Posted By RCVF Admin,
Wednesday, April 10, 2019
Updated: Friday, April 5, 2019
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Better Business Relationships Through Seamless Order Management
by Dean Gemmell, eZCom Software
For lasting success, get the details right.
You have a product that’s a definite winner. Your brilliant marketing strategy is delivering awareness. And your brand is in demand.
Exciting times, to be sure. But after all the hard work you’ve put into building success, this is the time when you need to focus on making sure you get the details right, too.
When it comes to transactions — whether it’s EDI (Electronic Data Interchange) with an established brick-and-mortar retailer, a purchase from an online marketplace like Amazon, or a sale on your own eCommerce store — both trading partners and consumers expect a seamless, efficient, error-free process. In today’s retail environment, there is little margin for mistakes.
Fact is, not only are missteps costly in the short-term — chargebacks, return costs, delays in payment — they also damage long-term relationships. No matter how hot your product or your brand may be, major retailers have scant patience for suppliers who don’t deliver according to their standards. And consumers are just as tough. If your shipment doesn’t arrive as promised, you risk losing a potential long-term customer.
Have a plan in place. Before you even need it.
The best way to capitalize on success is to plan for it. While you’re busy building your brand, it can be easy to push off the seemingly tedious work of developing supply chain efficiency.
Imagine if you’re like many nascent brands in today’s retail environment. Chances are, you launch primarily through online channels. But as you grow and demand rises, you begin to gain traction with traditional brick-and-mortar retailers. And those trading partners will demand the exchange of EDI documents.
EDI is a data exchange format that can seem daunting at first. Handled poorly, it can also quickly become time-consuming and shift your focus away from growing your company. You’ll find yourself paying a stiff price if you don’t get the details right — chargebacks are costly and retailers may be wary of continuing to carry your product if there are hiccups with orders.
For many, the best way to manage EDI is to, well, get someone else to do it. Making it efficient and seamless requires a very specific expertise, and the right EDI provider will have both in-depth knowledge and great cloud-based software. Chances are, you didn’t launch your business because you wanted to become an EDI expert. The good news is that others do know how to make it work for you and your company. If you use an ERP or accounting software, they may be able to integrate EDI into it. If you work with a 3PL, they can make the exchange of data easier.
What’s more, EDI standards are constantly evolving and compliance standards will vary from one retailer to another. An effective EDI provider will track changes and make the necessary updates to ensure that you remain compliant. Again, knowing that you have a partner that has your back will save you all kinds of headaches and keep you from enduring many sleepless nights.
What about all those other channels?
It’s an overused cliché at this point but we’re living in an omnichannel world. Today, it’s the rare product or brand that only sells through one or even a few retailers. Consumers have nearly limitless options for shopping and they make purchases through online marketplaces like Amazon, eCommerce stores on a brand’s web site, and yes, at the many still thriving brick-and-mortar retailers.
Some of these channels will use EDI — many others will not. That’s why you’ll want a partner with both a deep understanding of EDI but also software that is robust and can manage orders no matter where they start. With the right tools, you can keep it all under control and process orders from online marketplaces like Amazon or eBay alongside traditional EDI transactions.
The key is making sure your order management provider is evolving as rapidly as the retail landscape. Are they adding features that automate tasks and speed the exchange of data? Do they help you reduce time-consuming, error-prone manual entry? And do they understand the unique challenges of both online channels and brick-and-mortar retail? As you know well, nothing in business is static. Work with people who understand this as well as you do.
Order management. It’s nearly as important as getting orders
Orders are the lifeblood of your business. When people are buying, you should be thriving.
Remember, however, that while technology has ushered in extraordinary change, the value of old-fashioned business relationships endures. When you have a team in place that helps you meet the demands of today’s need-it-now mentality, you position yourself for long-term success. Finding the right partner for EDI and order management will help you do that.
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Posted By RCVF Admin,
Wednesday, April 10, 2019
Updated: Monday, April 8, 2019
The Revolution has Begun - Supply Chains and Social Media
by Inez Blackburn, President, Market Techniques and Innovation
In 2007 I wrote an article that defined what I believed is a “Best in Class” supply chain. While we have made progress with the deployment of new technologies and processes, there is still a long way to go. Consumers continue to evolve and will become more demanding. Technologies and processes across the supply will feel the pressure to adapt to these new demands as smartphone’s become the shopping weapon of choice. Why then, do companies continue to resist rather than embrace the new world order of social media and the future of supply chains?
“The best supply chains are not just fast and cost-effective. They must be designed in a way that effectively leverages technology to allow full visibility. Knowledge is most potent when it is shared in an environment that promotes collaboration. If you want a supply chain that is agile responsive and adaptable, make sure that all your processes are anchored to a positive customer experience. Too often companies limit their view of their supply chain and in doing so define their customer experience.
If you want to create a demand driven supply chain you need to give equal credence to the continuous flow of information. Collaboration cooperation and transparency will happen if you have full access to information that results in one version of the truth.”
