Top 10 Benefits of an Integrated Supplier Network
Supplier Collaboration Platforms: Doing it the Right Way | Top Ten Benefits of an Integrated Supplier Network
Industry research points to the fact that supplier collaboration is emerging as one of the top priorities for retailers wanting to leverage the benefits of improved supply chain management in a tough economic environment. Considering the level of focus on supplier collaboration efforts, one would have imagined retailers having made substantial investments in developing advanced collaborative models across their supplier eco-system. But the reality is rather different. Despite substantial technological and process investments towards collaboration, these models have not exactly moved in the right direction. An observation of a random selection of mid to large-sized retailers reveals the following:
- Collaboration in most of these organizations is department driven and focused on short term gains with limited cross functional involvement.
- Most mid to large-sized retailers have invested in multiple systems often up to ten or more – to streamline their supplier collaboration. For instance, a UK based $5 billion + retailer has as many as 14 different systems built over the last 10 years across various technologies, to support supplier collaboration.
- Most retailers have focused their supplier collaboration effort by championing pilot projects with their top suppliers with very little opportunity to scale up or replicate across more product lines leaving behind huge potential gains that would ensue from collaborating with a larger supplier base.
A recent Gartner survey points to the fact that only 15% retailers surveyed have supplier management processes that support their business objectives. Only a quarter of them are electronically connected to 50% or more of their suppliers. Clearly, developing and sustaining win-win collaborative relationships with suppliers is increasingly a challenge for retailers
Supplier Collaboration (Early Initiatives and Evolution)
Supplier collaboration in its current state evolved over almost two decades, primarily driven by specific department needs. The earliest collaboration efforts were driven by MIS and finance departments for the practical purpose of reporting, inventory optimization and automating purchase order processes. Not to be left behind, merchandising departments had some of their own needs around efficient category and product management. Collaboration initiatives designed for synchronized product information and new product launches met these requirements. The success of these programs led other departments such as marketing and logistics to also initiate their own collaborative programs focused on efficient warehouse management, transport management, joint promotion and marketing programs. Such departmentalized approaches to collaboration resulted in a proliferation of point-to-point systems built to address disparate supply chain functions and workflows. These systems have little interconnect among each other and are far from equipped to handle the integrated collaboration requirements of today’s retailers. Lacking an enterprise-wide vision, they did not merit large scale reform of end-to-end supplier processes and supporting systems. This disjointed landscape of multiple, quick-fix applications lacks data integration across the sourcing lifecycle leading to data duplication and inaccuracies. These silo systems lack visibility across the supply chain and have no decision support capabilities. There is hardly any process integration across departments or functions limiting the benefits of automation. Most such applications were not designed to interact with suppliers leading to one-way communication, which hardly qualified as collaborative. Much of the investments went into working with top suppliers as collaboration with smaller suppliers was expensive given the investment constraints. The ‘2010–2012 Global Supply Chain Trends’ report from PRTM consultants indicates that there is a still lot of ground to be covered in supplier collaboration initiatives for the majority of organizations surveyed. Among the 150 senior supply chain officials surveyed, only ten per cent had the desired level of maturity in their supplier collaboration strategies. The report concludes that during the last three years, companies overwhelmed by the magnitude of demand and supply volatility, focused on limited and short-term measures to ensure supply chain flexibility and collaboration – an approach that cannot work for the future.
Single Integrated Supplier Portal (End-to-end, cross-functional collaboration)
The smartest, cost-effective and most comprehensive answer to these problems is a single integrated, cloud based supplier portal that fosters collaboration with all suppliers across the entire sourcing lifecycle. Composite single portal solutions are comprehensive, cost effective and support two-way flow of information helping both retailers and suppliers to improve performance and build competitive advantage through industry-leading best practices. They allow retailers and suppliers to synchronize every stage of retail supply chain processes including stock assessment, order placement, order processing, inventory management as well as handle joint promotions, rebates
Top 10 benefits expected from a Integrated Supplier Portal
Many leading retailers have recognized the value of having a single portal to meet their end-to-end supplier collaboration needs. However while considering investments in such technologies, what are the criteria on which they evaluate available solutions? An integrated portal solution should ideally offer a blend of the following top 10 benefits to an enterprise.
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Automate processes, not just activities
A truly integrated supplier portal will automate retail processes and not just activities. For example, a new product launch warrants capturing the right details of the proposed product; identifying the right candidate for de-listing as per the one-in, one-out approach; planning in-store promotion and the actual product launch – seamlessly handling all these processes in an integrated fashion, rather than restricting itself to specific activities.
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Process + Data = Intelligence
A retailer’s ability to take the right decision is enhanced multi-fold when he has access to the right, reliable data at his finger-tips. He needs product performance and promotion lift data before planning the next promotion; and vendor performance data before the next round of negotiations. Single portal solutions will put all this information into the retailer’s hands, empowering him towards the right decisions.
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Two-way communication between supplier and retailer
A true collaborative portal will support two-way communication between suppliers and retailers. Retailer data on sales and stock positions, promotional activities and their annual marketing calendars will be accessible by suppliers. Suppliers in turn will feed information on new product launches, stock alerts and consumer insights – all through a single secure interface.
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Comprehensive and actionable information
An integrated single portal will provide role-based dashboard features and appropriate tools for root cause analysis, predictive analysis and simulations. And most importantly it offers self-service functionality providing access to all business users across the enterprise, enabling them to translate insights into actions.
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Automate larger supplier community
The proven benefits of automation are often restricted to a few top suppliers. A composite, easy to adopt, single portal will help extend this capability across the entire supplier eco-system in a low-cost, affordable way.
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Scalability beyond just the top suppliers
Just like automation, most other collaborative initiatives designed around CPFR or joint promotion planning get piloted with a handful of large suppliers and a few product lines. An integrated portal presents an opportunity to onboard smaller suppliers with minimal management overhead. Such a solution will also help retailers shift product inventory management responsibility to suppliers and enable a win-win situation.
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Build strategic relationships
Vendor score-carding is much talked about in retail industry but very few companies have got it right. An advanced single portal solution lets retailers uniformly track performance of all suppliers, not only on basic SLAs such as orders, fill rate and on time deliveries but also on qualitative aspects of the relationship such as sales performance, inventory performance, process compliance, market performance and promotion support. This helps retailers identify and categorize their suppliers into strategic, average and poor performers and take necessary steps to improve the poor performers.
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Speak the same language
A single integrated portal with a single version of truth will help everyone from within the retailer organization to the suppliers speak the same language. It establishes a common definition of KPIs and SLAs with suppliers so that everyone understands the meaning of margin, OOS, sell through and OTIF in exactly the same way and gets to see the same data.
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Make “Collaboration” enterprise-wide
A single supplier portal will help get rid of the departmentalized approach to collaboration. It helps the retailer’s entire organization mature together and also presents new opportunities to foster cross-department collaboration with suppliers.
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Transform data into dollars
Finally, money is always important. As already established, the business and revenue benefits of collaborating through a single integrated supplier portal are quite well balanced for both retailer and their suppliers. Retail data, when shared at a granular level, will help suppliers influence demand, right at the point of action. Suppliers who utilize these data driven contextual insights can boost category, market share and drive revenue growth! By entering into agreements with suppliers and monetizing this valuable retail direct data, retailers can therefore explore an additional revenue stream.
Since supplier adoption is a critical success factor for such an initiative, the benefits should be communicated to suppliers through a series of workshops, road shows and training programs to gain their buy-in.
