The retail industry of today greatly depends on strategy, data, and teamwork. However, there is a gap in the interaction between suppliers and retailers, which makes achieving the ideal seamless partnership difficult.
RELEX Solutions has released a research that highlights this disconnect. A noteworthy 87% of providers of consumer goods indicate that they require deeper cooperation with their retail competitors. Only 16% of these suppliers have access to the vital inventory data, despite the fact that 78% of them receive some kind of commercial or supply chain planning data. This disparity makes me wonder: What’s creating the difference?
Problems Precluding Cooperation
One major obstacle to cooperation is the inconsistency of data. While the majority of suppliers obtain data from their retail partners, there are often concerns over the precision and comprehensiveness of this information. frequently being displayed at an excessively aggregated level—for example, across locations on a weekly basis—when the CPG would prefer it to be displayed daily at the channel or shop level. This reduces its usefulness in forecasting and analysis.
When merchants and suppliers use different data models to operate, there is an additional layer of complication. This mismatch frequently leads to disparities in the interpretation of the data, necessitating thorough data cleansing and standardization. As a result, the data must be interpreted and made meaning of manually.
Moreover, exchanging data too infrequently—say, once a week—causes a great deal of process latency in the digital age, where immediacy is prized. The CPG has to wait for the next data batch to arrive in order to notice any changes or updates. To prevent these delays, data should ideally be sent in almost real-time, or at least once a day. Moreover, this data becomes less useful when it is divided up into distinct departments within an organization—a practice known as data silos.
Labor bottlenecks are another challenge. Even with improvements in automation, a lot of firms still rely a lot on physical labor. This takes time and costs money since labor-intensive jobs like data reformatting need to be performed by people who could be automated instead. In addition to the difficulties in attracting and keeping qualified workers in the current labor market, firms frequently struggle to stay competitive. Leading businesses have, nevertheless, recently introduced automated exception reporting that finds disparities, such those between retailer and CPG estimates. This enables planners to focus exclusively on the key problems and subjects that are most important to the company.
Finally, communication barriers present a unique set of difficulties. In the fast-paced retail industry, being proactive is essential, yet many companies make the mistake of using reactive management. This frequently results in snap decisions and, occasionally, a breakdown in communication. Issues with trust exacerbate the matter even further. The relationship of trust between suppliers and merchants may erode in the event of irregular data sharing or unanticipated difficulties. Collaborative metrics and KPI dashboards are essential for improving communication because they allow both sides to keep an accurate picture of the circumstances, which promotes understanding.
Decoding Data: Information Sharing’s Crucial Role in Retail Collaboration
Examining the data challenges in more detail reveals that they are both a benefit and a drawback. Although data can help guide well-informed decisions, suppliers are frequently misled by the inconsistent quality and amount of the information they get. It’s like trying to find your way through a complicated maze with a blank map.
Moreover, the format in which the information is distributed may also present challenges. Attempting to crack a code without the key is analogous. As if that wasn’t difficult enough, some retailers charge for access to their data. The most perplexing situations arise when important details, like sales data, are completely ignored, giving suppliers a partial picture.
Retailers must take proactive steps in order to ensure a strong and coherent connection. It is crucial to guarantee the caliber and applicability of the data given. The first step is to share high-quality, pertinent data. Retailers ought to look about establishing regular periods for data sharing and maybe reconsidering their approach of charging for data access. Furthermore, the focal point of this conversation should always be important data elements, including sales figures.
Conversely, when retailers share the appropriate information with diligence, CPGs must also be similarly ready. To use the data across the company in an efficient manner, they need to have the right procedures, equipment, and employees. By doing this, the advantages of the shared data are maximized and planning and strategic decision-making are optimized.
It is impossible to overstate the advantages of supplier and retailer cooperation. Both parties may unleash savings that improve customer happiness, lower costs, and streamline operations when they actively exchange and understand data. Customers will always find what they need on the shelves because to this synergy, which also improves inventory management and forecasting and speeds up response times to market changes.
A collaborative approach also promotes trust, which is necessary for longer-term partnerships that can withstand obstacles and unpredictabilities. In the end, a more strong and resilient supply chain is produced when retailers and suppliers work together, which benefits all parties involved, from the manufacturing line to the customer.