust between the sales exec and the GM. The two companies began holding an annual joint planning meeting with multiple functions in attendance from each company. They held multiple "collaborative ideation" sessions. They held bi-weekly meetings involving sales, marketing and category management teams to implement the programs and to communicate on an ongoing basis. Even the in-store sales associates became energized.

To sustain this collaboration, the sales manager and the GM were well aware that their obviously strong relationship had to go beyond the two of them if the collaboration were to be sustained. They had worked hard to make this happen. They admitted to me that neither of their companies had another customer-supplier relationship that came close to this one. And it's not for lack of trying to replicate this type of relationship with other suppliers or customers. The collaboration has been very financially productive for both companies, so they were somewhat puzzled by their inability to replicate it. It illustrates the limitless potential of a good customer-supplier relationship. Given how unique and almost counter-culture the relationship between the two companies is, I still wonder what will happen when these two individuals move on and others are left to keep the collaboration going.

Sherry Gordon

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