Improve supplier relationship management with these 3 tips
The evolution of supplier relationship management in recent years is only natural considering the way in which retail channel management is actively changing. Customers are channel agnostic, preferring to shop in whatever way is most convenient for them at a given time. This may mean making a purchase online, in a brick-and-mortar store, through a mail order catalog or using all of those avenues indiscriminately. In response, retailers must take a similarly agnostic approach by consolidating their omni channel operations into a single-channel view.
To achieve this perception, retailers need to need to have an inventory management system that is flexible and dynamic – one that can pull inventory from wherever it’s most convenient, whether from a third-party supplier, off a store shelf or from their own warehouses.
Supplier relationship management is growing increasingly important to modern merchants. Many retailers are placing greater emphasis on supply chain management, which may help them reduce stock on hand, avoid overstock and ultimately make the best use of capital at their disposal. To maximize efficiency, retailers consider leveraging multiple suppliers and fulfillment options to fill orders across all sales channels.
As a report from McKinsey noted, the modern merchant needs to take the role of conductor in their supply chain management. Conductors will need to coordinate supply chain management with multiple suppliers to ensure inventory remains adequately stocked and to ensure shoppers never need to go elsewhere because they can’t find the item they need.
Successfully utilizing a broad range of suppliers gives merchants a tangible advantage. As McKinsey noted, some retailers see a reduction in item markdown, more working capital from improved inventory flow design, higher revenues from reduced out-of-stock, better customer experiences and lower handling labor costs.
Here are three tips on supplier relationship management, which can help merchants improve supply chain management:
1. Understand suppliers
Successful supplier relationship management starts by actually understanding the supplier and their strengths and limitations. Merchants must know what areas they excel in, purchasing only specific products from a certain supplier.
Third-party suppliers play an important role in merchants’ supply chain management, but it’s critical to realize they have other needs and priorities as well. Practical eCommerce noted the importance of communicating openly to find a solution whenever an issue arises. Once communication lines have been established, it’s critical to regularly go back and review what retailers need from suppliers and also discover the baselines of what they can do.
As the saying goes, “retail is detail,” so by discussing everything from returns to expectations in advance, merchants can maximize the chances they aren’t blindsided in some way by suppliers.
2. Improve forecasting on the retail end
Part of supplier relationship management is ensuring everything is set on the retail end. When working with multiple suppliers, it’s important to realize that moving inventory takes time. Merchants can reduce stress on the retailer-supplier relationship by forecasting inventory levels and understanding lead times so an inventory threshold can bet set for each product to indicate when a purchase order should be generated.
Suppliers often deal with multiple retailers, so they can’t drop everything to restock one of their clients just because they didn’t calculate demand effectively.
3. Be consistent
When suppliers can predict what retailers need, they will be better able to fill those needs. Aside from knowing when to generate a purchase order, a retailer will need to know the number of reorder units and number of units within each reorder unit for each product so purchase orders become consistent. Being consistent enables suppliers to ensure merchants are adequately taken care of each month and helps avoid any stoppages in service or stock outages. Healthy supplier relationship management creates dependable and consistent supply chain operations.