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HOW TO CHANGE YOUR RELATIONSHIP STATUS WITH A RETAILER FROM VENDOR TO STRATEGIC PARTNER
By Remo Barducci, Director of Client Services APAC
Most vendors today will gain access to retail data to their own SKU’s on range within the particular retail-trading partner. This data can then be manipulated at the vendor by a team of analysts via something as simple as Excel, or perhaps a simple third party data processing tool or even a sophisticated business intelligence system. It’s at this point that retailer loses the engagement with the supplier because the in house analysis tends to be internally focused. This is how a typical retailer / vendor relationship works in the world of data.
How do we change the paradigm? How can we convert this retail data into an opportunity for both the retailer and the vendor? How can we elevate the vendor into something far more than a trading partner receiving data from a retailer?
This is where the power of the V Net differentiates itself from most third party software providers. Not only do we receive data from the retailers and create a platform where the vendors and retailers can collaborate looking at the same information. This is a great first step, but V Net goes the next step. We integrate into any retailers ERP system. Once we receive the data we do something far more powerful with it such as creating store level orders that are electronically transmitted to the retailer for approval and then to a DC, warehouse, direct to store or a cross dock facility. All this done seamlessly. Not only do we deliver this via the power of the inventory management solution, we also have highly trained inventory managers optimizing all sales opportunities and turning them into store level orders ready to be delivered.
All of a sudden our vendors go from a trading partner supplying product to a strategic partner managing the entire supply chain at the retailer level. Suddenly the touch points with the retailer extend, access to the buying team, access to demand planners, collaboration with the retailer looking at a true CPFR process.
Empowering the vendor who uses the information generated via the V Net solution leads to a collaborative approach to ranging. The highly automated functions within V Net make store grading far more flexible. Working with our inventory experts we then optimize this more micro level of store grading and create ranges more tailored to the consumer profile of the stores.
Australia’s largest retailers are all working with vendors using the V Net solution to manage inventory at a store level. This access to retailers has V Net’s algorithms tried, tested and trusted. Once the ranging process has been signed off by all parties, we know we have the right product mix in the right store, it’s now time to make sure that product is in stock when the consumers walk into the store. This is where V Net and our inventory specialists turn daily consumer data into orders. Our sophisticated algorithms take into account promotions, decay curves, seasonality and any other factor that may affect store level inventory. Based on joint KPI’s with the retailer such as days cover the V-net system will then create orders. This is where the true power of V Net kicks in, orders are then sent to vendors and retailers for approval. Once approved v-net feeds retailer systems seamlessly, the same way an internal retailer order would be created and then flows through to the stores as per the standard process. V Net has integrated its powerful inventory management order process into Australia’s largest retailers.
In summary retailers can change your relationship from a vendor to a strategic partner in the following 4 ways:
1. Engage directly with the retailer and jointly solve the out stock issue at stores
2. Take the pressure of the retailers buying and demand planning team by providing an inventory specialist using a state of the art system
3. Create a product ranges using both the retailers and vendors market intelligence thereby ensuring the optimal range in each of the stores based on consumer profiling
4. Not only solving store out of stocks but also using the consumer data to forecast for future demand planning and ensuring a greater fulfilment from the DC
In this current world of powerful technology do we want to continue to partner vendors and retailers by simply analyzing data. The future of retailer / vendor relationships is a true category partnership where the data is taken to the next level and the true winner here is the consumer.
THE MYSTERY OF ‘LOST’ SALES
By Tony Bugge, Director of Sales APAC
Even in today’s technology savvy world the challenge of ensuring a product is in-stock for consumers to consider for purchase remains one of the retailers and their trading partners’ biggest challenge.
Depending on how easy consumer demand is to predict for a product category (some are more predictable than others), we have seen retailers and their vendors with missed sales opportunities of up to 40%.
In addition to the missed sales opportunities damaging both the retailers and their vendor’s sales and margin, the out of stock product also leads to creating a level of dissatisfaction with the consumer. If items are unavailable often enough it may actually lead to a consumer deciding to switch their retailer of preference. The vendor is also impacted by their products not being in stock. Depending on the strength of their brands, the consumer may choose to switch products (as opposed to retailer switch) when their product is unavailable, and if satisfied with the alternative, it may lead to the consumer brand switching permanently.
So in this world of electronic order processing using a store sales and inventory data to manage store inventory and forecast future demand, why is it that so many retailers and their suppliers are still challenged with out-of-stocks?
