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Retail Value Chain 101: How Retailers Can Ensure Effective Communication with Suppliers

Posted By Administration, Thursday, October 19, 2017
Updated: Wednesday, October 18, 2017


Ask trading partners the key to solving just about any problem and most will point to better communication, which enables more productive collaboration. But what does better communication look like? What does bad communication look like? What can retailers do to ensure suppliers have what they need to meet compliance requirements, minimize confusion and disputes, accelerate the flow of goods, satisfy the end consumer, and maximize profits for both sides?

Get the Message Straight Internally and Stick with It
Before reaching out to suppliers, retailers need to make sure they're on the same page internally. The worst kind of communication is conflicting communication. Nothing is more frustrating for suppliers than getting an answer from one person in one department, acting on that information, and then finding out that the information they received was incorrect. When this happens, suppliers don't know what to believe, who to trust, and what is and is not possible. It makes them think compliance is negotiable.

Effective communication with suppliers first requires effective communication within the retailer organization. Only after various departments have achieved alignment with regards to policy, procedure, and message can the retailer present a unified, consistent voice to the supplier.

Set a Positive Tone from the Outset
The first communication between the retailer and supplier typically involves the merchant side of the retailer and the sales side of the supplier. It's critical to set a positive tone right out of the gates.

If the retailer's merchant organization is aligned with vendor relations, as well as the overall goals and mission of the retailer, the retailer will be better prepared for the first discussions and negotiations. The supplier will then receive a clear message about how the retailer expects to communicate, who the key people are, which departments and individuals should be contacted for various issues, and how issues should be resolved or escalated.

Establish these points of contact on both sides to set the tone for a productive, collaborative relationship. The worst thing you can do is have a single point of contact that forces one person to field all inquiries and try to solve every problem. Good communication starts with that first point of contact.

Position the Supplier for Success During the Onboarding Process
Once the retailer has made the decision to do business with the supplier, the onboarding process begins. Onboarding is usually the first time the operational teams of both sides begin to communicate. They start to exchange e-mails and information. They start an EDI relationship. They begin to discuss how logistics and freight are handled and how orders are processed.

This is a critical, teachable moment in the trading partner relationship. Retailers must make sure the right people within the supplier organization have the information they need to fulfill orders correctly and meet retailer expectations. That includes but is not limited to current and accurate contact information, checklists, instructional videos and webinars, documentation and, of course, the compliance guide.

Point Suppliers in the Right Direction
Onboarding can feel like information overload to a supplier, so take the time to show them how to find the information they need. Most retailers either have a compliance website or dedicated compliance pages on their corporate website. More and more retailers are deploying sophisticated portals where suppliers can access the information required to be a high-performing supplier.

In addition to providing knowledge and information resources, a best-in-class website or portal allows suppliers to ask questions and get responses. These interactions don't have to occur in real time, but retailers should be able to capture supplier questions, find the answer based on previously agreed upon policies and procedures, and respond quickly. This is far more efficient than having the supplier search for the correct contact person via e-mail or phone calls.

Trust, but Verify
Best-in-class retailers take a "trust, but verify" approach. Originally employed by Ronald Reagan when dealing with Mikhail Gorbachev in the 1980's, this approach by the retailer shows good faith to the supplier, but protects both sides by proactively validating the supplier's knowledge and capabilities.

How do I verify that the supplier has read my compliance guide and understands it? How do I find out what questions or concerns they have now so they don't turn into problems? This process shouldn't just involve vendor relations. Merchants should still be involved to confirm that the supplier is either ready to go or actively addressing issues. Verification is far less risky than simply nodding your head and assuming everything will go smoothly.

Take a Close Look at that First Order
Best-in-class retailers track and closely audit that first order when it hits their docks and offer detailed feedback to the supplier. The goal is to pinpoint issues, and the cause of those issues, as early as possible and get them fixed before the next shipment.

Communication can easily falter during this stage. Once the first shipment has been audited and problems have been addressed, there tends to be a lack of communication until something goes wrong. Retailers need to communicate throughout the year during meetings, including merchant meetings that cover new products, and supply chain and vendor relations meetings that deal with scorecarding and compliance performance.

Approach these meetings as you approach supplier communication in general by gaining internal alignment about issues that must be addressed with suppliers. Make those issues part of your meeting agendas. Be proactive and communicate regularly with your suppliers instead of waiting for a problem.

Survey Your Suppliers
In addition to validating supplier capabilities and evaluating performance, retailers need to take a look in the mirror and make sure they're living up to their end of the bargain from a communication standpoint.

The best way for retailers to find out if they're communicating effectively with suppliers is to survey them. Are you getting the information you need to operate successfully and efficiently? What problem areas need to be addressed? What do we need to work on within the retailer organization to help you reduce errors and costs?

Supplier surveys should not be a one-time event. Regular surveys will tell retailers if they're making progress and becoming better communicators. Top suppliers – those that have the most value to your organization – should be giving you the best scores because you're probably devoting the most resources to those relationships.

How RVCF Can Help
At RVCF Fall and Spring Conferences, we offer the retailers the opportunity to hold one-on-one, face-to-face meetings with suppliers, many of whom jump at the chance to have access to retailers. We also offer retailer breakout sessions so retailers can discuss bigger issues with a group of suppliers.

Retailers that don't do this through RVCF need to hold meetings on their own, whether face-to-face or via conference call, webinar, etc. RVCF can assist retailers that want a third-party to oversee these efforts. We can manage event logistics for seminars. We can also manage the backend of a webinar so trading partners can meet virtually without leaving their offices. This allows retailers to focus on what's most important – solving problems, discussing new initiatives, and looking for ways to improve supply chain performance.

So much of great communication begins with the retailer's compliance guide. RVCF can help to ensure compliance guides are properly structured, organized, clear, concise and complete. Retailers looking for a neutral, third-party perspective on their compliance guide should look for our new white paper, The Recommended Structure for Compliance Manuals and Websites, which is available for download here. This is a valuable reference tool to help retailers create or update their compliance guides in a way that's modeled after those of best-in-class retailers.

Final Thought
Effective communication is the cornerstone of any trading partner relationship – not one-time communication or occasional communication, but regular communication with a consistent, unified voice across the retailer organization. Your supplier communication strategy needs to be approached and developed with the same level of importance as any other business strategy.

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Tags:  Collaboration  Communication 

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