White paper commissioned by Compliance Networks - Author, Inez Blackburn 2007
When I think about social media, I think about Facebook, YouTube, Instagram, LinkedIn, and Twitter because these social media platforms tend to be the most popular and dare, I say the most invasive in our lives. Social media is a platform designed to encourage communication and collaboration across communities of interest. Sharing information on these platforms is expected and encouraged because who doesn’t want to get thousands of “likes” about their style of clothing, recipes or words of encouragement or inspiration.
Not long ago in the late 1990's, I was working at the University of Toronto analyzing” Point of Sale” data and building predictive models to forecast consumer demand. The internet was starting to gain momentum, and even though we had access, external websites were limited due to a demonstrated fear of employees surfing the web rather than working. This belief existed in an era of dial-ups and slow internet speed where companies embraced the new world order with fear and trepidation.
The next five years paved the way towards the “Internet of Things” as we found ourselves in a tsunami of dot-com initiatives. It was considered trendy to attach the “e-” prefix to every business process, and any company with a “.com” in its name was poised for greatness and ridiculous valuations. History has taught us that what goes up must come down and the dot-com bubble eventually burst. But not without a significant impact as the “.com” bubble effectively transformed how people and companies worked. “E-business” returned to its’ roots and became “business” again. This transformation paved the today towards Social Media as we know it today and the quantum of opportunity that it creates.
To understand the opportunity for Social Media and the Supply Chain, we must first understand how and why social media was created and evolved.
What is social media?
According to Oxford Dictionaries
Social Media: Websites and applications that enable users to create and share content or to participate in social networking.
What is social networking?
Social networking: The use of websites and other internet services to communicate with other people and make friends in tandem with the activity of sharing
When you think about it, is social media new or a natural evolution of communication. While we all agree that social media has evolved online, become faster and more sophisticated do we understand and embrace its’ potential. Being social has become faster more reliable and complicated, but is it really different? Are Facebook, YouTube, Twitter, LinkedIn, and Instagram merely the evolution of traditional media or something so disruptive that it is changing our beliefs and behaviors.
Let’s look at the history of social media for the answer.
Human beings are hard-wired to be social creatures that thrive on and crave social interactions to emerge as healthy and happy humans. Social media is a master in tapping into these primal needs, so it is no surprise that social media platforms and apps are so popular today. Many social media platforms Facebook, YouTube, Instagram, and Snapchat, have a significant impact on our brains. Research on how social media impacts our ability to think and focus and the effect and influence on our brains is increasing geometrically. Heavy users of social media crave validation and constant feedback. So, it is no surprise that social media platforms often get a bad reputation. Unfortunately for humanity the continuous interruptions that texting and social media platforms can influence our ability to focus and critical thinking. How then can we leverage Social Media and Social Networking to our benefit?
We have come to accept that social networking sites such as Facebook, Twitter, Instagram, and Tinder define a modern society that thrives on constant communication and connection. Social media enables those who embrace it, a sense of belonging and defines an ever-evolving way of being and interacting in society. Most will agree on the many positive benefits of social media, personally and professionally as numerous social media platforms have crossed the chasm from consumer to business models. Machine learning in tandem with AI (Artificial Intelligence) has created opportunities to leverage the power of social media for marketing to understand and influence shoppers.
Unfortunately, despite the numerous benefits, and opportunities, the abuse, and manipulation of social media by Cambridge Analytica have put social media on notice. The Cambridge Analytica scandal lit the fuse for further scrutiny about the role and impact of social media and social networking sites in society. How do we differentiate between social media as a platform for communication and collaboration and a social network platform that leverages the power of machine learning and AI to influence and manipulate society and how do we protect users from abuse? Many studies highlight the negative impacts of an addiction to social media but what if social media platforms and networks evolved to help companies communicate and collaborate more effectively.
What are the opportunities of social media?
I believe that social media can be much more than consumer social networking and will offer companies that embrace it a significant advantage over their peers. Social media can if deployed correctly can play a pivotal role in supply chain management. Is social networking about socializing in isolation or is it about facilitating people-to-people communication cooperation and collaboration?
When you take a moment to think about it, every major brand is committed to leveraging the power of social media to connect with consumers offering customized messaging and promotions.
Many companies actively monitor social media platforms to understand what the marketplace is saying about your company and your brands. They also use social media platforms to communicate with consumers and strengthen relationships. Actively engaging in social media to influence demand and leveraging the demand signals in your supply chain represents a significant opportunity for efficiency. Actionable insights into customer sentiment, beliefs and preferences enable companies to understand and communicate with consumers on their terms.
Marketing’s embrace of social media is significant as the opportunity for social media in the supply chain evolved from the emergence of demand-driven supply chains. When you think about it, a demand-driven supply chain designed for responsiveness will benefit from a social network. If marketing’s goal is to stimulate and influence demand through social networks, it makes sense for supply chains to have a line of sight into this valuable information.
Social Media and Supply Chains Perception versus Reality
Too often supply chain executives can’t get past the word “social” and the negative perception it often creates. Many executives believe that work is about effectively completing a task rather than socializing. Numerous interviews with supply chain executives confirm my hypothesis that supply chain executives often do not understand the role social media could play in supply chain management.
