describe how Bob Evans Farms (BEF) and Gordon Food
Service (GFS) used The Collaboration Framework to form
the basis of a lasting and mutually successful commercial
relationship that has yielded more than US $31 million1 in
additional profit for the companies to share over the last
four years.
STRUCTURING THE BUSINESS RELATIONSHIP
Bob Evans Farms, with sales of over $1.3 billion, owns a
restaurant chain that operates more than 500 restaurants
in the United States and a food products division that sells
branded products to grocery retailers. As part of an earlier
research project, we worked with BEF’s management to
document in financial terms the difference in value that
was being created by two suppliers. At that time, BEF purchased $16.7 million of ingredients from Supplier A, with
whom the company worked in cross-functional, cross-firm
teams that included representatives from marketing, sales,
purchasing, finance, research and development (R&D), and
logistics. BEF purchased $18.5 million of products from
Supplier B, where the relationship was between the supplier’s salesperson and BEF’s buyer.
The cross-functional relationship with Supplier A was
creating significantly more value than the relationship with
Supplier B. We termed this capability “value co-creation,”
which we define as the joint identification and actualization
of profit growth opportunities in buyer-seller relationships
that use cross-functional teams. Because the value created
in the relationship with Supplier A was millions of dollars
greater than the value created in the relationship with
Supplier B, Richard Hall, executive vice president of supply
chain management at BEF, said at the time, “Any supplier
who wants to be viewed as strategic must have the willing-
ness and capability to work in cross-functional teams and
think in terms of value co-creation.”
The company’s belief in the importance of value co-cre-
ation was clearly evident a few months later, when BEF
decided to address its second-largest cost category: the
distribution of food to the restaurants. BEF used multi-
ple distributors in a network that had evolved over time.
Management decided to consolidate the distribution to
restaurants with a single provider, and a national request
for proposal (RFP) was issued. Four suppliers that partici-
pated in the RFP were selected as finalists. A scorecard was
developed to evaluate their capabilities, and “potential to
co-create value” was included among the selection criteria.
Gordon Food Service, with sales of more than $10 billion,
was selected even though two other distributors offered
larger savings than GFS when compared to the existing
system with multiple distributors. Management’s decision
was driven by GFS’s comparative advantage in the “poten-
tial to co-create value” and “financial stability” criteria. The
difference in savings between the distributor that quoted
the lowest total cost and GFS was $2.7 million. If manage-
ment’s decision was to be justified, the financial outcomes
of the value co-creation opportunities with GFS had to be
greater than $2.7 million per year.
Six months after the contract was awarded, GFS had
managed an uninterrupted transition from the old distri-
bution system to the new one, but little progress had been
made toward the value co-creation goal of $2.7 million.
Management at BEF asked us to deliver a seminar for
some of GFS’s managers on the benefits of working in
cross-functional teams and the concept of value co-cre-
ation. However, we were concerned that the seminar might
be viewed as putting pressure on GFS’s management to
reduce costs in order to help BEF recoup the $2.7 million.
It is not co-creation of value if all the initiatives come from
one side of the relationship. Consequently, it was decided
to use The Collaboration Framework, which provides a
structure for management in the two companies to jointly
identify initiatives and agree on a plan to achieve them.
(For more about The Collaboration Framework, see the
sidebar and Figure 1.)
On March 22, 2011, a one-day collaboration meeting was
held in Grand Rapids, Michigan. A total of 33 managers
from BEF and GFS representing functions such as sales,
marketing, manufacturing, logistics, finance, information
technology (IT), research and development, and purchasing participated in the meeting. GFS’s chief executive
officer (CEO), chief financial officer (CFO), and president
were present, as well as BEF’s executive vice president of
supply chain management.
TURNING IDEAS INTO ACTION
In the first session of the meeting, managers from the two
companies worked independently to identify their drivers,
or goals for the relationship. The BEF team identified 18
