SPI - Retail Insights Blog - Beyond the Portal

Monday, January 24, 2011

Beyond the Portal

Today's Vendor Portals: How They Can Fall Short in Facilitating
Effective Retailer Vendor Collaboration

Today, retailers are using vendor portals as one way to address issues that arise from disjointed business practices between themselves and their vendors. Many have implemented portals to share information, ensure vendor compliance and reduce inefficiencies, understanding that this is one mechanism for getting themselves more aligned with the organizations with whom they do business.

That said, while vendor portals can be an effective approach to fostering greater collaboration, in their current forms, they are highly underutilized. A primary reason for this is that oftentimes, retailers use them very basically - for information sharing only. For example, a retailer's routing guide or EDI information may be made available to vendors. In this scenario, data is simply available.

Today, however, retailers and the industry are getting smarter about how better to use portal technology and thinking about how they can evolve a 'good enough' solution into something that is robust, flexible, responsive and reliable enough for current demands.

That being the case, workflow is now under the microscope. Retailers are looking past the data to the workflow around it and working toward optimization, so that the errors and 'clunk' that oftentimes occur due because of manual processes go away. Vendor Management, in particular, is an area of opportunity. Take for instance Deal Management -

In a manual and highly inefficient process, retailers and vendors connect with each other via phone, fax, email and paper. Both parties spend excessive time on activities, such as chasing paperwork, following up on conversations (What were those discount terms? Are they in writing?) and haggling about whether a deal was fairly handled long after the event happened. Post audit recovery firms perform financial audits and recover the dollars that leak due to these inefficient processes; however, there are costs associated (annual audit fees, strained vendor relationships, money recovered after several months or years following the leakage, etc) with this method that retailers would rather avoid. A smarter approach would be to prevent the leakages from happening in the first place.

Below, I've outlined the typical steps in a manual deal agreement (which we sometimes also refer to as merchandising vendor agreement or trade partner agreement) process today and where breakdowns occur. There is strong interdependence in these steps, and if something goes wrong in the first box, it doesn't course-correct in the second.

In the workflow above, we see a lack of document tracking and "auditability" and delays due to manual handoffs that portal technology doesn't account for. These, in addition to creating confusion and further slowing the deal management process, become costly.

The way I see it, enabling and deriving value out of vendor relationships is a multifaceted journey. While a portal alone can bring about big and visible change, it is not a silver bullet in eliminating all miscommunications, software limitations, inefficient workflow, manual processes, manual errors or supply chain bottlenecks.

In this illustration, I've outlined an area where there are obvious shortfalls. When I blog next, I'll go over on which areas retailers need to focus and how concentrating on them will make trading, and tradeflow, easier on everyone. Again, this needs to be a collaborative effort between retailers and vendors, and if we hone in on high-impact areas, the discussion becomes very worthwhile.