Several years ago, SCDigest's research arm - Chief Supply Chain Officer Insights - did a survey on the value of retail vendor compliance, using a survey population of just over 20 customers of vendor compliance software provider Compliance Networks.
We may repeat that survey soon, but it is worth taking a look back on those results from a few years ago, as we are confident the insights from that research are just as valid today as they were then.
Supply Chain Digest Says... |
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The overall message was clear: retail vendor compliance solutions deliver a wide range of important operational and financial benefits, with a strong ROI.
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About two-thirds of retail respondents were in the soft goods sector (department stores, specialty apparel), and one-third from various hard goods retailers.
As part of the results, respondents were presented with a series of potential problems, and asked which of these were important issues to their companies when they adopted compliance optimization software.
As can be seen from the figure below, improving shipment accuracy and the related category of reducing DC "problem shipments" topped the list, each cited by 85% of respondents. ("problem shipments" is a term often used in retail to describe a receipt that is just difficult to process for any of a number of reasons, or the shipment sits in the DC awaiting direction from somewhere else in the organization, such as IT or merchandising.) Those top two responses were followed by "poor fill rates," cited by 77% of respondents.
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We also note that 54% of respondents cited "cost to track compliance manually/with existing systems" as a problem to be solved with a new compliance optimization solution. While that was tied for the low spot with ASN/EDI problems, it implies more than half the respondents either had built an internal system that just could not keep up or needed too much maintenance, or else the company had looked at building a compliance tool internally and found it would be too expensive or take too long.
We also asked retailers to rate their level of improvement using compliance software along a number of different supply chain/logistics processes on a scale of 1-5, with 1 being a very high level of improvement, 5 being a low level, and by definition a score of 3 being an average or normal level of improvement.
We took the scores from each recipient, added them together, and divided by the number of respondents to get an average for each area.
Naturally enough, the linked categories of improvement to compliance guidelines - in the end the core mission of compliance software - and improvement in chargeback "revenue," which is the key lever for driving vendor compliance, scored the highest, with identical averages of 1.8 across the full population, well above the midpoint.
There are two sides to this coin. One respondent in a side comment noted that "It isn't at all about the chargeback, it's about perfecting retail logistics." But another said, "We simply were not able to identify all the violations we were experiencing with our internal systems, and now with this software we can."
Reduction in the number of problem shipments and improvement in the inbound flow of goods also scored high, with improvements in supply chain visibility and in reducing variability scoring a bit above the midpoint.
There was a lot more in the research, but the overall message was clear: retail vendor compliance solutions deliver a wide range of important operational and financial benefits, with a strong ROI.
I am sure that is as true today if not more so, given the added pressures of ecommerce and highly competitive retail environment, as it was when the study was first completed.
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