1. Data Daily – Many inventory management solutions use weekly sales and inventory snapshots to create the model stock (ideal inventory level for a SKU at store level based on estimate future demand). The use of weekly data to determine the inventory requirements for a SKU at store level is flawed for many reasons.
a. The most complex and accurate forecasting solutions in the world still struggle to provide accurate consumer demand at the most atomic level (SKU/store). The beauty of refreshing sales and inventory data on a daily basis is that the model stock for the store/SKU can be updated daily thereby providing a more accurate snapshot of any daily inventory requirements.
b. It doesn’t allow for a business to run a replenishment order more than once a week.
c. It doesn’t allow for an inventory management system to review important SKUs (typically new product lines or promotional campaign items) on a daily basis using the most recent daily sales and inventory levels at store.
d. Running analysis on ISP on a weekly basis provides false information to management on the true inventory position. The weekly analysis of ISP does not take into account the daily fluctuations of ISP.
2. Rigid ERP Systems – Although there are many benefits of running an enterprise and rigid ERP solution, managing inventory across diverse product categories with differing life cycles and decay curves is not one of them. ERP solutions typically are designed to manage inventory for product categories that are easy to predict. When faced with product categories with short life cycles or seasonal activities, they typically are ineffective.
3. Time-poor buying and planning teams – today’s modern retailer runs a very lean buying team. The buyers and planners have responsibility of sales and gp, trading terms, marketing funds, promotional management, range management and overall inventory levels. When challenged with an ineffective ERP and/or legacy system they will attempt to managing inventory using a spreadsheet solution. A time poor buying and planning team will manage the high velocity SKUs and campaign SKUs without having the time to manage other SKUs. The outcome being out of stocks for second tier SKUs that, when consolidated, equate to a significant missed sales opportunity.
4. Unsatisfactory Fulfilment rates – the best consumer demand solutions cannot account for vendors having inadequate demand planning solutions. There are many distributors and/or manufacturers today who have underperforming demand planning solutions that contribute to fulfilment rates as low as 50%. These unsatisfactory fulfilment rates are typically the result of poor data and/or science being employed to create demand plans.
V COLLABORATE LAUNCHED WITH 3 MAJOR ELECTRONICS & TECHNOLOGY COMPANIES
V Net has announced the official launch of V Collaborate between a leading consumer electronics retailer and three of their most strategic trading partners.
The V Collaborate solution provides incredible benefit in aligning joint business objectives, and creating a platform where all parties (retailer and vendor) can access one environment to publish, monitor and measure the success of the business plans.
The nominated strategic trading partners now have access to one source of the truth to monitor the progress of their investment within the retailer’s environment.
Tony Bugge, Director of Sales APAC at V Net explains, “What makes us unique to the dime-a-dozen Business Intelligence Tools in the marketplace is our ability to create a platform that becomes the conduit between retailer and trading partner. The dashboards are specifically designed to measure each of the key business objectives between retailer and vendor, but more importantly, they allow for dynamic navigation that highlights the success or missed opportunities within that strategy. This allows the Buyer and Vendor Sales Executive to walk out of their business reviews with clarity around what actions are required to improve business performance.”
The success of this program will lead to an accelerated roll-out plan for other key V Net trading partners.
V NET ANNOUNCES STRATEGIC ALLIANCE WITH PHARMACEUTICAL WHOLESALER
V Net has announced a strategic alliance with Central Health Solutions (CHS, a subsidiary of Sigma), that has the potential to transform the pharmaceutical industry.
The partnership will see the V Inventory module as a key component of a new business model CHS are due to launch in April 2017.
The pharmaceutical industry in Australia today is facing many challenges. The introduction of destination and volume driven pharmacy brands like Chemist Warehouse, has placed huge pressure on the industry, resulting in diminished margins. To remain competitive, the pharmaceutical industry needs to employ efficiencies within their supply chain to reduce the cost of doing business. V Inventory will be a driving force in empowering CHS to respond to these challenges quickly and effectively.
Tony Bugge, Director of Sales APAC at V Net said, “V Net is excited that CHS has selected our V Inventory platform to form the foundation of a new service model that will transform the pharmaceutical industry.
“The V Net business development team has spent the past 3 months understanding the nuances of the pharmaceutical industry and has embarked on a major R&D (research and development) effort that will transform our V Inventory platform to meet the specific needs of a pharmacy.
