Ed Betts, Retail Express, discusses the potential for retailers to lose sight of their supplier interactions – and argues that it is time for a change of perspective and technique
Retailers sit between the economic forces of supply and demand. Profit is found in the balance between the pull of customers’ needs and the push of supplier priorities. But getting there is a chaotic, difficult process with many moving parts. Successful promotional activity demands the ability to discover and act upon new category opportunities, the foresight to predict the position of the market when supplier deals come into effect, and the accuracy to ensure that all pieces are in place when promotions land – all while maintaining clear, professional and consistent relationships with suppliers.
Keeping up with these demands can be a monumental task for retailers, particularly given the complexity of supplier relationships and the busy nature of retail as a whole. Many retailers are reticent to change despite knowing that their systems are not perfect and require significant amounts of management time to work. Yet the truth is that the human element is fallible, and these systems often do not work. Sometimes planned promotions do fail or poor communication leads to vital opportunities being missed. To keep pace, retailers will need to go beyond the unreliable nature of spreadsheets, emails and phone calls and embrace the power of AI and automation to transform promotional plans, supplier interactions and keep relationships in line.
Different suppliers, different approaches
The first step to revitalising one’s relationships with suppliers is to define exactly what they are, how they work at present, and what is strategically expected of them. Careful examination of the relationship will highlight the pinch points of dealing with a supplier and the opportunities to navigate around inefficiencies which will benefit parties up and down the chain. And it will make the truth of one’s supplier interactions fully evident, helping retailers secure key trade funds and improve upon often razor-thin margins.
This is no small task, because every supplier relationship is different, and a balance must be found between them. Multi-brand multinationals present a large number of lines, points of contact and promotions which can make managing those relationships very difficult and require close partnerships. At the opposite end of the scale, smaller suppliers may have a transactional relationship where they rely upon the support retailers provide far more keenly, but may find themselves sidelined given the rich pastures presented by their larger counterparts.
Others fall more in the middle. They may be looking to debut new products, work on deals to increase shelf presence and stock levels, or further build the critical two-way relationships with retailers that will generate a customer base through heightened promotional activity. But if a busy retailer does not pay proper attention to its supplier relationships, these things will be difficult to achieve, or missed altogether.
Examining partnerships to discover insights
Supplier analysis paints a clear picture of the way business is presently being done – and this is often not optimal. Without proper record keeping and continuity, for example, a planned promotion may fizzle. Some retailers have, in the past, got by with what essentially amounts to a spreadsheet of upcoming deals, one which offered no confirmation to all parties on the promotions set to occur. Stock controllers scrambling to provide product for a promotion they did not know was happening is not a situation any retailer should find themselves in; neither should they be forced to deal with overstock for a promotion that has been pulled last minute due to unforeseen events or, conversely, gaps on shelf that serve as a very visible reminder of missed sales.
If trust erodes, reputations are damaged and potential growth opportunities may be offered elsewhere. Analysing supplier relationships and the communications methods used to manage them is key to ensuring such mistakes do not happen, and that key partnerships do not suffer as a result. Those who have participated in a programme like the Advantage Group survey will already understand the value: a poor score from a supplier (or vice versa) is a clear indicator that communication is not up to scratch, or that opportunities are being missed or not followed up.
Analysis reveals what is being done to manage supplier relationships, a deep understanding of the communications and systems involved and whether one’s methods are currently efficient. Managers should not be mired in bureaucracy and fixing errors that could easily be avoided when they could be focusing on big-picture thinking or paying attention to suppliers, new or existing, who are bringing genuine growth to the category. This is not just about fostering trust day-to-day – it is about driving the maximum possible category opportunity, sharing relevant insight and making agreements that stick.
Centralising discovery through big data
Algorithmic retailing, which joins safely guard-railed algorithmic AI decision support with a big data model that connects every vital point of data from end-to-end of a retail business, is more than just a strong way to facilitate change down the line. Its centralised planning and data model builds automated analysis and reporting into a system which spans a retailer’s business functions – meaning marketing, buying, stocking et al get the same chance to discover and fix flaws in their supplier relationships in a united and aligned manner, acting on a single source of truth.
Algorithmic retailing also unlocks AI techniques which can discover weaknesses and opportunities which may not have been otherwise obvious, enabling retailers to remain agile. The traceability and accountability of data in this model means the process of analysing supplier interactions can be performed without the upheaval of a large-scale manual audit and can be a regular, automatic part of business processes rather than a one-off drive or a constant grind.
If such analysis suggests a supplier’s situation has changed, or if the market happens to shift, new agreements can be made quickly based on predictive models and deep knowledge of past interactions. And when the time comes to drive for even better deals, algorithmic retailing delivers the data required to get the absolute best possible outcome – no matter the size of supplier or the complexity of the relationship.
The Digital Transformation of Supplier Collaboration whitepaper examines the steps that should be taken to ensure retail success against a backdrop of market uncertainty.
Edward Betts, SVP general manager – retail lead Europe, Retail Express
Ed has worked in the retail industry for over 20 years and joined Retail Express in 2019 where he is General Manager for the UK and Ireland. Ed has extensive and specialty knowledge of retail category management, pricing and buying requirements having worked with several UK retailers, including 8 years at Asda where he developed and launched a standalone online wine service. Following this, he worked for Distell, a large international drinks manufacturer, where he managed strategic accounts across several major UK grocers including Morrisons, Asda and Marks & Spencer. Ed is also Retail Express’ Head Consultant helping clients make more effective use of the products and services as well as providing consultancy on the effective use of pricing and category management.
