In the wake of the Covid-19 pandemic, for many suppliers it feels like they’re re-starting their collaboration journey. Against a backdrop of CPI increases, retailer system changes and leaner supply chain teams, collaboration appears harder than ever before. Despite these challenges, the need to collaborate to reduce the cost-to-serve, improve the effectiveness of promotions and yet improve availability, is urgent.
At our recent ambient supplier group meeting, our members shared insights into their challenges and successes across the retail sector, that were both encouraging and inspiring and despite challenges there is considerable opportunity. The need to effectively communicate and build trust, with absolute clarity of purpose and smart use of data, proves its value now more than ever.
Service Level: The Cornerstone of Collaboration
For suppliers whose product availability is not good enough, collaboration is virtually impossible. In the wake of COVID-19, both retailers and suppliers were forced to tolerate service levels significantly lower than the standard ‘98.5%’ expected. Since the pandemic, global and local events have impacted service levels, political instability and the Ukraine war, labour shortages, cost increases, and packaging unavailability have all contributed. Despite these challenges, it's encouraging to note that most suppliers are currently achieving service levels in the mid-90's, with some back up at 98.5%. Additionally, fewer suppliers are rationalising SKUs to achieve this.
The Impact of Stretched Retailer Resources on Facetime and Supplier-Retailer Trust
As retailers continue to make efficiencies, with increasingly automated systems and reduced staffing, the opportunity for supplier and retailer teams to communicate has significantly reduced. Retailer teams are increasingly caught up in crisis management, leaving little time for value-added activities and proactive collaboration with suppliers. Another significant change is the shift from face-to-face meetings to virtual ones. A carryover from COVID-19, this practice is now firmly entrenched and is slowing down decision-making. The high churn of buyers and supply chain teams is another increasingly common challenge, with suppliers often without a regular contact point. However, new teams can also present opportunities for suppliers to redefine their collaboration strategies, allowing suppliers to re-engage, enquire about their priorities, and redefine mutual objectives.
Challenges of New Systems Implementation
The recent adoption of automated new systems that are still building their knowledge base to become self-sufficient, is also causing difficulties. The current advice from one Code Compliance Officer is for suppliers facing challenges is to liaise with category directors to apply pressure on the team to offer facetime and resolve issues.
Generating Savings: Leveraging Retailer Data to Unlock E2E Operational Efficiencies
Following the flurry of Cost Price Increase (CPI) negotiations in recent times, the opportunity for suppliers and retailers to discuss shared savings has diminished. To establish successful collaborations the right communication is critical and a number of suppliers explored how they were improving the quality and uniformity of information shared to achieve this.
Traditionally, suppliers have embarked on initiatives that focus solely on the savings within their control, sharing the benefits, without fully understanding the impact on the retailer.
By being able to model the retailer and supplier operational impacts, the combined savings can be shown to be significantly greater, with retailers already able to take a significant share. Positioning such collaborations as being genuinely end-to-end therefore allows both parties to invest in efficiencies, rather than just relying of suppliers to be proactive.
The need to build trust and leverage retailer data echoes feedback from our Collaboration Initiative, where early indications are for significant benefits (10-20% cost reduction within existing operating parameters). By analysing and optimising retailer order data, suppliers are able to help retailers deliver the best end-to-end value result for both parties.
Our Customer Supply Group is expanding as we welcome new suppliers into the group. If you are interested in collaborating with industry peers to achieve sustainable improvements and see real change, then please do get in touch: hello@simply-sc.com
Find out more at https://info.simply-sc.com/customer-supply-group
