Creating visibility into supply chain activities is critical for breaking the cycle of poor vendor performance, which in turn impacts supply chain performance and success at the store or on-line. Clarity into the supply chain offers the potential for improving buyer planning, and merchandising execution. It can also provide the basis for:
• Identifying vendor failures and recovering the associated costs
• Reducing labor costs by minimizing problem shipments and streamlining inbound auditing
• Reducing the amount of required safety stock
• Improving customer satisfaction and sales
Compliance Networks Says... |
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| A meaningful Vendor Compliance Optimization effort is comprised of four supply chain elements that directly support the retailer's overall objectives |
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It should be every retailer's ambition to adopt a Vendor Compliance Program (VCP), since they're proven to provide a comprehensive view into all supply chain activities. A VCP lays the groundwork for improving supply chain performance and positively contributing to a retailer's profit target goals and meeting shareholder expectations.
Effective supply chain execution via a VCP enables a retailer to gain control of their supply chain by establishing accountability for vendors and other key stakeholders alike. A VCP brings clarity to all internal and external supply chain activities while yielding insights that lead to predictability into future performance.
A VCP automates processes, formalizes workflows, encourages collaboration and places the organization on a continuous improvement track. It also provides key stakeholders with a 360-degree view of all aspects of their supply chain activities so that they are equipped to make data-driven decisions.
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The Elements of Vendor Compliance Optimization
A meaningful Vendor Compliance Optimization effort is comprised of four supply chain elements that directly support the retailer's overall objectives:
• Application: The technology (software, hardware, and database) infrastructure that supports all compliance assessment activities.
• Workflow: The integration of human activities with the application to automate the optimization program.
• Collaboration: The communication, planning, and cooperative activities between all stakeholders which facilitates optimal execution of the merchandising plan.
• Continuous Improvement: The performance data (PD) generated by vendor compliance activities that enables stakeholders to focus on continuous improvement. PD identifies execution successes and failures and facilitates adjustments to the merchandising plan and supply chain activities.
Vendor Compliance Adoption Model
Prior to taking any actions or making any decisions, it's important to evaluate where your organization is on the Vendor Compliance Adoption Model, as shown in the graphic nearby. That graphic illustrates the three levels of vendor compliance sophistication and value: visibility, variability, and velocity.
Each level provides different degrees of visibility, variability, and velocity benefits, however, it is important to note that as retailers improve the design and execution of their vendor compliance programs they can expect to move into outcome levels that are best described by their focus on visibility, variability, or velocity.
Next month, we will discuss each of these levels and the opportunity to advance to higher levels of maturity.
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