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A Look Back at the Value of Retail Vendor Compliance


Adopters of Vendor Compliance Solutions Looking to Address Key Supply Chain Issues

April 27, 2017

Dan Gilmore

Editor

Supply Chain Digest


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...

The overall message was clear: retail vendor compliance solutions deliver a wide range of important operational and financial benefits, with a strong ROI.

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.


Any comment on this article? Enter below.

Your Comments/Feedback

Srihari

Senior Consultant, Infosys
Posted on: May, 22 2016
Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.

Mike O'Brien

Senior editor, Access Intelligence
Posted on: May, 26 2016
Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard

Marketing Director, Inovity
Posted on: Jun, 27 2016
Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann

Strategic Alliance Manager, Schneider Electric
Posted on: Aug, 19 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 

Jo Ann Tudtud-Navalta

Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines
Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".





Sandy Montalbano

Consultant, Reshoring Initiative
Posted on: Aug, 24 2016
U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm

Robert

Transportation Manager, N/A
Posted on: Aug, 30 2016
 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen

Mr, NHLS
Posted on: Sep, 14 2016
SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.

Don Benson

Partner, Warehouse Coach
Posted on: Sep, 15 2016
Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 

Jade

Admin, Fulfillment Logistics UK Ltd
Posted on: Oct, 02 2016
Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis

President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at ZipXpress.net)
Posted on: Oct, 03 2016
Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.

Blaine

Inventory Specialist, Syncron
Posted on: Nov, 16 2016
Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com

Bob McIntyre

National Account Executive, DBK Concepts LLC
Posted on: Nov, 21 2016
This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 
 
 
 
 
 

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