Redefining supplier relationships: the importance of analysis and automation in retail

= Summary: Ed Betts 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 keen product discovery, confident market foresight, and accurate execution – all while maintaining clear, professional and consistent relationships with suppliers.

Retail is busy, and supplier relationships are complex. It is hard to keep up – and despite the imperfections present in existing systems, many retailers are reticent to change their methods. Yet the truth is that planned promotions do fail. Poor communication leads to vital opportunities being missed. To keep pace, retailers cannot rely on spreadsheets, emails and phone calls – the power of AI and automation is vital when looking to transform promotional plans, supplier interactions and keep relationships in line.

Download the whitepaper: The Digital Transformation of Supplier Collaboration

Different suppliers, different approaches

Change begins by defining one’s supplier relationships, how they work, and what is strategically expected of them. This process helps highlight the relationship’s pinch points and inefficiencies, as well as indicating opportunities to work around them. It makes the truth of one’s supplier interactions fully evident, helping retailers secure key trade funds and improve upon often razor-thin margins.

Every supplier relationship is different, and a balance must be found between them. Multi-brand multinationals present multiple lines, points of contact, and promotions, making them difficult to manage and forcing close partnerships.

Smaller suppliers may present a transactional relationship, relying upon retailer support, but may find themselves sidelined in favour of their larger counterparts. In the middle sit suppliers looking to debut new products, 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.

Examining partnerships to discover insights

Some retailers have, in the past, got by with what essentially amounts to a spreadsheet of upcoming deals. But there must be communication and confirmation. Stock controllers scrambling to provide product for a promotion they did not know was happening is an unacceptable situation. Overstock for a promotion that has been pulled last minute should never happen.

Analysing 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.

Through analysis, we find efficiency. Managers should not be mired in bureaucracy or spend time fixing errors that could easily be avoided. Their time is best used focusing on big-picture thinking, creating agreements that stick, and paying attention to suppliers, new or existing, who are bringing genuine growth to the business.

Centralising discovery through big data

Algorithmic retailing, which links 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 a strong way to facilitate change down the line – but it is more than that.

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, all acting on a single source of truth.

Automated analysis for instant relationship upgrades

Algorithmic retailing also helps retailers add agility through AI techniques which help to discover weaknesses and opportunities which may not have been otherwise obvious. The traceability and accountability of data in this model means supplier interactions can be analysed without the upheaval of a large-scale manual audit.

Importantly, algorithmic retailing makes this analysis a regular, automatic part of business processes rather than a one-off drive or a constant grind. If the market shifts or a supplier’s situation changes, 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, the data is already there to generate the 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.