Unfortunately, when supply chain executives hear “social media,” they think about Facebook, YouTube, LinkedIn, and Twitter. Moreover, because these social media sites fail to communicate any supply chain and logistics advantage, it is difficult to see how a social media platform or networks will positively impact transportation and warehousing operations. Rightly or wrongly the term “social media” has too many negative connotations in supply chain circles. The negative baggage from abuse on the consumer side continues to impact any description that includes the word “social” on the business side.
Maybe, positioning social media for the supply chain as a platform for continuous innovation that will help you understand demand signals in pursuit of increased efficiencies would help with acceptance and adoption. When deployed correctly, social networks in a supply chain will positively impact communication, collaboration, data mining, and data sharing.
Further complicating the issue is the fact that human beings are hardwired to resist change. So any platform or process that challenges the status quo will face numerous obstacles. Experience has taught me that any new application or technology will not be successful just because you tell people to use it. New technologies and processes often demand new skills and performance metrics and face considerable resistance. Supply chain practitioners are often creatures of habit, and embracing change is a daunting task. We must be able to convince key decision makers that leveraging social networks for supply chains will deliver positive and measurable results in the following areas.
- Help companies identify, understand and monitor demand signals, customer concerns, and opinions
- Create stronger links with marketing and many departments to deliver a more responsive supply chain and break down silos
- Effectively communicate key performance metrics; inventory levels, shipping, delays in transportation (e.g., weather, disasters, holidays)
- Create synergy and break down departmental silos with internal staff and suppliers
- Establish a line of sight to track products and communicate status visually
- Manage risk mitigation and demand volatility and identify and manage risks through data sharing and data mining
- Create continuous supplier feedback and identification of new vendors, business partners, suppliers
- Effectively communicate sustainability and ethical sourcing commitments and protocols
- Reduce labor costs by managing day-to-day supply chain activities more effectively
- Create enhanced opportunities for machine learning and AI for a sustainable competitive advantage across your supply chain.
Quantifying the business case for social media in the supply chain will be a daunting task as it will be difficult to validate and quantify the business value of using social networking technologies. Calculating how much will it cost versus how much will we save and the impact on productivity will create hurdles and bottlenecks for adoption. Companies who embrace social networks for their supply chain will not be able to answer these questions in the short term, which explains the slow adoption. Companies will not realize efficiencies until they take the first step down the social network path and make creating a best in class supply chain their goal.
To effectively leverage the quantum of potential that exists, all stakeholders must embrace the fact that social media in the supply chain is about creating a social network to get past the negative connotation of being about socializing. Social media in a supply chain is about creating an environment that facilitates and enables more effective communication cooperation and collaboration — thus building a strong foundation for effectively managing and executing supply chain processes. Social networking for a supply chain must go beyond the confines of traditional social media platforms; Facebook, YouTube, Instagram, LinkedIn, and Twitter to include an extended universe that encompasses leading software vendors that companies can leverage to more effectively manage their business processes across their supply chains.
What does the future hold?
In five to ten years social networking in supply chains will be ubiquitous. There will be one version of the truth, and the strength of your supply chain will dictate the power and potential of your company. Businesses will have no choice but to embrace social networks as a competitive advantage in a world of automation, machine learning and artificial intelligence. Being replaced by robots will be displaced by the importance of learning to work with robots.
Mobile technologies will move to center stage and innovation will evolve from the ability to harvest and transform data into knowledge. There will be an emergence and convergence of mobile computing and social networking driven by smartphones and mobile devices.
The continuous consumerization of IT and the growing acceptance of the fact that software in isolation will never be enough to address the challenges of demanding consumes and evolving supply chains. Social media will emerge as social business platforms and leverage the power of AI and Machine Learning. Lines will blur between in-store and online shopping and supply chains will adapt to meet the challenge.
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Thursday, January 31, 2019
Returns: The Bottom Line Bully
by Felton Lewis, IIII, Principal, Alliances and Business Development, NEWMINE
For many years, retailers have adopted the mindset that Merchandise Returns are just a cost of doing business. In order to create frictionless shopping experiences and compete with giants like Amazon, eCommerce retailers have taken a customer-centric approach to returns by making them fast, free, and easy. In fact, The Journal of Marketing found that retailers who offer free returns see customers spend up to 457% more than they did before initiating a free returns policy—an indication that a customer-centric approach is a competitive advantage for top line growth.
However, what’s good for the top line, isn’t always as good for bottom lines. As online and marketplace sales continue to grow, so do endless aisle sales via drop ship suppliers. While historic return rates for brick-and-mortar stores hovered around 8%, online return rates can skyrocket to 45% in some merchandise categories. Returns put strain on your reverse logistics as Distribution Center square footage or 3PL continue to expand, not to mention the monumental labor and transportation costs that returns processing incur. While many retailers don’t quantify the full cost of their returns, studies show that processing returns can cost 20%–65% of COGS.
Newmine has uncovered that on average, each returned product requires more than 7 different resources to process the return: from store associates, to carriers, to return to vendor or return to DC. In 2018, around $400 billion worth of inventory was returned to retailers. Combine this with the staggering reverse logistics costs, and retailers are seeing their bottom lines deteriorate. Despite these glaring issues, only 25% of retailers surveyed by Peerless Research Group reported they would change their returns handling process to course correct in the next 2 years.