“We are excited to announce a pilot program that will be live in April with plans for an accelerated roll-out to hundreds of pharmacies in the back half of 2017.”
The outcome of the pilot program has the potential to transform the pharmaceutical industry; providing CHS with a vehicle to introduce operational efficiencies and subsequently, drive profitable growth.
V NET CONTINUES TO EMBRACE BOOKS
V Net has launched V Category with a prominent Discount Department Store enabling the management of over 1,200 books titles across their store network.
The challenge of being armed with a legacy system that allows for only 200 items to be managed at any one time, placed huge pressure on the buyers and planners within the Books category of this leading Australian retail brand. The V Category roll-out has led to immediate operational efficiencies.
Tony Bugge, Director of Sales APAC for V Net explains, “The physical books category is making a resurgence, so the challenge put to V Net was to help introduce a core range of 1,200 SKUs that could be replenished on a weekly basis.”
The results were immediate, with a double digit sales growth on last year being driven by a disciplined replenishment process that filled shelves based on consumer demand by SKU at a store level.
The success of this program will lead to the roll-out of V Category to other departments with similar operational inefficiencies.
V CPFR LAUNCHES WITH GREAT SUCCESS
V Net has launched the very first fully integrated V CPFR solution with one of the world’s leading technology companies, allowing the immediate gain of sustainable financial and operational efficiencies.
Proving to be a real challenge for this multi-national company was the need to effectively manage their demand planning across multiple product categories with diverse decay curves. The unsatisfactory on-shelf availability rates were a derivative of poor planning and forecasting processes, resulting in missed sales opportunity.
The use of the V CPFR solution has already seen on-shelf availability increase to 98% and fulfilment rates increase to 95%.
Tony Bugge, Director of Sales APAC for V Net explains, “V CPFR has allowed our client to implement fully integrated, global store inventory management system. A vendor portal provides both the vendor and retailer with one platform to develop strategies and objectives, allowing an easy way to identify missed opportunities. The forecasting tools also provide our client with the ability to build a 13-week demand plan by SKU.”
The success of this program has led to the roll-out of V CPFR in other parts of Asia including Japan.
V NET INSIGHTS FOR ALL BUYERS AND PLANNERS
V Net has been commissioned to roll-out a multi-dimensional insights solution for one of Australia’s leading retail brands. This came after its Buying Director expressed his need to arm 60+ buyers and planners with a reporting system that supports a fact-based decision making process.
The solution has been found in V Net Insights that has not only armed the buyers and planners with access to daily sales, margin and inventory insights, but also provided users with an interactive mechanism to very quickly identify missed opportunities to improve their respective business units.
Sanjeev Balasubramaniam, GM of Business Development at V Net comments, “The scalability of the rigid environment within the V Insights platform allowed us to import 104 weeks of daily data for sales and inventory. This atomic level data was then aggregated to create a data model that would provide the buyers and planners with the flexibility to dive into their respective business unit information via custom built dashboards.”
The results have been instantaneous with all users now able to make important product, placement and promotional decisions based on real time data.
The roll-out of a V Collaborate vendor portal has now been greenlit to provide both the retailer and its strategic trading partners access to this very valuable data model; allowing for joint business monitoring of shared objectives and plans. Most importantly, V Collaborate provides a vehicle for both parties to quickly identify missed opportunities and areas for profitable future growth.
V NET MAKES SMALL APPLIANCES BIG
V Net has launched V Inventory to a leading consumer retail store network to manage its small appliances category. The move comes in response to the accelerated roll-out of a small appliance range that the legacy data system simply couldn’t handle due to multiple challenges.
Remo Barducci, Director of Client Services APAC at V Net commented, “Being a strategic partner with one of Australia’s leading consumer electronics retailers allows V Net to have an intimate understanding of their value proposition. We understood how important the execution of an accelerated growth plan for Small Appliances was to their business strategy for 2016 and beyond, and so we commissioned V Inventory to manage their small appliances category. The flexibility of our solution and the ability to create daily replenishment orders that were based on the most recent sales and inventory data at a store and SKU level, assisted in a successful core range roll-out to over 150 stores. ”
The results were immediate and sustainable growth was demonstrated. The successful implementation of V Inventory has led to the review of other high growth categories that may benefit from this solution in the very near future.
