Getting More from Vendors
Get the best deal through good communication
When buyers know up to the minute how vendor goods are performing, they can strike a better deal. And when buyers know how the discounts for one promotion-if applied slightly differently-can deliver a better return, they can strike a smarter deal. For vendors, it works the same way. If vendors have knowledge of where they aren't performing competitively, they can start to make improvements.
Vendor performance measurement is the foundation of collaborative planning. With it, vendors take an extra step to assure that inventory will remain in stock even during large promotions.
However, this requires giving your buyers sophisticated, up-to-date information at their fingertips. Once buyers have information via strong business intelligence (BI) systems, it's easy for vendors like you to access the information you need. Such secure, web-accessible information-along with the sales and margin gained from this information-can deliver a strong return on investment (ROI).
Empowering Your Buyers for Vendor Negotiations
Some buyers measure vendor performances on order fill, invoice accuracy, on-time delivery, and several elements of supply chain compliance. Many use some of those measures for billing chargebacks, which is one high-ROI initiative. But other buyers are taking vendor performance measures a step further, and are achieving additional high-ROI gains.
These buyers are measuring product performance for each SKU, based on its sales, net margin, category dominance, price elasticity, demand by loyalty customers, and more. And they're automating these measurements with BI. With easy access to this information at vendor negotiation time, there's more ammunition to make better new product decisions and negotiate more profitable deals.
Deal-Buy and Promotion Analyses
Some buyers are inundated with deal offers from vendors. This means fast decisions and fast moves. As a result, many accepted deals fail to achieve targeted margins. Moreover, for many buyers, increasing warehousing and related costs often exceed the value of a deal's price reduction, co-op dollars, etc.
There are myriad factors to forecast a promotion's sales lift and calculate costs. If buyers have fast access and analytic tools to calculate a proposed deal's actual results, they can make more profitable decisions. Additionally, buyers can use BI to analyze and suggest changes to a vendor's deal that will deliver a better return without significantly raising costs.
Private Label/National Brand Analyses
Private labels offer superior margins-and higher risks. But many retailers don't measure those risks, so that private label goods often fail to deliver the margins intended. That's all changing, as retailers are starting to use BI to better manage the product development, packaging, and logistics processes on private label merchandise.
What's more, some are using BI to assure logical price parity between private label and nationally branded goods across product categories. In many cases, private labels can command yet higher margins, especially when teamed with promotions on affinity/halo products.
Vendor Performance Management
Too often, vendor shipments arrive short, and with substitutions, or are late-resulting in backordering of products without confirmation. This causes lost sales, lost margin, frustrated and potentially lost customers, and extra work. To minimize such repeating problems, some retailers are engaging in vendor performance management and collaborating with vendors over the internet. These retailers are giving vendor executives access to their information so the vendor knows how to serve them better to become or remain a preferred vendor. Vendors get access to the same performance measures used by buyers so the vendors see where performance improvements will be most fruitful.
Additionally, some retailers are giving vendors access to planned potential orders in a series of order periods stretching into the future. Vendor managers can use this information to plan their own inventory availability so orders arrive on time and 100% complete.
All told, it's a low-cost way to leverage BI for high ROI and superior customer service.