JOIN THE RETURNS REDUCTION MOVEMENT!
Richard Branson once said that “Every great movement in the world starts with a tiny group of people who simply refuse to accept a situation.” When companies are in a comfortable place, they are less inclined to take bold steps to create change. Without disrupting the current order, retailers will continue to see returns increasingly bully and erode their bottom lines. Not only is Returns Reduction possible and the benefits tangible, unifying your corporate culture around Returns Reduction is an endeavor with sustainable benefits across the value chain:
- Improved EBITDA and Reduced OPEX – While a “Returns Reduction Movement” may seem to have expansive, unattainable goals, the fact is that moving the needle just a bit leads to big financial rewards. Newmine has found that a $1 M Returns Reduction delivers $0.5 M to the bottom line—money that can be invested back into the business on revenue growth initiatives.
- Enhanced Customer Experience – Returns Reduction also improves your customer experience and retention. Retailers don’t like to admit the amount of merchandise that comes back for reasons like “wrong item shipped” or “defective,” but these events occur more often than they would like. Not only is it a waste of OPEX, it’s a significant customer experience risk, as 80% of first-time shoppers who must return an item will never shop again with that retailer. Returns Reduction has a substantial positive impact on Customer Lifetime Value.
- Product Development Intelligence – Collecting and synthesizing return data, including quantified customer reviews and feedback, will offer insight into what customers are truly looking for. That ability to forecast will drive future product success.
SHOW YOUR RETURNS BULLY THE DOOR
The good news is RVCF members have the returns data, even if there is no single system of record for returns. In order to put a dent in your annual return rates, you will need both an aggregated and granular view of your returns data. The data is housed in business systems such as eCommerce, CRM, OM, WMS, and POS. Customer experience data is stored in reviews and on social media. The key to an effective Returns Reduction Movement starts with organizing all data into a single view to create a cohesive picture of customer returns. The next step is to leverage this data to achieve Returns Reduction through addressing four fundamental requirements:
- Root Cause Discovery: “Returns Reduction” means reducing both the number of avoidable returns and the cost of returns when they do happen. Returns Reduction is only possible once the data is collected and analyzed in one central system in order to discover the root cause of returns.
- Timeliness: Too often have businesses relied on a “post mortem” after each season to recognize the impact of returns. By addressing the problems in-season, and in near real time, you can prevent avoidable returns.
- Actionable: Your ability to reveal the Root Cause and focus on your highest priority products and categories will enable your team to effectively address the issues.
- Collaborative: Returns and their associated reasons are a direct byproduct of the entire organization. Any successful initiative will require two essential elements:
1) a “single version of the truth” for all returns and shared by all business users, and
2) a collaborative workflow mechanism to manage team alerts, support action, and measure success.
ENSURING YOUR RETURNS REDUCTION INITIATIVE IS SUCCESSFUL
We are pleased to be working with RVCF to spark a Returns Reduction Movement in 2019. In direct response to members’ comments, RVCF has commissioned a new Returns Reduction study to spotlight the challenges. Here are several guidelines to ensure your FY19 Return Reduction initiative is successful and delivers business value.
1) Shared Vision: Build your movement around a shared Returns Reduction vision and strategy that is communicated relentlessly throughout the business. Start with a two-year retrospective of your returns data for FY17-FY18 and identify a few of the largest returned items (lost sales revenue) where the need for change is clear.
2) Accountability: Hold sponsors, process owners, project managers, and team members accountable to deadlines and deliverables. Set up the forums to manage return initiatives and give them the right support and attention.
3) Right Stakeholders: Few, if any, organizations have a role titled “Chief Returns Officer.” In lieu of not having one executive that is responsible for the total lost revenue due to returns, we encourage our clients to assemble a cross-functional team including Merchandising, Digital, Marketing, Supply Chain, and Finance.
4) Tools and Skills: Give project managers, process owners, sponsors and team members Analytics and AI based tools. Spend time educating teams. Newmine’s flagship software, Chief Returns Officer™, is an AI-based Returns Reduction Platform that empowers teams with the analytics needed to reduce returns.
5) Processes, Metrics, and MBOs: In order to preserve the new improvements and reduction in return rates, establish and monitor “at risk” products, set return rate goals, and create return reduction MBOs. Every $1 M in reduced returns, contributes $0.5 M to the bottom line EBITDA.
Companies rarely take business improvements seriously until it threatens their survival. Organizations that have made the leap to omnichannel, while still maintaining high operating costs, are risking severe deterioration to their bottom lines. Further, without disruption in this area, new e-retailers will struggle to enter the market sustainably.
All innovative disruption requires some discomfort as companies forge a new strategic path. Given that every $1 M in returns equates to $0.5 M in EBITDA, can you afford not to change?
