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Innovation is often lacking not only where you expect it most (just ask Xerox), but abundant where you expect it least.
For example, I recently wrote an editorial about the formidable cultural barrier to sharing information among trading partners ("We're Not Worthy," Feb. 16, 2001). In that column, I pointed out that the promise of collaborative supply chain management will remain nothing but that - unrealized potential - unless the buyer-seller-supplier relationship status quo changes. In other words, bashing each other over the head in the pursuit of short-sighted cost cutting, even if you do so using e-procurement systems and other "digital hammers," is not collaboration (well, collaborative bleeding, perhaps).
Since then, surprisingly, the convenience-store industry has become one of the few business segments in the United States to breach that barrier to increase profitability. Retailers such as Loaf 'N Jug of Fountain, Colo., Kwik Trip of La Crosse, Wis., and Quick Chek Food Stores of Whitehouse Station, N.J., have joined a long list of distributors and manufacturers (including Anheuser-Busch, Pepsi-Cola, and R.J. Reynolds) in a collaborative business relationship that should be the envy of American industry. The big automakers (see "The Big Bang") wish they had it so good.
C-Store Collaboration
Here's the background: In early 2000, the American Wholesale Marketers Association (AWMA) and the National Association of Convenience Stores jointly assembled a consortium of partners to initiate the Convenience Supply Chain Assortment, Profitability & Efficiency (C/SCAPE) project. This project, which involved a 12-month analysis of item-level and activity-based costing and other data originating from consortium members, culminated in the development of a framework for "shared understanding" of costs as well as supply chain cost assessment software that will be shared across the industry. The study results, framework, and software were recently introduced at the sponsoring bodies' trade conferences.
According to Kit Dietz (see www.AWMAnet. org), chairman of the board of Tripifoods (Buffalo, N.Y.), and an early activist for the project, neither wholesalers nor retailers in his channel understood how individual, parochial decisions can affect costs in the supply chain; no required data or models existed. (Dietz cites the example of windshield washer fluid, a bulky item that stores tend to stockpile during winter time, thereby increasing deliveries and distribution costs. Intuitively, it may make sense to gradually increase washer fluid orders across regular deliveries, but no data existed to confirm that this approach would be more cost-efficient.) To Dietz, it was clear that an "industrywide approach" was required to integrate cost and profitability into his supply chain model.
Anecdotal evidence suggests that data compiled by C/SCAPE has already improved the competitiveness of Dietz's channel. (See "Convenience Stores Create Software to Boost Profitability and Cut Costs," The Wall Street Journal, Feb. 15, 2001.) Someday, all trading partners will recognize the value of teamwork: a hallmark of the intelligent enterprise.
Best Behavior
Speaking of teamwork, our lineup of contributing editors is deepening all the time. In this issue, Laurie Windham, founder and CEO of e-marketing strategy firm Cognitiative Inc., debuts a new column called Customer Behavior. Laurie is the author (with Ken Orton) of The Soul of the New Consumer (Allworth Press, 2000), a seminal book about e-customer attitudes and the marketing foundations of customer-centric e-commerce. In this venue, she will share her insights about the motivations that drive customer loyalty on the Web and how intelligent organizations can exploit business-IT synergies to capture it. Welcome, Laurie.
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