How to Create Real Retailer-Brand Loyalty

Editor’s Note: Norman Katz, president of supply chain consultancy Katzscan Inc., writes a monthly column for Supply Chain Management Review. Katz’s column appears on the third Monday of each month.

There are certainly some brands that are deeply embedded with their retail partners, developing exclusive products in partnership and engaging in cooperative marketing. But given the vast number of retail vendors out there, I would submit that the number of brands in such a relationship is a small percentage of the total.

With the rise of the internet since I started with vendor compliance in 1993, the ability for a brand to go direct-to-consumer (DTC or D2C) has enabled some consumer product companies to break from selling to retail and forge a path of their own, even if with a little help from a behemoth online marketplace.

But brands need retailers too, like retailers really do need brands. Since retailers have their private labels, product development is not necessarily their specialty area as it is with a dedicated brand.

Onerous vendor compliance requirements and the way these programs are run, (I hesitate to use the word “managed”), have changed little over the decades. I’m not stating that vendor compliance isn’t necessary—it is—to have efficient and effective supply chains. What I am saying is that retailers should value their vendors as much as they cherish their customers.

Chargebacks—the financial penalties for non-delivery—should be the penalty of last resort. Educate and help enable your vendors to successfully comply. Invest in vendor portals that work. And for goodness’ sake: update and clearly write your vendor compliance documentation and make it easy for your vendors to acquire.

Electronic data interchange (EDI), an ANSI (American National Standards Institute) standard, is still abused by retailers who force what I can only surmise to be their own system limitations and problems (or lack of understanding) onto their vendors to figure out how to deal with, often in costly and disruptive ways.

Retailers: if you’re going to send the TD5 (carrier details) segment (data record) in the EDI850 purchase order with a “2” in the second data element (data field) position, that means that you should be also placing the SCAC (Standard Carrier Alpha Code) in the third data element position … don’t leave that third field blank and just include a description of the carrier and the service in the fifth data field, because deriving programmatic meaning from a description is a real parsing pain-in-the-pants.

Support for vendors should be as frontline as customer service should be, especially because vendors are under time-crunches that can affect their performance metrics, as well as the availability of the goods for the retail customers. So don’t make your vendors wait, whether you have them submit a support ticket, send an email, or place a telephone call. And if your vendors are all complaining about the same thing, it’s time to focus on what that “same thing” is—whether technical or operational—and get to the root cause to fix it, fast. 

It shouldn’t take over one dozen emails to multiple retailer integration analysts and third-party billing specialists across multiple weeks just to finally get a third-party billing account identifier.  Watching the retailer’s personnel “@” and CC (carbon-copy) each other back-and-forth was like an Abbott and Costello ping-pong routine, but I wasn’t laughing.

Splitting vendor compliance documentation between retailer and retailer technology intermediary portals only makes it that much more difficult for retail vendors to acquire and analyze. Vendor compliance technology and operations requirements often go together and are dependent upon each other, so stop making it more difficult for retailer vendors to get the full picture of what they have to do.

Retailers blame brands/vendors for their supply chain woes, but vendors will comply if they know what to do and how to do it. And retailers, you are not perfect either: retailers make plenty of mistakes, from abusing EDI standards to sending duplicate purchase orders due to system malfunctions. Retailers, you are the ones who are supposed to be the supply chain leaders with the knowledge, sophistication, and experience. Don’t blame your vendors when the fault is out of their control, e.g., when a late or damaged shipment was caused by the carrier you contracted with and told your vendor to use. 

And retailers, before you sidle up to a technology intermediary that you are going to saddle your vendors with using, make absolutely certain that they are up to the task with their software features, functions, up-time, and support. Because if you’re going to force your vendors to use a software intermediary that may interfere with your supply chain relationship and burden your vendors with software integration issues and higher operating costs, that’s wholly on you, not your vendors. Retailers, you own the vendor compliance relationship, not your technology suppliers, just like you tell your vendors all the time, so own up to this responsibility.

Retailers and brands need each other. Consumers simply want the best and most desirable products that they can afford. If a brand cannot work with one retailer, they are likely to shift to another retailer that they can work with. This risks making retailers, like products, a commodity.  Why are retailers going out of business seemingly so much? Is it because they couldn’t get the brands that they needed and consumers wanted? Maybe their vendor compliance was too prohibitive to deal with. 

Execution, from one end to the other, is the new competitive edge, and this applies whether you are the brand or whether you are the retailer. Folks, from my perspective, it’s been 30 years … isn’t it about time you really started to work together like you depended upon each other?     

SC
MR