The NEWMINE team is like no other – uniquely focused on optimizing retail commerce and Returns Reduction. We are all accomplished professionals with deep retail strategy, operations, and IT systems skills honed by decades of in-the-trenches experience. We have helped some of the retail industry’s biggest brands transform their customer experience and enhance profitability. We are the developers of the only AI-powered returns reduction platform, Chief Returns Officer™.
YOUR EBIDTA OPPORTUNITY: http://www.newmine.com/returns-calculator
BUILD A STRONG DEFENSE AGAINST ONLINE RETURNS: http://www.newmine.com/how-to-reduce-customer-returns
 UPS - https://www.ups.com/us/en/services/knowledge-center/article.page?name=return-shoppers-by-rethinking-your-online-returns&kid=aa3b199e
 CNBC - https://www.cnbc.com/amp/2019/01/10/growing-online-sales-means-more-returns-and-trash-for-landfills.html
 PRG - https://scg-scmr.s3.amazonaws.com/pdfs/SCMR1805_Reverse%20Logistics%20PDF.pdf
Posted By RCVF Admin,
Wednesday, January 30, 2019
Are Product Data Standards Important?
by dataZen Engineering
Which ones, you ask?
If you’re doing business electronically you know that compliance with on-line data standards is necessary to get in the game. For example, if you’re an EDI shop, then you know about “standards” like ANSI X12 that help trading partners “speak the same language” when exchanging EDI documents on-line.
EDI paired with a leased line or VAN (Value Added Network) provides a highly secure and available means of doing transactional business. Unfortunately, only about 5-7% of companies decide to invest in EDI and ANSI isn’t the only game in town when it comes to data standards.
Product Data Standards, overwhelming?
Enter the e-selling experience on the internet and the proliferation of data standards that can be downright overwhelming esp. in the retail industry. In the early internet days of ecommerce, there was fear and resistance that data standards would only hasten the commoditization of a company’s products. The worry was that price would become the ONLY thing that mattered to the web consumer. Many companies were reluctant to serve up structured product data fearing that it would allow a web shopper to “compare” their products to the competition. Some companies chose not to include pricing. Sadly, that practice didn’t work because price is a critical element in the customer’s selection and ordering decision process. Lastly, some just hoped that the world of paper would somehow prevail. Sadly, we all know what happened to the JC Penney and Sears catalogs.
Welcome to today’s Unified Commerce and its channel along with the normalization and synchronization of everything for the web. Bottom line, like it or not, if your product data isn’t suitable for the digital marketplace together with prices, 360-degree photos, videos and other mandatory “standard” attributes needed for selling through channel partners or direct, you are pretty much out of the game.
So, what are the Product Data Standards anyways?
EDI processes aside, product data standards for the internet is where things get tricky. Navigating the world of product data standards from GS1 (Global Standards 1), ETIM (Electro-Technical Information Model), UNSPSC (United Nations Standard Products and Services Code) are some acronyms that take some getting used to. These standards organizations are all presumably helping to simplify the on-line digital experience for consumers / buyers. There are others. And, the value proposition for each one is pretty much the same; by aligning your product data with these standards, you will save money. Again, the idea is “save money”.
Remember the GDSN (Global Data Synchronization Network) which changed its name to 1Sync to presumably get better brand recognition in light of the “synchronization and normalization” buzz phrase for product data? It’s not bad to be GS1 or UNSPSC compliant, but just like EDI, there are costs involved in getting there but then by implementing you save in the long run.
Are these Product Data Standards for me?
More importantly, understanding which standards affect your company and specifically retail industry takes some digging. Fortunately, there are folks like us around that have been down this road before. If you need a little help, we can help you speed up the process.
So, what to look for and what are the byproducts? These are some outcomes to look for in general after you have applied some Product Data Standards.
The idea is to start with a small footprint following some proven technology and methodologies to meet your desired objectives. Say, you want to implement UNSPSC standards. Then one of the goal from the get go must be how do you initialize your taxonomy down to the product attributes and values at the SKU level. That way a consumer is more informed to distinguish yours against what the competition offers.
Today, it is data about the product or service that is more important than the product or service itself. Therefore, having solid product data standards across the board is super critical for any business!
United Nations Standard Products and Services Code
Posted By RCVF Admin,
Tuesday, January 29, 2019
Are You Accounting for Supplier Performance During the Budgeting Process?
by Victor Engesser, RVCF
The annual budgeting process for retailers, or any organization for that matter, is stressful. Every business need can’t always be met with dollars and labor resources, and not everything will get the green light. Some things just have to wait. However, one area that’s absolutely critical to achieving major budgeting objectives such as revenue, margin and inventory turns is supplier performance.
If you know where you stand with regards to supplier performance, you’re probably already tracking it at the category or merchandise level, or by merchandise group. Hopefully, you’re working on ways to better manage and improve supplier performance as well. But is supplier performance incorporated into the budgeting process so that it is "owned" in the same way that sales and margin targets are "owned"?
Suppose at some point during the year, it becomes obvious that supplier performance is holding you back from delivering the results you budgeted in certain merchandise categories. Can you really say you were caught by surprise?
After all, you know supplier performance is critical. Otherwise, you won’t maintain desired inventory in-stock, which means you won’t always make the sale, which means you won’t meet your revenue and margin goals.
