Surging demand, container shortages, port bottlenecks, shipping price increases, military conflict in Ukraine, trade imbalances, skyrocketing energy prices, and so on are roiling the economies of the world. We are subject to global interconnectedness, interdependence, and interrelatedness, and it requires new thinking. This includes innovative approaches and starts with a move away from “just in time” approaches to thinking that incorporates “just in case.” Supply
Every company is trying hard to fix its supply chain problem, and solutions are not that readily available. A far more expansive approach, one that incorporates collaboration and innovation among industries is a more likely way forward. Industries will bring the collective wisdom, insights, and scale necessary to build more practical and durable solutions. Since we are in a time of change and disruption it’s the right time to look at new and different perspectives. Approach it from this standpoint, industries can build their structural frameworks. They would be comprised of their own supply chains, study points of failure, and build pre-competitive strategies that help build durable and resilient supply chains. These strategies are centered around logistics concerns and macro policy issues that must be addressed. This is not as far-fetched as it seems like innovative approaches similar to this are being implemented. CNBC reported last week that American Eagle has developed a new strategy to compete with Amazon: reinventing their supply chain strategy through a proposed “frenemy network” of vertical logistics.
American Eagle, for example, reached outside traditional thinking and built out a logistics platform that can be utilized by others in the apparel industry. As is the case with other new innovations, the global pandemic accelerated the launch of this unique strategy. The effort is led by Shekar Natarajan, chief supply chain officer at American Eagle. Almost 50 other companies are using the platform and Natarajan is seeking to add an additional 200 brands.
Another viable approach is building strategic partnerships between industries and their trade associations. Trade associations are accelerating their traditional roles as industry advocates, and they are ready to meet the moment. In some cases, they may be positioned as strategic business units of the industry, serve as neutral integrators, and even collect points of failure throughout the supply chain. From there, they develop policy solutions, implement advocacy strategies, shape a favorable business environment, and deliver roadmaps leading to help achieve resilient supply chains.
The good news for business leaders is that these types of strategic partnerships between industries and their trade associations already exist. They lead and convene industries to deliver unified advocacy strategies and convey business outcome-focused messages to government officials. These relationships translate into vital assets to help industries face challenges and position them for growth. For example, the recreational boating and baking industries have built their own strategic partnerships and contracted durable ecosystems with their trade associations. The National Marine Manufacturers Association through an impressive ecosystem and partnership with the recreational boating industry promoted the outdoors and the boating experience when the economy went into lockdown. NMMA’s Discover Boating and the Recreational Boating and Fishing Foundation launched a Take Me Fishing promotional campaign. Targeted toward consumers stuck in quarantine, they would learn about opportunities to enjoy the great outdoors. This industry-focused initiative helped the recreational boating industry achieve a 20% year over year (2019 to 2020) increase in revenue. These results exceeded expectations from industry leaders who expected to never see this level of performance after the end of the great recession. The American Bakers Association is also a strategic business unit for the baking industry and it is changing the game. Notably, the strategic partnership between the food industry and the American Bakers Association was delivered when it really mattered: Through a Food and Beverage Industry Alliance, the baking industry and all food companies were designated as critical infrastructure plants, and factories were kept open due to their work with regulators, where they collaborated to design effective worker safety protocols. The same strategic partnership is delivering career roadmaps and helping to onboard new workers with a multilingual platform. Supply
Strategic partnerships have unlimited opportunities when it comes to supply chain solutions, everything from developing industry fail-safe options to where and how to store excess parts and goods in the next national emergency. Other opportunities which help industries and suppliers seek to restore production. They can leverage their strategic partnerships and build cooperative local government relationships to deliver education and training programs that train their workforce. These same partnerships can have the capacity to work with transportation authorities to secure the necessary transportation or rail infrastructure to transport. The same principles also apply to industries seeking to nearshore. Supply
Everyone wants to find their favorite products on their next shopping trip. We need something more. Something that incorporates innovation and takes us from “just in time” to “just in case” strategies. It’s time for supply chain reimagination. American Eagle is first out of the gate, and they show what happens when an industry leverages the collective assets of industry supply chains. Let’s imagine how much more impactful approaches like this would be if they effectively shape the macro environment through strategic partnerships with trade associations. Supply
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 has built a successful career as an association executive, leading organizations with diverse focus, from manufacturing to high tech to finance and advocacy. His deep understanding of policy and regulatory influence on industries has shaped his approach to industry strategic partnerships. Through his own executive experience—and over a decade advising association clients—Dan has applied his data-driven strategic process to the industry and market challenges of trade associations and the domestic and multinational companies they represent. Dan Varroney is the author of the groundbreaking new book, “Reimagining Industry Growth: Strategic Partnership Strategies in an Era of Uncertainty.”
By Dan Varroney