The Real Barrier Between Grocers and Better Supply Chains

Businesses understand there’s a massive opportunity to improve supply chains by gathering more data and leveraging it more holistically. Contrary to popular belief, the most significant hurdle isn’t technology or talent, strategy or systems. What’s holding supply chains back is a lack of trust.

Conversations at the recent FMI Supply Chain Forum underscored this reality. Opportunities mentioned at the conference included the need to improve data integrity; the desire for scorecards that serve as the single source of truth; and the development of AI-based forecasting and allocation models that drive OTIF, among many other initiatives. Industry members at the event agreed that collaboration would theoretically be an asset in all those scenarios, but they also shared reasons why pursuing closer partnership can be more complex than it might sound.

Risk avoidance mindset

Often the reality of the grocery business – valuable trade partners almost inevitably also partner with the competition – can limit the appetite for sharing information. For traditional grocers, for example, it can be tough to stomach walking into a club store and seeing prices at less than the cost of goods; it creates insecurity that agreeing to greater transparency with their suppliers still won’t mean priority or true alignment of goals. For suppliers, there’s resistance to disclosing certain details to their customers for fear of losing leverage in negotiations.

Quality of data can be another barrier. There’s little appeal in partnering more deeply with an organization that doesn’t have clean data, doesn’t have the right data, or doesn’t actually use the data effectively in its decision-making. Companies that take a siloed approach to data are also less attractive.

Organizations recognize the need for collaboration, but they have an acute awareness of the potential risks – and perhaps a less clear understanding of the potential rewards. There’s an acknowledgement by all parties regarding the opportunity, but there’s hesitation about leading the charge.

Short-term and long-term rewards

What should motivate supply chain partners to put aside any misgivings and explore how to partner more broadly is the simple truth that growth requires squeezing more dollars out of existing opportunities or unearthing new ones. Partners are a critical component either way. On projects from route optimization to pairing SKU segmentation and customer segmentation, collaboration can improve the initial strategy and how effectively it is executed.

In addition, by working together and ultimately creating a more robust dataset for both parties, companies position themselves as more desirable partners overall in the long run. One of the speakers at the FMI Supply Chain Forum referenced the “data cool kids” of grocery – the organizations whose data experts provide accurate data but can go beyond requests for specific metrics and instead advise what information will be most useful based on what problem needs to be solved, what black box needs to be opened.

Last but not least, regulations on traceability related to food safety are only becoming more stringent (FSMA 204 enforcement begins January 2026, for example). More data sharing throughout supply chains will be expected in the coming years regardless of companies’ comfort level. Taking a proactive approach will ensure that the systems needed to produce the necessary traceability data can be used not just for compliance but for a more comprehensive understanding of the supply chain as well.

First steps

Companies can open the door for collaboration by having honest conversations with their trade partners. Being explicit about concerns is key to arriving at parameters that work for both sides. Then retailers and suppliers can test their framework with a small but meaningful project with the potential for a quick win. Seeing what data is most useful in that context can set the foundation for broader initiatives, and having a real success story to help sell the benefits of collaboration can be pivotal.

Too often, retailers and suppliers limit their conversations to the details of the deal. They don’t talk enough about how to grow together in the coming 3-5 years. Agreeing on goals and defining KPIs together is essential. Regular check-ins on those goals should be priorities for leadership.

Aligning goals

Incidentally, lack of trust and reluctance to share data isn’t only an issue between organizations; it can be an issue within them, too. Solving it comes down to convincing individuals that collaboration and the results of it are better not only for the company as a whole but for them individually. Part of that process is examining performance metrics to ensure that each division has an incentive to solve problems rather than pass them around. Another key element is connecting each division to the big picture of the company and giving them visibility into how their work supports overall goals.

Whether the goal is strengthening partnerships within the company or with trade partners, companies will have to decide for themselves which metrics need to be shared to unlock more growth. No matter the answer, it’s likely more information than what’s being shared now. As companies assess opportunities to work more closely with their partners, they will naturally consider what they risk by collaborating. They must also carefully consider what they risk by not collaborating.

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