Instead of waiting for something bad to happen, you need to make sure you get a voice at the table during the budget process when everyone is very much aware of what they’re signing up for. In addition to making sure you have the staff and the support you need, you need to plan for supplier performance. This will help you get the commitment and resources you need now, and the attention and follow through during the year to keep your suppliers’ on track so they uphold their end of the bargain, which is to meet your performance expectations.
The objective should be to have a well-defined, documented target for supplier performance within each merchandise category in order to support the high-level budgeted goals of your company. Merchandise category metrics with budgeted objectives that are affected by supplier performance include but are not limited to inventory dollar levels, inventory turns, order frequency, safety stock levels, and in-stock levels.
To support these category objectives, you need speed to shelf. To have speed to shelf, you need on-time, in-full performance. You need an accurate, timely ASN. And you don’t need delays caused by errors with labels, packaging or cartons. In a nutshell, you need the supplier to adhere to your compliance requirements to achieve your objectives within each category and deliver on your budget goals. When these supplier performance goals are identified and aligned with the merchant, the supply chain compliance team and the merchant can then collaborate and work with suppliers when and where necessary to drive these results.
Internally, you need to identify the necessary resources and required supplier performance levels to achieve your budgeted objectives. Externally, you need to make sure your suppliers know how important their performance is to achieving your goals. You need to make it clear that you’ve established performance goals for the supplier that, if met, will make it possible to hit your numbers.
Here is a simple, five-step approach to incorporating supplier performance management into the budgeting process.
- Campaign. Campaign to get others within your organization to understand the importance of incorporating supplier performance management in the annual budgeting process.
- Partner. Partner with key stakeholders to identify what your expectations should be by major category and by major supplier.
- Collaborate. Collaborate with major suppliers. Seek alignment and commitment from them to achieve these goals.
- Commit. Commit resources and identify specific responsibilities to collaboratively accomplish these goals.
- Follow Through. Follow through by measuring, reporting and managing these goals.
The ultimate goal is to use the annual corporate budgeting process to revisit the supplier’s supply chain performance and recommit, both internally and externally with trading partners, to improve performance and the resulting financial benefits it provides to both companies.
You might say to yourself, “Well, we’re already doing this.” But are you truly seizing this moment in time during the budget process to communicate to merchants the importance of having a clear goal for individual supplier performance? If suppliers meet those expectations, you’ll have much more confidence, and much higher probability, that you’ll produce the results needed to meet your budgets in terms of sales, margins, and inventory turns.
The more you directly integrate supplier performance with your budgets, the more it remains top-of-mind throughout the year. Then you can constantly revisit performance goals, determine to what degree supplier performance is keeping you from meeting objectives, and address specific issues as quickly as possible to get back on track.
Budgeting Supplier Performance
supplier performance management
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Monday, January 28, 2019
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From the Desk of Kim Zablocky: Design Thinking Program Announced
RVCF’s focus has always been on the “Perfect Order”. As the industry evolves and online sales for both retailers and brands continue to grow, we are now faced with expanding our focus to include “Perfect Handling of the Reverse Flow of Product”.
Returns have a drastic effect as accounting departments must seek new ways to manage the reconciliation nightmare of debit/credits on returned products shipped on behalf of the retailer or .com. From merchandising to payment, companies are struggling to find ways to stem the tide of returns (that can equate to 15-40% of all online sales) and protect their margin.
Surveys, coupons, pre-authorizations, reducing purchase dollar credit over an extended period of time before returning, time limits on returns and more are being deployed with mixed results. These actions mean increased costs and less profit. Is the answer to take the draconian step of shutting off the consumer from future purchases?
RVCF is addressing the subject of “Returns” in a big way beginning with our Returns Reduction Survey and continuing through the RVCF Spring Conference. Along with a conference session dedicated to reducing returns (see related article, “ Returns: The Bottom Line Bully”), the conference agenda features a session on deploying Design Thinking methodology to the returns process along with the development of an E-Commerce Performance Scorecard, to be shared by the retailer with its brands.
We introduced the concept of Design Thinking at our Fall 2018 conference and followed up with a series of teleconferences. Based on the enthusiastic response received we will continue on this path. Whether you joined us in the fall or are just getting started, this session is certain to bring tremendous value not only to your returns processing but to future projects in your organization and beyond.
Experienced leaders from the Barkley Consulting Group, will facilitate this full day session intended for participants from both retail and wholesale/brands who manage the e-com returns process. The session will help you to think “Outside of the Box” and create new and innovative ways of addressing this timely issue.
For those that may not be familiar with the Design Thinking methodology, it is a human-centered approach towards problem-solving that sees a problem from the eyes of your end-user—the consumer, the employee, the partner. It is a way of thinking that embraces empathy, inspires creativity, and encourages experimentation to create solutions that meet the needs of the audience for whom you are designing. Design Thinking is a highly-experiential technique any company can employ to generate new ideas to solve problems while achieving maximum consumer benefit. Design Thinking provides a methodology that fuels innovative thinking. It helps people learn how to think vs. telling them what to think.
