Can suppliers turn retailer KPIs into new business?

by | Jan 4, 2017

Retailers may be asking suppliers and vendors to do certain tasks a certain way to keep their customers happy. For example, they want orders to ship out within four hours of receipt or perhaps they’ve asked to keep returns under a certain threshold. This requires significant trust in suppliers, as well as a close monitoring of their performance.

How do retailers track and measure the results of their suppliers? What are retailers looking for and what goals have they assigned to their vendors? Vendor scorecarding is the practice of measuring the retailer’s KPIs as compared to trading partner performance, determining whether or not they’re able to meet their needs. Scorecarding can be accomplished with visibility and order performance analytics tools, but it doesn’t just have to be a tool for retailers – suppliers and vendors can use the information to their benefit and evaluate their own performance, too.

Strengthening existing retail partnerships

More often than not, a supplier finds out they’re not making a retailer happy through negative feedback. The vendors usually hear about problems after they’ve become real issues – after they’ve been rampant enough to be noticed by the retailers (Previously I laid out four retail KPIs that are important for suppliers to know). By the time the retailer complains about it, the relationship has already been harmed and all you can do is damage control to repair it, or risk the retailer finding a supplier who can take care of their needs.

However, what if the suppliers scorecarded their own performance and made improvements proactively, before they turn into real issues for retail clients? Wouldn’t it be nice for the supplier to become aware of potential issues before they show up on a retailer’s radar? Further, imagine if vendors measured and scored their performance across all of their trading partners, discovered where their most common problems lie and addressed the recurring issues to improve performance over all trading partners.

This is where these analytics can make a big difference. A supplier can look at its data and analyze where systemic weaknesses may exist, such as high return rates for certain products, slow shipping issues, obscured inventory and more. Then remedy the situation with proactive solutions – better product descriptions, adding shipping priority protocols for certain retail clients, better inventory visibility and other fixes. After the remedies are in place and improvements are reflected in the data, the supplier can use this information to show the retailer that you’re a real problem solver, potentially elevating the partnership and maybe even gaining more business from the retailer.

Appealing to new retailer customers

The resulting data would be beneficial for building relationships with the supplier’s current retail customers, as well as gaining new ones. Using the statistics to help tell the story of how a supplier is proactively monitoring their performance to offer superior customer service is a compelling narrative for securing new clients. Having the analysis to back up their claims is a solid demonstration of a vendor’s commitment to the trading relationship.

Quite simply, using analytics to improve performance, especially without having to be asked by the retailer, sends a message that this vendor is a proactive business partner. Consumers are constantly asking retailers to go above and beyond and it can be difficult to meet their demands alone. To keep up with what consumers want, retailers seek out partnerships with suppliers who they can rely on and trust. Having data as proof of a vendor’s commitment to top-notch service can be quite convincing for retailers to sign on the dotted line.

If you would like more information on our Retailer Visibility and Order Performance Analytics tools, or any of our other cloud-based software solutions, please visit the SPS Commerce website to learn more.

Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc

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