iStockphoto.com/Olimpia Tosheva
Source: www.retaildive.com, July 2024
Collaboration between retailers and suppliers isn’t new, but it’s taken on a new sense of urgency. After facing numerous supply chain challenges and disruptions in recent years, retailers are doubling down on supplier partnerships.
Discover 5 practical strategies retailers are implementing to strengthen their supplier relationships and drive mutual success.
1- Accurate and timely item data
Item data (including attributes like product descriptions, dimensions, pricing and other specifications) is crucial for successful retailer-supplier collaboration. It forms the foundation of key business activities, including assortment planning, order accuracy, margin analysis and product launches.
While suppliers are essential sources of item information, retailers often struggle to obtain accurate, timely and consistently formatted data. Internally, retailers also face challenges with siloed teams and disparate systems.
Many retailers are investing in Product Information Management (PIM) systems to address internal data silos. However, these solutions often fall short of addressing the core challenge: the data acquisition process from suppliers. To truly solve this issue, retailers are establishing standardized data formats, introducing robust validation procedures and creating more efficient processes for updating item data. By prioritizing data accuracy and consistency, retailers build a foundation of trust and efficiency with their suppliers.
2- Precise inventory optimization
Having the right inventory at the right place and time is more important than ever. Supplier collaboration makes this possible, enabling retailers to optimize stock levels across channels.
Inconsistent data sharing makes it difficult to balance stock effectively, often leading to stockouts or excess inventory, problem shipments, late deliveries, long lead times and poor fill rates.
To tackle these problems, retailers are working collaboratively with suppliers to drive greater accountability and shipment accuracy. They’re adopting integrated inventory management systems, developing collaborative forecasting processes and establishing clear communication channels. This approach empowers retailers to respond quickly to consumer trends, improving inventory efficiency and reducing costs.
3- Omnichannel fulfillment integration
Retailers face increasing complexity in order fulfillment as they strive to meet diverse customer preferences. This includes managing multiple fulfillment methods, such as in-store purchases, curbside pickup and same-day delivery, all requiring close coordination with suppliers.
Key issues include maintaining accurate inventory information and working with suppliers on timely product availability. Unfortunately, retailers often also struggle with disparate systems, leading to fulfillment errors and dissatisfied customers.
To address these issues, retailers are investing in omnichannel technology to accelerate fulfillment across all channels. By breaking down silos between different fulfillment channels, retailers and suppliers can work together to deliver a seamless customer experience, regardless of how an order is placed or fulfilled.
4- Sustainability and traceability initiatives
Collaboration on sustainability efforts, including ESG requirements and FSMA compliance, has become a priority for many retailers. This involves data sharing with suppliers for improved transparency throughout the supply chain.
Obstacles in this area include the complexity of tracking products from source to shelf, complying with various regulations and meeting growing consumer demand for sustainable and ethically sourced products. Many retailers lack the systems and processes to effectively gather and verify this information.
To tackle these issues, retailers and suppliers are working together to adopt robust traceability systems. These solutions track products throughout their lifecycle, providing data on origins, manufacturing processes and transportation. By sharing this information, retailers and suppliers can identify areas for improvement in their sustainability efforts and build consumer trust through increased transparency.
5- Supply chain performance measurement
Implementing comprehensive, data-driven supplier evaluation metrics fosters mutual gains in supply chain performance and encourages continuous improvement. This approach is replacing traditional vendor compliance programs with more collaborative performance measurement systems.
Retailers often struggle with inconsistent performance metrics, lack of real-time data and difficulty in aligning goals with suppliers. This can lead to misunderstandings, missed opportunities for improvement and strained relationships.
To address these challenges, retailers are developing balanced scorecards that consider multiple performance factors. They’re also implementing real-time data sharing and analysis tools, establishing joint problem-solving initiatives and conducting regular review meetings with suppliers. By aligning performance metrics with shared objectives, retailers and suppliers can build stronger, more resilient supply chains that drive collective success.
Take the next step in enhancing supplier collaboration
The future of retail success lies in strong, data-driven partnerships between retailers and suppliers. By focusing on these key areas, retailers can create more efficient, responsive and sustainable supply chains. Connect with our team or explore our website to learn how we can simplify supplier collaboration and transform supplier partnerships to drive success.
