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Suppliers: Is a Lack of Management Buy-In Affecting Compliance?

Posted By Administration, Thursday, May 12, 2016
Updated: Wednesday, May 11, 2016


by RVCF


In this month's "From the Desk of Kim Zablocky" article, Kim suggested that attendees of RVCF conferences bring their bosses to these events. Not only will this allow senior management to experience the true value of RVCF firsthand, but getting approval for conference registration fees will probably be less of an obstacle in the future.

While management buy-in is important for attending RVCF conferences and maximizing the return on your membership investment, we believe senior-level support is critical across the board for our supplier members. Vendor compliance and supply chain operations departments in particular, with shoestring budgets and skeleton staffs, need that support to meet retailer requirements and ensure that action is taken when those requirements are not met.

Without accountability coming down from the top, it's too easy for individual departments to point fingers and pass the buck. It's the distribution center's problem. It's vendor compliance's problem. It's not my job to dispute chargebacks and try to get the money back. When upper management is involved and invested in the situation, each department's role in compliance is set in stone. Management may even add a layer of accountability with financial consequences, whether that means hitting the budgets of these departments or decreasing margins for salespeople working with their buyers.

Just like a retailer uses chargebacks to motivate a supplier to buy into the retailer's compliance requirements in order to speed goods to market, the supplier needs to have buy-in from management so there is internal accountability. And when all departments within the supplier organization work together, they can collectively protect the bottom line.

Make no mistake about it. Compliance is still a problem, as evidenced by data from our Merchandise Supplier Survey on Compliance Management, which we presented last month during the RVCF Spring Conference. The percentage of chargebacks to sales is still in the 1-2 percent range. This money can and should be recovered with the help of management buy-in.

Besides a shortage of vendor compliance personnel, the biggest challenges in terms of managing compliance internally, according to our survey, include poor execution, a lack of accountability in responsible areas, and upper management buy-in. Accountability and buy-in can drive compliance in a supplier organization, but the lack of either, or both, increases dilution.

Further exacerbating the problem is the fact that the vast majority of negotiations with retailers involve such a wide range of departments, including sales, compliance, customer service, IT, legal, logistics, marketing and operations. Similarly, many of these departments are authorized to sign these agreements. Our survey also found that only about 6 percent of suppliers have senior management participating in cross-functional teams and retail visits.

Retailers want to talk to people who can make decisions and drive compliance, which is why suppliers shouldn't let just anyone attend meetings and negotiate agreements. Senior managers are the only ones who should be negotiating and signing off on terms.

When a merchandise supplier has corporate accountability across the board and senior managers are active participants in dealings with retailers, the supplier is viewed by the retailer community as a strategic partner that is capable of executing the shipping of merchandise. Retailers will be eager to work with supplier management to drive down costs and improve processes. When you attend RVCF conferences and participate in RVCF programs and initiatives, retailers recognize your desire to be a collaborative trading partner, thereby inviting your input. Plus, you'll be able to connect with them for a more engaged and rewarding relationship.

Most importantly, millions of dollars lost to preventable errors, miscommunication and a lack of accountability can be recovered. Obviously, we would love to see more senior management attendance at RVCF conferences. We would love to see more senior management participation in RVCF initiatives. Both would enable more meaningful collaboration and allow our membership to solve more problems and make more progress.

But management buy-in is absolutely vital to supplier organizations in terms of both internal accountability and perception in the retail community. We encourage senior management for all of our supplier members to support compliance and supply chain operations and work together to protect your bottom line.


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Tags:  Senior Management Buy-In 

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