By Jill Harrington

Business relationships can be compared to dating: The first phase is “getting to know” each other, followed by progressive stages of intimacy and openness (if the relationship continues at all). Similarly, in business the ultimate goal is to reach total transparency because at this point in a relationship, value creation likely will escalate and ultimately benefit both parties. In order to reach this point, however, parties must trust one another — trust that each is acting not only in its own best interest but in the best interest of the joint relationship.

In the contract manufacturing and packaging industry, the challenge is to reach that level of trust and begin to realize value-creation opportunities. But, do you really have to go through all this “dating” to get there? Can’t you just collaborate from the start?

Collaboration works. There is little, if any, evidence to prove otherwise. So why can’t we just collaborate and improve our processes and start reaping the benefits of our collective knowledge, experiences and ideas? After all, the concept seems fairly simple: Two minds are better than one, and logic should dictate that this formula would provide exponentially superior results simply by increasing the number of participants. Of course, there is one detail to consider — the relationship factor.

The Relationship Factor

A collaborative effort only will be successful if it is founded upon strong, open and mutually beneficial relationships. Ask anyone what the most important ingredient in a relationship is and they are bound to tell you that it is trust. This is undeniably a major factor in the quality of external relationships in the consumer-packaged goods industry.

Rob Swift, associate director of purchases, External Supply Organization, for Cincinnati-based Procter & Gamble, captures this idea quite well: “In those relationships that are tenuous, positional or adversarial, both parties go to the opposite end of the spectrum in support of their own interests. However, there are huge benefits to moving up the trust continuum and getting into something that looks like helping each other do good business together.”

However, in some circumstances, it may not be practical for certain types of business relationships to work toward such a high level of collaboration. “Relationships are at so many different places: They may be long or short term, the nature of business need may dictate a certain type of relationship. There are always variances. Some of it is not because of the company, but due to the business requirements,” says Al Rodrigues, director of contract operations alliances at Minneapolis-based General Mills and a team leader for the Oakland, N.J.-based Foundation for Strategic Sourcing (F4SS).

However even with strategic relationships, sometimes it can be difficult to achieve a level of openness. Sher Marshall, director of contract manufacturing, finance and operations for Sara Lee Corp., Downers Grove, Ill., says, “It’s a challenge to move from where you’ve been in the past. As with everything else, people don’t like change. It also depends on whether you have a strong strategy within the organization as to how you view your external supply chain.”

TAC: Trust and Collaboration

In spite of the hard work involved in achieving these levels, it is clear that the industry would benefit from broader focus in the area of collaboration. In an effort to bolster this business approach, members of F4SS are addressing the important role trust plays in collaboration with a team of industry professionals called the Trust and Collaboration team (TAC). “The purpose of the team is to transition relationships from transactional and guarded to a more open and collaborative environment,” says Paul Slowey, director of national accounts for Diversapack of California, Chino, Calif.

It’s a large task and one that will not apply to every situation, but, overall, appears to be a worthwhile endeavor with a huge upside, industry professionals agree. James Grissom, vice president of national sales at Crescent, West Chester, Ohio, and F4SS team leader, points out: “We have seen that sometimes the relationships are transactional just because of their nature, but other times there has definitely been the opportunity to be more collaborative.”

To help spread practices that encourage collaboration, TAC is putting together a TACK — Trust and Collaboration Kit. Included in the kit are valuable tools developed from best practices identified in the industry. To date, available tools are: Governance/Process Flow, Code of Conduct, Key Relationship Drivers and a Customer-Supplier Relationship Health Check. Currently, these tools are being piloted by F4SS members to identify benefits and cost savings associated with the kit, as well as opportunities to further enhance it.

The benefits in the process are clear to those who have embraced it thus far. “When we have breakthroughs with our suppliers, there is much more clarity and visibility to trust and collaboration,” Rodrigues says. “It helps us to think about giving more business to that partner and to start thinking of that supplier as a strategic partner.”

In a trusted and collaborative relationship you are more focused on taking out costs and streamlining processes for both parties, Grissom says, adding: “Once you let your guard down, you can focus on systematic changes that can lead to focus on doing things differently.”

Industry professionals and observers would agree there is significant opportunity to improve the level of trust and collaboration with the upstream CPG supply chain that would benefit everyone involved. The F4SS TAC team will continue to build on its progress thus far and plans to share results via CM&P. Stay tuned!