This full day session will take place on Monday, May 6th. In order to receive the greatest value from your participation, attendees must commit to being present for the full session. A pre-workshop conference call will be scheduled in April for further discussion with those who will be joining the session and a post-workshop review will be conducted to discuss ways to implement this learning in their work. Spring Conference registration is required.
About Barkley Consulting Group and this unique process:
At Barkley Consulting Group, our team of experts has deep knowledge of Design Thinking through years of practical experience. We use that experience to help companies master Design Thinking to unleash the creativity that exists within their organization.
Our experiential workshops, classroom training, and customized activities engage, inspire, and educate participants and deliver the following value:
- Comprehensive knowledge of the Design Thinking approach and how it is used to solve problems and create new opportunities
- A solid understanding of innovation; how to inspire creativity and think innovatively
- How to apply Design Thinking to real-world problems and opportunities
- Valuable professional development skills, including collaboration, communication, leadership, and empathy
- How to move rapidly from idea to action using rapid prototyping, experimentation, and iteration.
Changing mindsets to accept failure as a positive force; focusing on asking the right questions vs. giving the correct answers Our program is not merely informational but an actual agent of tangible change; attendees can implement these teachings immediately and achieve the Design Thinking Workshop for Retail: The best way to learn Design Thinking is to do Design Thinking. This highly experiential workshop will teach Design Thinking concepts and immediately put them into practice on the given challenge. More importantly, participants will be given the tools, knowledge, and experience to use Design Thinking in their jobs, with their partners, and with customers. Over the course of the workshop, attendees are exposed to new concepts and methods around human-centered design. They will learn how to empathize with the needs and desires of the end-users, how to define the real problem(s) that need to be solved, brainstorming techniques to ideate potential solutions, prototyping skills to act quickly on those ideas, and testing methods to iterate refinements to develop the ideal solution. Attendees will learn key aspects of the process through collaboration, communication, and reflection.
Finally, Companies can use Design Thinking to:
• Create new products or services
• Solve existing problems or challenges
• Unleash creativity to discover new opportunities
• Uncover insights regarding unmet needs of your customers
• Develop their internal talent and increase their confidence, sense of empowerment, and contribution within the company.
Posted By RCVF Admin,
Monday, January 28, 2019
Quick (2 Minute) Survey Results: Direct Ship Decision Factors and Score Card Question
by Victor Engesser, RVCF
With the growing popularity of direct ship fulfillment (retailers asking their trading partners to fulfill the retailer's ecommerce order), we thought it would be informative to ask our members how they determine which products are stocked and which are direct shipped. Based on their responses here are some of the most common criteria used,
- Supplier's ability to direct ship (obviously, but not all suppliers have this capability)
- Size and weight of item (this is both a handling issue for retailer and customer as well as a warehouse space issue, and freight cost calculation)
- If assembly or scheduled install is involved (what works best to support the overall customer experience)
- Forecasted sales and profitability (anticipated sales rate while taking into consideration product turns and inventory holding costs)
- Product seasonality or lifecycle, and in apparel, size or color popularity, etc.
What we also learned from many retailers is that inside their company it is the category buyer that usually makes the ultimate decision on which items to set up as direct ship. This makes sense when you consider today's direct ship has it's roots in yesterday's "special order" capability and has evolved and expanded with the ecommerce "endless isle" objective which quickly filled up ecommerce warehouses. The buyer likely has to consider at least a few other factors before deciding how to proceed,
- Supplier cost to retailer based on which way they decide
- Direct ship product availability if they do not stock
- Markdown risk if the own the inventory
With the rapid grow occurring in direct ship fulfillment we are likely to see more and better financial tools and software capabilities to support this decision making and fulfillment process for both retailers and suppliers.
Posted By RCVF Admin,
Monday, January 28, 2019
RVCF Spotlight: Conference One-on-One Meetings
by Susan Haupt, RVCF
One-on-One Meetings began as casual, ad-hoc conversations between Retailers and Merchandise Suppliers during RVCF Conferences. Fast-forward to today where One-on-One meetings have become a signature session on every agenda with literally hundreds of meetings taking place during the course of each RVCF conference.
The meetings themselves look something like “speed dating”. Retailers are situated at tables in a separate area of the event venue during designated meeting times. Merchandise suppliers report to the meeting area and move among the tables in 15-20 minute intervals following their pre-assigned meeting schedule. The area is closely monitored by RVCF Staff to make sure that the meetings run smoothly and on time. Discussions may include performance reviews, upcoming initiatives, deduction evaluation, and more.
Retailers wishing to conduct One-on-One Meetings with their merchandise suppliers need only advise an RVCF Staff member of their interest and availability to meet. We will notify you of your meeting requests including the supplier number and topic(s) to be discussed. Only the requests that you approve will be included in your schedule, which is sent the week prior to the conference.
Merchandise Suppliers wishing to participate in One-on-One Meetings with their retailer trading partners must register for the event and pay their conference registration fee. In the weeks prior to the conference, an on-line survey will be sent through which meetings are requested. All registrants that requested meetings will receive a schedule of their approved meetings the week prior to the conference.
