LP Magazine

JAN-FEB 2018

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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EDITOR'S NOTE: This article first appeared in the Autumn 2017 edition of LP Magazine Europe. I n the English language, the word "set" reportedly has the most number of different meanings—464 according to the Oxford English Dictionary. The word "run," with 396 meanings, is apparently making a strong bid to catch up, and somewhere not far behind is probably the word "collaboration." Even just in the context of retailing, it has many meanings. To some, it can mean working with those you would traditionally see in a commercial relationship as your adversary. To others, collaboration is about one party complying with the needs and requests of the other party. While to others, it can mean working together towards one common purpose for the benefit of each party. Given the sheer number of mentions of collaboration in retail publications, conferences, and talks, the ECR Community Shrinkage and On-shelf Availability Group felt there was an opportunity to bring some clarity and definition to what is really meant by collaboration, with a particular focus on reducing food waste in retail. To this end, a team of academics and practitioners from the world of fast-moving consumer goods (FMCG) manufacturers and retailers have been working together for the last eighteen months, with the support of food waste experts from Oliver Wyman, to identify the true "DNA" of collaboration. In this article, we will detail why we chose food waste as the focus of our research on collaboration. We will then share what we have found to be some of the key barriers to collaboration and then some of the early insights from the project. We will close by describing a possible next step for retail loss prevention professionals. The Value of Using Food Waste as a Case Study We chose food waste for two main reasons: 1. Food Waste Matters. One-third of food produced for human consumption is wasted. It is now an industry priority, and bold waste-reduction targets have been set by a number of bodies, including the Consumer Goods Forum. 2. Collaboration Is in Demand. Top retail managers have called out the need for collaboration. George Plassat, the CEO of Carrefour, said, "Food waste is a collective challenge in which all stakeholders must take action." That comment was further underlined by Dave Lewis, the CEO of Tesco, who said, "At Tesco, we're committed to tackling food waste not only in our own operations but also through strong and effective partnerships with our suppliers and by helping our customers reduce waste and save money." In short, food waste is not only highly relevant to our member organisations and the shoppers they serve, but also seen as a priority by senior business leaders who have called out improved collaboration as a strategic priority. Thus, it made sense for the ECR Group to focus this project on food waste. Understanding the Barriers to Collaboration Despite the apparent relevance and sense of urgency for greater collaboration on food waste, many attending the workshops organised by the ECR Group expressed frustration at the current state of collaboration. As one member put it, "We all know what we have to do together to reduce food waste, but it's not happening." They then went on to ask, "What does it really take for us to get to a better state of collaboration?" To begin to answer this question, the research group had to first identify the major barriers to improving collaboration. Five key obstacles were thought to be particularly relevant: 1. Incentives. The reward and recognition schemes for most suppliers' category managers and retail buyers do not include food waste, thus collaboration is rarely included as a metric or consideration in their assortment discussions, annual contracts, or daily interactions on supply. 2. Competing Internal Priorities. Fresh suppliers are being asked to collaborate with multiple stakeholders within each of their customers, each with slightly different requirements that have different impacts on food waste. By way of example, the supplier and the supply-chain manager of a retailer may wish to increase the case counts from twenty-four units per case to forty-eight units to reduce packaging costs and the number of journeys to the store. However, the supplier's category manager and the retail buyer may want smaller case counts from twenty-four units to twelve units to increase sales and the depth of distribution. If retailers and suppliers cannot be perfectly aligned internally on their requirements, collaboration will be problematic. 3. Data Sharing. Collaboration can only happen when data is shared, yet accessibility to the right level of inventory, food waste, and sales data by store and by SKU is a barrier, with some retailers choosing as a principle not to share data. 4. Benefit Sharing. While multiple case studies consistently demonstrate that collaboration can unlock huge value, often projects can stall at the very start when organisations fail to reach agreements on how to split any benefits that may be realised. 5. Consistency and Capacity. Collaboration is about long-term thinking; however, suppliers' category One-third of food produced for human consumption is wasted. It is now an industry priority, and bold waste-reduction targets have been set by a number of bodies, including the Consumer Goods Forum. COLLABORATION ON FOOD WASTER REDUCTION 46 JANUARY–FEBRUARY 2018 | LOSSPREVENTIONMEDIA.COM

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