drivers, and the GFS team identified 22 drivers. When the
two groups presented their drivers to each other in the
“align expectations” portion of the meeting, they discov-
ered that 10 of the total of 40 drivers were similar for both
companies. For example, managers at both companies
wanted to:
( 1) reduce the current number of proprietary stock-keep-
ing units (SKUs that GFS carries exclusively for BEF) and
proprietary vendors used by BEF (vendors that are exclusive
to Bob Evans and are not used by other GFS customers);
( 2) offer GFS’s freight management services to BEF’s
suppliers;
( 3) jointly explore opportunities to hedge commodity
prices against market fluctuations; and
( 4) have GFS’s and BEF’s product development teams
participate in joint culinary ideation sessions, where the
teams discuss ideas for new menu items.
Of the 18 drivers identified by BEF’s managers, 17 were
accepted by GFS and became joint goals for the relationship. Some drivers were accepted without further information gathering. Examples include increasing the sales of
BEF’s products through the retail stores owned by GFS; the
expansion of the cross-docking operations; and the provision of the same service level for BEF’s two retail formats.
Other drivers were accepted subject to further evaluation
of the economic opportunities and the feasibility of implementation. Examples include fuel contracting, increasing
backhauling, freight forwarding, and expanding GFS’s
operations into new geographic areas. In some cases, drivers were accepted under certain conditions. One example
was the sale of excess inventory; GFS would agree to sell
BEF’s excess inventory to other customers if BEF’s managers achieved the goal of reducing the number of SKUs.
Of the 22 drivers identified by GFS’s managers, 21 were
accepted by BEF. For example, balancing the quantities of
products ordered by the restaurants; implementing “key
stops” where GFS drivers are given access to restaurants
in order to make nighttime deliveries; the simplification of
administrative duties; and the implementation of a joint
employee-discount program became joint goals for the two
companies. Some drivers were accepted subject to further
evaluation of the benefits and implementation costs. For
example, it was necessary to evaluate the suppliers that GFS’s
management wanted BEF to use and compare them with
BEF’s current supplier base before a decision could be made.
Of the 40 proposed drivers, two were not accepted. The
expansion of GFS’s operations to geographies it did not cur-
rently serve was deemed not feasible by GFS’s management.
Also, BEF’s management was not willing to accept GFS’s
request to extend the five-year term of the contract until
there was evidence that the value co-creation efforts would
exceed the $2.7 million premium paid for GFS over the
lowest-cost distributor in the RFP. The reasons for rejecting
these drivers were explained to the group. The companies
then developed action plans that included goals, priorities,
responsibilities, and timelines for each of the drivers that
had been accepted. When the collaboration meeting ended,
managers left with an understanding of the expectations on
both sides of the relationship as well as an action plan for
implementing the jointly identified initiatives.
After the collaboration meeting, the companies organized
quarterly business review meetings to evaluate the progress
made in the relationship. These meetings were led by the
steering committee members and by the relationship coordinator (a critical position held by a BEF employee who was
responsible for tracking the progress of all the initiatives
and documenting the financial benefits). Each meeting
started with presentations by the project team leaders about
the status and the financial contribution of their projects.
New project ideas were discussed, and the list of drivers
identified in the collaboration meeting was reviewed to
determine whether projects that originally had been identified as low priority should be elevated to a higher priority.
The teams also made decisions about closing projects that
had been completed.
FINDING SAVINGS AND NEW OPPORTUNITIES
Guidelines for measuring the financial outcomes of the
joint initiatives were distributed to the project leaders after
the initial collaboration meeting. The incremental financial
benefits derived from the projects were calculated as profit
improvements for BEF and/or GFS. The two categories of
benefits were defined as cost savings and profit improvements related to revenue enhancement.
Cost savings positively impact the operating profits
of one or both companies. Cost savings were defined as
reductions of variable costs at any point from raw material
purchase through delivery to the customer. Cost savings
included logistics costs (such as freight, inventory, and
warehousing), maintenance costs, materials costs, personnel costs, and product and service quality costs. In the
case of BEF and GFS, financial investments such as the
purchase of assets (facilities, vehicles, equipment, and so
forth) dedicated to the relationship were not required. If
