Ah, consultants. I can make fun of them because I used to be one. I’ve heard all the jokes: they only come up with things that run on a copier, they look at your own watch in order to tell you the time… That’s consultants for you. The other thing that consultants do is invent frameworks. At NRF’s first annual supply chain conference (which was really good and I hope they do it again next year), one of the breakout sessions was hosted by A.T. Kearney, with an executive from Walgreens (Todd Steffen) and an ex-executive from Target (Timothy Anderson) participating to add commentary.

It took me a while to understand exactly what the presenter from A.T. Kearney, Kumar Venkataraman, was trying to get across, but when I did get to that point, my very first thought was “He’s crazy. “ So here’s the 2-minute summary — this is just my take and the disclaimer here is I may well not do it the justice it deserves, but I’m going to try anyway. If you really want the whole story, talk to A.T. Kearney (which I will refer to as ATK from here on out for brevity’s sake).

So the company has done a lot of work around the apparel supply chain, and one thing they discovered was that when a third party gets involved in the supply chain, serving an intermediary role between supplier and manufacturer, it creates efficiencies in the supply chain that well exceed the cost that the third party adds. Think Li & Fung and apparel sourcing. From an economics point of view, I guess it goes something like this: the costs of many manufacturers doing business with many suppliers grows to the point where someone sees an opportunity to consolidate the relationships by acting as an intermediary. ATK said that they have seen up to 30% cost reduction in the entire value chain when an intermediary steps in.

Okay, that’s all fine and dandy. But then they asked, why has this kind of relationship not taken off in the fast-moving consumer goods supply chain? And they asked it not just of the relationships between raw ingredient suppliers and manufacturers but also between manufacturers and retailers. Why haven’t companies like Proctor & Gamble, Kraft, Target, and Walmart gotten together to create a grocery equivalent of Li & Fung to lower their supply chain costs?

So by this point, I could no longer keep my mouth shut. Before I got called on to ask a question, someone else in the room asked about the data exchanges — I can’t keep up with the names anymore — the Worldwide Retail Exchange (WWRE) and their kind. There was general nodding of heads that this perhaps counted as an attempt, but that aside from the costs and complexities of these kinds of exchanges, retailers and manufacturers just seemed unwilling to collaborate on anything strategic. I lobbed my question in: “perhaps the competition of private label gets in the way? “ The Walgreens and ex-Target guys agreed at once that private label creates a competitive barrier that gets in the way. Kumar Venkataraman of ATK said, (I’m paraphrasing) “But given the cost reductions that a third party has brought to apparel, wouldn’t it be possible for manufacturers to collaborate enough on the supply side to cut their prices enough to make private label irrelevant? “

Um, no. Actually, if you look at the research that we just published on pricing, retailers who took our survey say that private label brands are some of their most profitable brands to promote. I have a hard time believing that retailers would be willing to give those up, especially when both retailers and national brands are feeling the pinch on commodity prices.

By this time the session had already run over its allotted time and I didn’t get a chance to ask the thousands of other questions that had occurred to me by this point. Questions like, isn’t the Li & Fung of grocery actually companies like Nash Finch and Unified Grocers? Distributors that serve independent and small chain grocers so that they can pool their buying power? Doesn’t a grocery distributor serve an aggregating function, bringing product selection to the retailer and aggregating retail demand so that large CPG companies can afford to do business with companies that otherwise would be too small to serve efficiently?

However, for all my grousing, I did come up with one area where I could see the potential for collaboration, and that’s actually around cross-channel. To me, grocery cross-channel isn’t about save the sale, and it really isn’t about home delivery. Buy online, pick-up in store? Yes, I can see that, but the real advantage of that model for grocery is access to the long tail of products that rarely see the light of day on the shelf. With SKU proliferation continuing its unchecked pace on the manufacturer side and retailers looking to rationalize SKUs at the shelf, what better way to give something like the hypothetical “Tide High Efficiency Cold Water Touch of Downey Dye-Free in Fresh Scent ” a shot than to offer it on the endless aisle of online, with the promise that it will be available for pickup in store during a shopper’s regularly scheduled shopping trip?

How to do that? Why not a third party? Someone who stocks these oddball SKUs so that they can be delivered to any retail store within, say, a 3-5 day window max? Hmm. I would be very interested in seeing a business plan for something like that — as long as the most complicated supply chain idea in the world can actually deliver on its promised value.