"Both sides would get what they wanted; that has always been our mantra." That sounds like a worthy goal in any relationship. How successful in real-world practice, though, is cultivation of the retailer-supplier pairing?
Theory of the relation
Recognize first that the interface between retailer and supplier is one of the few arenas that can generate sustainable profit for your organization. If you become a commodity handler and price-taker, the market will efficiently run your margin to zero. You must nourish your brand to escape that fate, either as a retailer through the reputation you build with consumers, or, on the manufacturing side, in the products you deliver for purchase.
In the modern age of fulfillment, the mechanism for strengthening that interface is compliance. Retailers and suppliers agree on terms of fulfillment, settlement, payment, schedule, and damage. Mediated by digital communications of the sort ec-bp covers, goods arrive in the stores, and make their way to shelves. Too often, suppliers still miss out on percentage points of their billings as deductions for defects: orders delivered outside loading-dock windows, shipments that don't match current purchase orders, loss through damage or other shrinkage, and so on.
Limits to co-operation
Losses, including deductions, shrinkage, and foregone sales, are absolutely real, and available to be recouped through improvement in fulfillment practices. As a supply-chain executive, though, your own leadership remains a critical resource. You can only win a few battles at a time. No matter how much you perfect, for example, your collaboration and supply-chain efficiency with regard to paper clips, if paper clips are only 1% of your over-all business, all your triumphs in that one dimension will barely nudge global profitability.
To see clearly both the positive and negative aspect of such calculations, it's also crucial to be realistic about the differences between success for the organization and success in your own career. You might come up with a winning plan to shave a full day off average deliveries of a significant product, for instance, while improving cash flow. Without the right authorization for that plan, though, or if its implementation appears to conflict with priorities already established for your department, you could simultaneously score a big win for your company and sabotage your own standing.
Supply-chain success, therefore, involves several steps:
- Understand the technical details of supply-chain compliance;
- Learn how to collaborate effectively with your supply-chain partners;
- Digest the priorities and interests within your own organization and how supply-chain improvements impact them;
- Judge which of your partners are in a position to enhance their relationships;
- Plan specific enhancements to the fulfillment under your control;
- Execute your plan;
- Measure the results; and
- Communicate the measurements to the benefits of your employer, your favored partners, and your own career.
Any individual seminar, training session, conference, or consultation will strain to address more than three of these elements at a time; as a supply-chain specialist, you need to keep them all properly balanced. VCF Retail Executive Advisor Victor Engesser, formerly vice president of Vendor Relations with Circuit City, emphasizes, "this is about selecting opportunities ... where you'll get the biggest 'bang' ..."