A report was recently published by Supply Chain Digest, suggesting that supply chain relationships can be improved for better business moving forward. The report is an attempt to get closer to how these relationships are faring in the current moment and what parties on both sides need to make them stronger and more efficient. The editors surveyed over 44 retailers and 165 consumer goods manufacturers including companies like Procter & Gamble, Target, Big Lots, Home Depot, Nike, and JC Penney.
Many recent developments in the supply chain industry were addressed — serialized carton barcode labeling, continuous replenishment, and more — and both retailers and vendors agreed that there is a significant opportunity for both sides to reduce costs and improve customer services versus acting independently or not sharing the same strategies and objectives.
Read the full report here. However, here are the most insightful findings.
- When it comes to technology support to improve compliance or support collaboration, the majority of vendors (56%) have formal vendor scorecard programs; most retailers (43%) said they use an online portal to communicate with vendors.
- Nearly all retailers (79%) have compliance programs, an increase from 69% two years ago. Retailers enforce vendor compliance mainly through chargebacks, followed by counseling.
- Chargebacks are expected to increase over the next five years. Both 43% of retailers and 58% of vendors expect chargeback levels to rise, findings that are higher than the last study.
- Retailers say that advanced ship notice (ASN) is the most problematic area of vendor compliance, followed by on-time shipments, fill rates and labeling. The least problematic area of compliance was vendor drop shipments.
- While many vendors believe retailers use chargeback programs to generate profit, the survey shows that only a quarter of retailers (23%) say that they use the programs as a profit center. Thirty-five percent say the programs focus on supply chain improvement.
- Are vendors and retailers collaborating as much as they should be? It depends who you ask. More than half of retailers (57%) said they have high levels of supply chain collaboration with large top-tier suppliers. However the majority of vendors (53%) said characterized the same collaboration as just medium.
- Retailers say that the greatest barrier to improved collaboration is the lack of actionable data, followed by their trading partners’ lack of knowledge of skill, or their lack of interest in collaboration. Vendors agreed that lack of data was the largest barrier to collaboration.
What do you think about these relationship improvement tactics for the supply chain? Let us know in the comments below!