How Sharing Data within the Supply Chain Benefits Everyone, and the Planet!
Now that we have fully come of age in the era of Big Data and connectivity, with Cloud-based applications mushrooming into the web, there’s no excuse for organisations at both ends of the Supply Chain to shy away from co-operation and collaboration when it comes to sharing data. The Retailer’s goal is to improve the end Customer Experience as well as maximise profit. The Supplier’s goal is to improve the retailer’s experience by ensuring availability meets demand – and also maximise their own profit. This can be achieved with dramatic results if Suppliers and Retailers co-operate to reduce costs and wastage. And a welcome by-product of increased logistical efficiencies is a lower overall carbon footprint so the Earth benefits from data-sharing!
Vendor Managed Inventory
One of the keys to improving the efficiency of the Supply Chain is a co-operation-based replenishment strategy – which facilitates high availability of goods at the same time as requiring a low stock level of core product availability. If you can find the “sweet spot” that maintains this balance then you will achieve the greatest efficiencies. If the Vendor can use the Retailer’s data and calculate the inventory requirements for them, it reduces the burden on retailers who have typically hundreds of suppliers and tens of thousands of unique SKUs to manage. Vendor Managed Inventory takes this further, whereby the supplier takes full responsibility for managing an agreed level of inventory. The sharing of data is, as you would expect, a prerequisite of this model.
Supplier BI Portals
One of the ways that we have seen our own retail and wholesale customers working towards this goal is by creating a “Supplier BI Portal” which allows wholesale suppliers to view the retailer’s sales, stock and purchasing information at store level in relation to their own product list. The portals we have developed allow suppliers to carry out ad hoc analysis through a web enabled application, getting detailed information by product, category and brand. They can view and filter information through time based reports and also download exports of the relevant information. This facility allows them to see exactly what is needed at store level without stepping foot inside the store, so they save costs on some store-based merchandising tasks and also help the retailer manage their inventory.
We have worked with organisations in the Hardware and DIY sector, Drug distribution, Electrical Wholesale Associations and Independent Pharmacies operating under Retail Brands, who have all benefited from some form of data sharing investment. It is a non-adversarial relationship which delivers more insights to both ends of the supply chain and unites them in a shared goal.
The most successful applications we have seen are where the supplier uses the information from the portal to load into their own internal ordering software and calculate order volumes for “just-in-time” deliveries. Organisations that are using this method are seeing sales increase dramatically since inception. Every part of the supply chain wins when this method is applied – wholesalers can accurately manage inventory requirements and create POs or suggest POs to the Retailer. “Weeks Cover” can be maintained at optimal levels so as to ensure the end customer doesn’t experience a stock-out and go elsewhere to shop – perhaps never to return. Retailers win by reducing their role in their own stock management and maintaining the lowest stock levels that still provide adequate cover. This takes strain off their cash flow as money is no longer tied up in unnecessary stock.
Many organisations are now “sharing” or optimising transportation costs by using logistics companies that provide pallet network hubs – so rather than trucks working a long route to deliver from one supplier to many branches of a retail chain for example, pallet networks allow pallets to be taken to central locations where delivery to the end retailer is a via trucks that takes pallets from a variety of suppliers.
Efficient Consumer Response
There are a number of not-for-profit organisations that have been set up to bring together key players in the Supply Chain to develop industry best practices and principles in consumer goods value chain sectors including Food, Drink, Grocery, Pharmacy and Hardware sectors.
There are some very helpful articles and guides on the website of Efficient Consumer Response Ireland which is one such agency. It has a steering group comprising many key people from both ends of the supply chain who have day jobs at various well-known companies in Ireland, and membership from many more.
About Debbie Lonsdale
Debbie Lonsdale has been working with the Diver Solution as a BI Consultant at Dynamic Business Informatics since 2008. Her previous experience includes computer programming, analytical and technical roles, team management, account management, sales and marketing in a variety of market sectors, including the Travel Industry and Distribution. She combines this experience as an all round ICT professional in the BI sector.