Supplier Collaboration Excellence: Achieving Walmart Quality
Decision makers at Walmart have a simple test to check the value of each innovation the retail giant considers. Each new process or decision at Walmart goes through three key questions:
- Will it help to reduce price?
- Will it improve customer service?
- Will it help improve supplier collaboration?
It is no secret that the retail behemoth from Bentonville has been able to stand by its founder Sam Walton’s initial promise of quality products at everyday low prices thanks to smart inventory management, superior communication with suppliers, visibility across the entire Walmart supply chain and excellent supplier collaboration strategies on their powerful retail-supplier platform.
Today, the Walmart supply chain consisting of over 2,400 stores and 100 distribution centers connect seamlessly with its 14,000 strong network of global suppliers over a technology platform that enables end-to-end supply chain visibility and superior decision support. The platform also gives Walmart’s suppliers access to its entire database with up-to-date, store-by-store information on sales and inventory of their products, decision support, what-if scenarios, sell through and pricing.
Supplier Collaboration: The Super Six Check-list
When it comes to supplier collaboration every retailer aims for Walmart quality. But how many are successful in their collaboration efforts? Why do many retailers lose significant time and efforts on collaboration projects and technologies that meet with failure? Despite investments in top of the line technologies, why do so few retailers establish effective supply chain visibility?
A key reason behind this is the narrow view of supplier collaboration that equates it to a set of collaborative and event-based practices as against the building of long term, collaborative relationships with suppliers.
Here is a quick super six checklist which will help you identify if your collaboration initiatives are on track with the best in the business.
1. Are delayed product additions and vendor listings driving you up the wall?
Over 20,000 newly launched products are added to the Mintel Global New Products Database every month. This roughly translates to an average addition of over 650 products a day and hundreds of new vendors registered each month. For many retailers, this means undue delays, complex product assortments, frustrations and often chaos in the supply chain.
But managing dynamic product assortments, new product additions and vendor listings does not necessarily have to be such a painful process. A comprehensive supplier portal with collaborative capabilities enables you to launch products and enroll new vendors electronically, and handle expanding product assortments at rapid turnaround. These let suppliers submit information and images of new products with high degree of accuracy to be launched while allowing retailers to on-board new vendors in a speedy, structured process. Merchandising teams at the retailer’s end can quickly evaluate new vendor listings and new product proposals, shorten review cycles, quickly expand product assortments and fast-track decision-making.
2. Do your suppliers support you through every stage of killer promotions?
The retail industry is rife with stories of retailers planning elaborate promotions and festive offers. But many of these end up getting a lukewarm response in the market because of poor supplier support.
A truly collaborative culture will foster joint promotion planning among retailers and suppliers, enabled by sharing of product sales and inventory data under highly safe and secure environments resulting in timely markdowns and the appropriate pricing strategies.
With access to timely information on marketing plans and promotion schemes, suppliers are better equipped to support you through your killer promotions.
3. Do your suppliers share insights to help boost your sales as much as theirs?
Your suppliers have their finger on the pulse of the industry and are in the know about market trends, customer preferences, moves by competition and significant shifts in the market. Effective supplier collaboration works as a two-way street for improvement with suppliers being as much of a contributor of information to your business. They bring insights and customer data at their disposal to help you increase sales, improve product assortment decisions and boost foot falls to your stores.
4. Do your merchandise, sales and store operations teams have supply chain visibility?
In today’s retail supply chains, trying to get correct information on sales, product assortments, or shipments can be as baffling as groping in the dark. A merchandise manager trying to get a grip on where a consignment is in the delivery chain, may end up having to make a series of back and forth calls, e-mails and faxes. Suppliers trying to gain information on product sales and stock positions may be an equally daunting task.
The Walmart supply chain has set a bench mark with regard to retail supply chain visibility providing its network of suppliers as well as distributors and logistics providers with real time access to data on product assortments, stocks, sales and shipments.
Effective supplier collaboration offers superior supply chain visibility with safe and secure access to product master data, purchase orders, invoices, data on goods Available to Promise (ATP), Advanced Shipping Notices (ASN) as well as information on product safety, traceability and recalls all on an easy-to-use single portal accessible at the click of a mouse to all stakeholders.
5. Are your suppliers using funds in smart ways that boost their business as well as yours?
Getting an early buy-in and support from suppliers into your business and marketing cycles and product assortment decisions, is a very critical aspect of any retailer-supplier collaboration and is where most retailers lag behind.
The most powerful and effective way of doing this is to involve suppliers at a pervasive level of planning, demand forecasting and marketing for optimized results at both sides. With their close involvement in your processes, you can get early commitment of funds from suppliers towards promotions, combination offers, gondola hire and dedicated staff deployments at your stores – with a view to improving your sales, customer service and margins as much as their own.
6. Have you put in place vendor scorecards to help suppliers assess whether they are performing to plan?
Have your collaboration efforts been primarily focused on your business with total disregard for your suppliers growth? If yes, perhaps you need to relook your strategy.
Advanced supplier collaboration techniques suggest embracing comprehensive and in-depth vendor score-cards. This scorecard should capture critical metrics and Key Performance Indicators (KPIs) of all suppliers, helping to track, measure and monitor supplier performance and focus on areas for improvement.
Based on these score cards, you can make comparisons across similar supplier community and offer each supplier recommendations on improving refill rate, margin percentage, sales volumes and delivery schedules as well as infrastructure and process improvements.
Advanced Supplier Collaboration Portals:
Retail chains and large format department stores focused on building true collaboration can rely on the super six check-list to ensure that their collaboration efforts are on track with the best in the business and achieve Walmart quality.
Integrated web-based portals with comprehensive supplier collaborative capabilities facilitate seamless collaboration, supply chain visibility and real-time information exchange between retailers, suppliers and all other touch-points in the retail supply chain.