Retail Acumen believe that the key to successful, long term relationships across the retail supply chain is the process of information sharing between all of the actors in the supply chain - often termed supplier collaboration.

Collaboration adds value when retailer and supplier are working together towards a common goal - it doesn't work if there is a power struggle and one or other party uses a balance of power in negotiations.

Retail Acumen has found that the processes ideally enhanced by collaboration include collaborative product development and selection and aspects of merchandise / range planning (in particular stock planning). Additionally collaboration can often incorporate elements of supplier relationship management and supplier performance management, as the collaboration tools allow the retailer to share performance against key KPIs with the supplier and discuss that performance quite openly, with the objective of resolving issues and continuous improvement.

In some cases detailed demand forecasting has been done collaboratively. The retailer shares sku store day level customer demand / EPOS data with the suppliers and from that the supplier performs the calculation of the demand forecasting and the associated replenishment quantities for the DC on the retailers' behalf. This is known as CPFR - collaborative planning forecasting and replenishment, which is not too dissimilar to VMI - vendor managed inventory. This level of data sharing is quite rare. It requires a considerable amount of trust between the parties in the relationship.

Sharing sales data is more common place between suppliers and retailers when the retailer is providing the supplier with information relating to their products performance in terms of sales / stock / future demand / promotional effectiveness etc and is better than no information sharing at all when it comes to helping suppliers to plan their own supply chains.

For many retailers supplier collaboration is something of a new concept. Many are cautious about sharing sensitive sales data, and rightly so, with fierce competition a bit of healthy paranoia about confidential data getting into the public domain makes a lot of sense! More and more retailers are however realising the benefits of working more in partnership with their suppliers. The days of adversarial relationships and retailers being known as the 'bullies' at the top of the supply chain are disappearing.

It is still true that many retailers have the balance of power over the supplier base, but it is also true that buyers and procurement professionals have 'grown up' and now believe that quality and reliability in the supply base is a more valuable asset than the current lowest price. This shift in mindset has lead to the realisation that building long term relationships with suppliers, large and small, pays off when excellent products are developed that almost intuitively meet the buyer's brief. Supply chains are flexible, demand patterns are understood and deliveries are, more often than not, complete and on time.

So whilst it is fair to say collaboration is primarily about relationships the information flow to support a collaborative relationship is critical to achieving its goals. This is further complicated when different time zones and vast distances separate buyer and supplier / manufacturer. To aid the collaborative process methods by which highly sensitive data can be shared, safely, need to be used.

Retail Acumen have experience in a number of retailers of developing and implementing supplier collaboration processes and the tools to support them. If this is an area you would like to explore further with us please feel free to get in touch - we look forward to working with you.