To make the most of this unique opportunity for collaboration, please be mindful of this timeline.
- On-going - Retailers commit to One-on-One Participation.
- 6 weeks prior to conference – RVCF launches meeting request survey to paid registrants. Please complete the survey as thoroughly as possible including your availability for meetings. Be sure to take into account travel plans and sessions that you don't want to miss.
- 5 weeks prior to conference – meeting requests are distributed to Retailers for review and approval.
- 4 weeks prior to conference – scheduling of retailer-approved meetings take place.
- 1 week prior to conference – schedules are distributed to Retailer and Merchandise Supplier participants.
While the process has evolved over the years, the purpose remains unchanged; to provide an environment for Retailers and Suppliers to meet, exchange valuable feedback concerning their business relationships and pave the way for future dialog. All participants benefit from being able to meet with multiple trading partners in one location during the course of a single trip saving precious travel dollars.
Posted By RCVF Admin,
Friday, January 25, 2019
If You Ship with UPS or FedEx, You Should Be Auditing Their Invoices
by Kenneth Kowal, Founder of ShipStarter
The cost of shipping is a constant concern for manufacturers, retailers, and distributors who send a large volume of small packages with UPS and FedEx. Both carriers’ service agreements are complex, and their pricing is hard to understand, even for seasoned logistics pros. This makes optimizing cost extremely difficult for most companies.
What’s worse? The carriers can’t be trusted to invoice for shipments accurately. They also cannot be trusted to credit customers fairly for refunds they are owed for delivery errors like missing a guaranteed due date. In fact, the carriers make errors on an average of 5% of invoices. But since it’s so hard for shippers to audit invoices, most companies either don’t notice the errors, or see this problem as just a cost of doing business.
So, What’s a Parcel Shipper to Do?
To help recover the money they’re owed, smart small parcel shippers enlist help. Yet, the 2017 Annual Third-Party Logistics Survey from JDA reported that 68% of companies either conduct their own shipping invoice audits or are not auditing their invoices at all. And given how difficult it is to audit small parcel invoices thoroughly and well, it’s questionable if any of the companies that are conducting audits in-house are doing so effectively.
Perhaps shippers do not realize just how advantageous an audit can be, or as we’ve said, they would rather take the hit to their bottom line as a cost of doing business than spend the large amount of human resource time that’s necessary to properly audit the invoices.
Parcel invoice auditing is an integral part of confirming that carrier pricing matches the original agreement. An audit can tell a shipper if they are being overcharged for errors or late shipments, as well as find other inefficiencies in the supply chain.
Why Are There Errors?
The reason there are errors is that carrier rates agreements are complex and depend on a lot of variable circumstances. And since shipping by its nature often involves contingencies, costs can often end up being very different than what is estimated by a shipper when a package is handed off to a carrier.
There are several errors that occur regularly, including:
- Fuel surcharge errors
- Incorrect billing address
- Wrong PO number
- Incorrect exchange rates
- Wrong weight calculation
- Duplicate shipments or invoices
Some of the errors can be on the part of the shipper, and some by the carrier. An incorrect billing address can be easily corrected, but it comes with a hefty price tag. A mistake like this will cost at least $11 per shipment, depending on the carrier. Address errors are not always the shipper’s fault, however. But if you are not checking, how do you know?
How Much Can a Shipper Save?
On average, working with a parcel audit service will result in a savings of 2%–5% or more on the total spend. The average savings will vary by business and can end up being a lot more. So, is it worth it? Think about what a 5% reduction in small parcel shipping costs would mean to your company’s bottom line.
It’s clear how auditing invoices can recover a significant amount of money for many shippers. But what about other areas of your business? The data on your parcel shipping program that comes out of the auditing process can also help you tighten up your shipping operation in other ways. Parcel data can provide insights into carrier performance and your overall network efficiency, down to the package level. Armed with data, logistics managers can analyze their operation to make better business decisions.
A partnership between a small parcel shipper and its audit team provides value across the supply chain. It’s a simple way to remove cost and waste from your company, while ensuring that the terms of your carrier agreement are being met.
Transportation Impact provides small parcel rate negotiation and invoice audit services to large-volume FedEx and UPS shippers. We’ve saved hundreds of companies over $100MM in the past ten years. To learn more, visit www.transportationimpact.com.
Posted By RCVF Admin,
Friday, January 25, 2019
RVCF's 2019 "All About Retailer Compliance"
The 2019 edition of RVCF's "All About Retailer Compliance" publication is now available. We've combined retailer requirements with industry standards and decades of experience to develop this all encompassing training and reference resource that is a "go to" guide for anyone connected to compliance in the retail supply chain.
Users will be able to quickly and easily:
- locate standards and prioritize those needing special attention
- decipher industry terms and acronyms
- understand the order fulfillment process - step-by-step, what's important and why
This 90-page guide features individual chapters dedicated to :
- Purchase Orders
- Direct to Consumer
- Floor Ready
- Packaging & Marking
- Accounts Payable
- Vendor Compliance
This document is available at no cost to RVCF Members and for the nominal fee of $295.00 for non-members. Download your copy
retailers; retail compliance