AI-driven planning tools hold the key to successful supplier collaboration
Retail Express’ CEO, Barry Grange, considers the benefits of algorithmic retailing technology to help retailers cement better supplier relationships in today’s competitive marketplace.
Retail success comes from an ability to delight customers, operate with excellence and effectively leverage financial incentives to drive and maintain footfall. Yet the deepening cost-of-living crisis with soaring inflation rates, rocketing energy bills, and as a result, a more cautious customer, has put significant pressure on the industry. Retailers are now having to work harder and think smarter to create stand-out promotions through closer collaboration with suppliers.
The retailer and supplier relationship is an absolutely fundamental part of day-to-day operations, yet it’s interesting to note that many trade promotions established between retailer and supplier are not profitable. A key issue is that the majority of retail functions are still dominated by outdated and siloed methods of working across spreadsheets, emails and phone calls. This makes it extremely difficult to keep up with changes and maintain an accurate record of the details of agreements and negotiations, which in turn renders the collection of vendor funds more difficult. As managers and staff struggle in a never-ending battle to operate effectively using cumbersome manual systems and guesswork, it’s time to give ‘business as usual’ an overhaul.
Download Retail Express’ Supplier Collaboration whitepaper
Supporting businesses with intelligent merchandising
The volume and complexity of today’s merchandising practices continue to grow faster than current staffing and processes can support. The number of decisions and alterations required each week to remain competitive and to drive footfall stresses existing systems and processes, stunting the business’ capacity to generate new revenue. In the absence of a definitive, more organised way to manage merchandising and support cost-effective growth, most retailers will be struggling to retain their market share, let alone increase it, and will run the risk of being overtaken by rivals.
A new approach to retail merchandising / trading is desperately required. Collaborative planning capabilities (including joint-supplier business plans) and better coordination will place the retailer and supplier relationship in a much stronger position to face the challenges of a highly competitive marketplace head-on. With money and time now in very limited quantities, forward-thinking retail businesses are seeking intelligent merchandising solutions. Such solutions embrace digital transformation to improve pricing, promotional planning and execution, media planning and collaboration with suppliers as a way to unlock improved vendor funding and enhance execution.
Unlocking the potential of algorithmic retailing
The drive in retail for digital transformation will create an opportunity for more ‘algorithmic retailing’ – Gartner’s term for the use of artificial intelligence (AI) in retail to drive automation and recommendation systems. Algorithmic retailing can free up executive and staff time whilst still allowing them to retain control. This is particularly appropriate in a situation where internal practices have become a direct hindrance to growth and market responsiveness. Intelligent merchandising solutions, powered by AI can be implemented to improve retailer and supplier collaboration and unlock competitive advantage.
Intelligent merchandising software facilitates decision-making in real-time, often with levels of automation, as well as better planning and forecasting. This enables a move away from one-way data flows, broken communications and tired manual processes. Managers, now freed from administrative burden, can focus on how best to position their business and grow those important stakeholder relationships.
Retailers can now make use of new levels of visibility and insight previously out of reach. For example, by using AI to analyse current and historic data with the trading and merchandising conditions that underpinned those sales, retail businesses can make accurate predictions about how pricing and promotional plans will impact future revenue and profits at both summary and granular levels. Previously this intelligence could only be gained from implementing a plan and waiting to see its effect; essentially a process of trial and error. Now, the ability to gain such knowledge in advance is truly game-changing.
A dedicated supplier portal for improving collaboration.
The ability to act quickly in response to market and consumer trends makes for a much healthier retailer / supplier partnership driven by shared data rather than guesswork. The shift from paperwork and emails to a digital solution facilitates real-time supplier proposals and deals. When retailers use technology to collaborate consistently and transparently with suppliers, everyone benefits. Analysis of data in real-time helps the retailer and suppliers react to shifting sales patterns, gain insight into promotions planning and understand the supply chain dynamics involved.
Further benefits include the sharing of planning and AI forecasts, and joint business plans with funding visibility, as well as the ability to track and trace all funds and allowances using digital contracts and solutions that drive compliance. A full digital audit trail means that, for the first time, step-by-step negotiations can be accurately documented and verified; offering full visibility into the effectiveness of promotions for all stakeholders. A dedicated real-time supplier collaboration portal means that trading partners can better work together to tighten agreements and ensure sales growth with clear visibility of promotional ROI.
One version of the truth
By effectively offering one version of the truth siloed approaches and conflicting practices are replaced with a singular and transparent plan that everyone can get behind, shared by all stakeholders to become the definitive, unified method of operating. Utilising a fully collaborative workflow allows two-way communication, two-party authorship of promotions and consent, and joined-up business planning.
The time has come to take advantage of AI-powered intelligent merchandising. Investing now in improvements to crucial communication and coordination between retailers and suppliers will strengthen this most important of relationships at a time when unlocking value, maximising ROI and gaining a significant advantage over competitors has never been more important. By identifying and eliminating barriers, retailers and suppliers can unlock a far greater capacity for success in the most challenging of times.
To learn more, visit: Download Supplier Collaboration whitepaper
