Published on: November 17, 2009by Michael Sansolo
At the Retalix Synergy event in Dallas last week, retiring CEO Barry Shaked shared a remarkable story. Shaked explained how he got his big breakthrough in the early 1990s when he made a deal with Tesco. What was so remarkable about the story though was also so simple: Tesco offered to pay Retalix to run a pilot, when the start-up Israeli company was willing to do that project for free.
Shaked said at first he thought the Tesco people were silly, but then realized their genius. Tesco paid him to make sure Shaked and Retalix could both complete the pilot and stay in business. Getting the work for free might have wrecked the company and in that case the pilot would have been for naught.
Now think about that for a moment. Imagine a retailer paying a supplier for a service that could have been provided for free and a supplier understanding the genius and point of such a move.
That is what we call a real win-win-win. Tesco won, Retalix won and the partnership won, producing improved use of technology and data for the British retailer, which at the time was not exactly the giant we all know today. Sadly, a win-win-win is still a rare event.
(Full disclosure: I was a guest speaker at the Retalix event.)
Increasingly, we hear of anything but win-win these days. Trade relations that have long been somewhat peaceful (or at least relatively quiet) seem to be getting strained again by pricing pressures and increasing movement to private label - the two hallmarks of the Great Recession. Relations are being further strained by the continued emphasis on fresh products as the retail point of differentiation, while center store focus lags.
Suppliers talk about the pressure on them for new levels of support and lack of appreciation for products and promotions. Retailers talk about the lack of support and appreciation for their new store strategies and competitive efforts.
There is a line the very beginning of the wonderful Lord of the Rings trilogy. It explains how history became legend then myth as the history was forgotten. Is it possible the same is happening in trade relations?
It was less than 20 years ago, in the wake of a mild recession, that trade relations frayed beyond control. With alternative formats - then Walmart’s first supercenters and Costco’s club stores - growing sales, retailers began questioning the prices and products supplied those stores. It was then that retailers learned of the great logistic and economic advantages held by those formats and launched the now historic and frequently forgotten Efficient Consumer Response (ECR)movement.
The goal was replacing a mindset of contention and win-lose with cooperation and win-win. Clearly there is a ton of work remaining.
The question is have we learned anything through these years. Have we learned to appreciate the efforts, the challenges and conundrums faced by trading partners? Have we learned to understand the many nuanced ways that companies go to market and the flexibility that requires in building an effective supply chain? Have we learned to work together to solve problems that could not possible be solved by either side independently?
Have we learned that together we can be stronger than on our own or must we fight all the same battles over and over again? Most importantly, have we learned the lesson Tesco imparted on Retalix years ago, that by respecting and nurturing trading partners we can actually emerge stronger for the effort?
In short, have we learned that the alternative to win-win is usually lose-lose, not win-lose? If not, it may be time to repeat history.
Michael Sansolo can be reached via email at firstname.lastname@example.org .
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