SPI - Retail Insights Blog - Aligning Retailer-Vendor Efforts

Thursday, November 25, 2010

Aligning Retailer-Vendor Efforts

In line with my last post, I would like to provide more context around SPI's set of solutions that we've coined 'Tradeflow Optimization^SM ' and illustrate why we have created and implemented them the way we have. Tradeflow Optimization - or aligning efforts between retailers and suppliers to more efficiently and effectively move goods across the supply chain - has become extremely relevant to retail organizations due to the current landscape and the challenges they're increasingly facing.

Today, with competition fierce, retailers are forced to be more creative about how they deliver value to their customers while balancing internal and external timing and cost pressures and the need for increased supply chain efficiency and visibility - a lot to deal with at once.

Tradeflow Optimization exists because to keep all balls in the air and moving at a steady pace, retailers and suppliers need to lean on each other, since trade is a two way street. Many times, though, efforts are disjointed and completely independent of one another and lack the true collaboration necessary to deliver consistently to the customer, who after all, is the lifeblood of retailers and their trading partners.

If you think about it, all across the supply chain, retailers and suppliers are at the mercy of one another, so a little give and take might be in order.

For example, on any given day, vendors need to onboard a new item, or check the status of a submitted invoice. Or, maybe they need clarification around language in the supplier agreement, or want to understand why merchandise was returned (Was it damaged? Was there a miscommunication regarding quantity? Was the wrong merchandise shipped?).

Today, the vendor takes up the retailer's time by trying to gain clarity around these and other similar situations. And the retailers? They rely on vendors for adherence to special allowances, markdowns, invoicing terms, compliance with their trading rules, among a host of other things. When there are breaches in the process, it costs both sides precious time and money. Now, a forward thinking individual might say "Gee, if the retailers and vendors both had access to the data they sought, that'd save a lot of people a lot of time and allow everyone to do his or her job much more quickly." Yes, it would. But, in order to do that, both parties have to be willing and able to share information so they can fully and wholly collaborate with one another - because collaboration is where it all starts.

If we can get retailers and their suppliers on the same page, communicating and working together, trading becomes much easier. In my experience, I've seen tight retailer-supplier relationships that improve lead times, increase on-shelf availability and optimize assortments and pricing, and through technology, there are really no limitations to functionalities and features at retailers' fingertips.

With that in mind, in my next post, I'll examine today's processes and identify the gaps and opportunities for improvement, specifically concentrating on how Tradeflow Optimization solves for these gaps.