The magnitude of supply challenges is far too complex for any one company to address on its own. Interestingly enough, supply chain cracks existed before COVID-19. Yet, many of us were not aware of the extent of these fissures until the pandemic took hold.
Between 80-90% of the world’s goods travel by ship at some point in their supply chain journey. As demand far exceeds supply, issues abound from shipping container shortages to port bottlenecks.
On top of these difficulties are rising energy costs and labor costs, which means it’s a lot more expensive to ship goods to convenience stores today.
COVID-19 disrupted markets and supply chains, and it also accelerated new thinking. For c-stores it’s an opportune time to reimagine supply chains and build a long-term, more durable strategy.
It starts by moving away from a “just in time” approach to new thinking that incorporates “just in case” strategies. These are best leveraged by bringing all aspects of the c-store supply chain together to collaborate and innovate more durable solutions. This approach can help c-stores identify points of failure throughout their supply chain and help determine pre-competitive solutions.
Forming strategic partnerships between industry trade associations is one of the more compelling pathways forward. Since the pandemic, trade associations have demonstrated considerable leadership potential. These organizations are adapting and, in several cases, positioned as strategic business units of the industries they serve.
In each case they are neutral integrators including all companies, and they can collect information on points of failure in the supply chain. The trade associations then build advocacy strategies that shape a far more favorable business environment that leads to resilient supply chains.
One of the more successful partnerships occurred in the baking industry through the American Bakers Association (ABA). ABA is a well-known, established force that leads and convenes the industry and effectively delivers advocacy strategies that shape a more favorable business environment and, in many cases, help the industry manage its costs. Most importantly, ABA plays an increasingly critical role in helping its industry address challenges in a unified manner and, over time, helping to position bakers and suppliers for growth.
Led by Robb MacKie, president and CEO, ABA builds successful industry partnerships wherever possible to far extend the reach of its industry. One of its more successful endeavors is its partnership with the Food and Beverage Issue Alliance (FBIA), where the two organizations work to achieve supply chain alignment. FBIA represents trade associations throughout the food, beverage and agriculture ecosystem. This partnership successfully expands levers of industry influence to shape the complex business and regulatory environment for a much larger industry ecosystem.
For example, in a national emergency this alliance answered a clarion call. At lockdown, strategic partnerships in the food industry mattered: Designated as critical infrastructure, the alliance helped keep plants and factories open, and they worked with regulators to design effective worker safety protocols.
The FBIA partnership would prove its value throughout the pandemic. Two bakers approached MacKie with safety concerns. Route sales representatives and merchandisers were in the store at the same time customers were and it heightened anxiety.
MacKie reached out to peers representing the food retailers — Leslie Sarasin, president and CEO of the Food Marketing Institute; and Greg Ferrara, president and CEO of the National Grocers Association. He asked, “Is there any way that you all could communicate out to your members to try to move perishable direct-store-delivery windows to non-business hours? Our bakers will figure out when, or you just tell them when, so that we can cut down on that.”
Although it took several weeks, the situation improved. Throughout the pandemic the FBIA acted collaboratively and quickly to maintain food supplies for the country’s hungry and anxious consumers.
ABA helped keep companies open during the initial lockdown and prevented the state of New Jersey from limiting independent distributors from getting their products to the marketplace. ABA is a highly regarded strategic partner because it achieves successful policy and regulatory outcomes for the baking industry.
Moving forward, the c-store industry can build its own ecosystem similar to what the baking industry developed. Trade associations will be an essential component for the industry’s ability to reinvent supply chains.
Think of it as a pre-competitive strategic industry planning effort focused on the development of fail-safe options. These potential outcomes might include built-in redundancies throughout the production process to ensure supply chain resilience, which leads to fail-safe contingencies. These incorporate unified and effective advocacy strategies that will help the industry create a business environment favorable to all c-stores, suppliers and logistics companies.
Better maintaining global supply chains is a must, and these strategic partnerships can develop options and alternatives that don’t exist for c-stores today.
Other possibilities include redundancies at different levels in the production process that will bring about supply chain resilience and even failsafe contingencies. These outcomes are much more likely to happen because trade association strategic partnerships unite the supply chains and deliver effective advocacy strategies.
C-stores have reached an inflection point and returning to timely product availability is a must. CEOs and all decision makers need something to help transition their thinking from a “just in time” approach all the way to “just in case” strategies.
Building these strategic partnerships sends a clear message to the industry, its suppliers and also to its customers that it’s time to reinvent convenience store supply chains.
Dan Varroney is the president and CEO of Potomac Core, a strategic consulting firm that specializes in association transformation and industry-focused strategic partnerships. He is the author of the groundbreaking new book, “Reimagining Industry Growth: Strategic Partnership Strategies in an Era of Uncertainty.”