An efficient and responsive supply chain can help ensure customer needs are consistently met and favorable profit levels maintained.
Better guaranteeing this requires the right type of stock to be available at the right time, and some retailers are using in-house technology systems to provide timely alerts for when products need to be replenished. However, it is important to remember the role suppliers should play in this process and retailers should take this thinking into account when selecting a vendor.
Due to the pressure that retail buyers are under to meet customer needs and drive revenue, suppliers need to match an in-depth knowledge of the sector with proactive efforts to ensure there are no gaps in supply. This, in turn, is facilitated by a comprehensive understanding of a retailer’s network of stores and their individual needs.
Beyond this, incorporating intelligent stock management systems for the items ordered on a regular basis by a retail customer is vital. It may be that an agreement is put in place to establish a system where the supplier is electronically alerted when stock is running low. To work effectively, close working relationships need to be established with key individuals and departments within a retailer’s operations to obtain access to the timely data needed to deliver against this. This means suppliers should maintain regular contact with a buyer and their in-house team, not only to better understand a retailer’s store dynamics but also to align working preferences and establish links with a range of representatives.
As well as allowing for access to stock-related data, this approach helps vendors understand the pattern of regular demand and ensures their stock types and levels are responsive enough to maintain uninterrupted service. This is only half the battle though, as the very nature of fast-moving consumer demand means activity is often unplanned. For example, it is typical within the retail sector to hold an unplanned sale in order to capitalise on increased footfall where particular items are proving popular. In scenarios like this, vendors don’t only show value through ensuring the right products are available in a timely manner, but also through offering support items such as till roll and point of sale (POS) materials which are needed to facilitate the sale itself. Those suppliers who are poised to offer this comprehensive support at a moment’s notice are more likely to be seen as long-term partners that genuinely support their commercial focus. However, the ability to do this ties in closely with the effort a supplier makes to understand a retailer’s operations and in turn become part of their inherent network.
Recognising that retailers can be at the mercy of variables outside of their control is also a significant aspect of supplier service. For example, a period of wet or hot weather can drive demand for particular products. Vendors that work to a high standard should recognise this and proactively make efforts to ensure they can meet the higher stock levels that are required. This comes back to knowing the buyer and the needs of its customers well enough to recognise why demand will increase. This can only be guaranteed by suppliers that are able to draw on direct experience in the sector.
There is no doubt that retailers need to put a high level of internal checks in place to ensure stock levels are sufficient to meet the needs of customers. However, it is vitally important that the role of suppliers is not forgotten in the demand planning process.
Nigel Crunden is a business specialist at Office Depot