V CPFR LAUNCHED WITH GLOBAL ELECTRONICS VENDOR
When creating orders and forecasts for a global electronics supplier a retail specialist was unaware of that supplier’s fulfilment levels in relation to requested stock. Furthermore, there was no process in place to bring alignment between the consumer demand for stock and the ability of the supplier to provide the required amount of stock within their “locked in” manufacturing horizons. This led to lower than required on shelf availability and a constraint on the sales that could be achieved.
V-Net’s GM, Business Development, Sanjeev B explains “Using V-Net CPFR the V-Net team was able to facilitate a functioning CPFR model between the supplier and the retailer. Firstly, V-Inventory was implemented to ensure that consumer demand was accurately forecasted. This was achieved using a combination of V-Net’s demand algorithms and the work of our inventory experts in facilitating planning collaboration between the supplier and retailer on the impact that upcoming activity would have on demand and stock levels.
Then V-Net CPFR was able to bring to together this demand, orders, shipments and store receipts to report on the gaps between the retailer’s commitment to purchase, required stock and the suppliers’ ability to manufacture and provide stock.
The results identified on average $260k in additional stock orders over Buyer and Account Manager forecast to meet consumer demand. V-Net also Identified order fulfilment gaps on a weekly basis highlighting on average $2m missed each week on requested stock
These gaps were analysed and changes were made the forecast horizon to accommodate vendor manufacturing constraints
Subsequently, the on shelf availability increased by 5.9% and sales rose by 19.05%, improving stock turns from 3.8 to 5.2 within a period of four months.
The success of this program has led to other global consumer electronics vendors rolling out V-CPFR to gain similar efficiencies and improvements”.
V NET CAPTURES EMERGING TRENDS
In 2015 adult colouring became a hot emerging genre in the retail book industry. Once initial sales had blown away expectations and sold through large amounts of vendor stock, there was little left to satisfy the market.
Ben Sammut, V-Net Team Leader comments “The vendors that provide the adult colouring titles work on a first come first served basis. With the implementation of V-Net, the buyer was in a position to take the remainder of stock available from the vendor’s warehouse. Once reprints landed at the vendor, the retail partner was also in a position to act on the available stock first and thus their stock was first on the truck out of the warehouse. This was only possible due to V-Net’s capability of generating orders within an hour and transmitting to the vendor quickly, as opposed to internal systems which take 24 hours at a minimum.”
The result of this was a jump in market share on this emerging category. Where the retailer typically held 13% of the total market sales, they were able to hold a 27% market share on adult colouring. The initial sales have continued, delivering a consistently above average market share to this leading book retailer as customers now see this retailer as one that can provide stock availability.
V NET SMASHES ALL RECORDS WITHIN BOOKS
The Books Category at in this leading Discount Department store chain was challenged with complexities around ranging, planograms, varying display levels, publisher shipping practices and release dates/embargos. The V Inventory platform was launches for all books and provided immediate benefits.
Ben Sammut, V Net’s Team Leader at explains “By engaging close communication with the publishers & distributors, as well as the internal buying team, the V Net team were able to expand the 50 closely managed sku’s to over 2000. By utilising seasonal trends, advertising forecasts and customised replenishment algorithms these lines were maintained at manageable stock levels to ensure sales were maximised while returns were minimised”.
The results were immediate. The initial orders landed in store with the on shelf availability increased to 99%. The stores were now in a position to merchandise stock effectively, which resulted in the below after 3 months:
Sales went from -15% v LY to +10%. Meaning a 25% increase in sales
The retailer gained market share, increasing by 2.61%
Although stock holding was increased, sales were increased at a greater rate, equating to a stock turns increasing from 3.22 to 3.36 per year.
The successful results within books has provided V-Net with a launch pad into other difficult to manage categories within this Discount Department Store environment.
Printer Ink in this Discount Department Store (DDS) retailer is a category with many SKU’s which have huge variances in turn and sales. The highest selling products turn 500+ units a week whereas the lowest selling products sell.
Remo Barducci, Director Client Services APAC at V-Net explains “The internal replenishment system and staff at this DDS retailer were not working closely with the vendors on replenishment, forecasting and stock availability. This resulted in orders being placed and stuck in the system where the vendor didn’t have stock, many orders went as low as 50% DIFOT. This resulted in an 85% ISP, and sales dropping 15% on last year’s figures. In May of 2015 V-Net solutions were consulted to work through the problem, and bring results back to expectations.”
V-Net facilitated tight communications and forecasting of future orders so the vendors could maintain sufficient warehouse stock. This resulted in an immediate jump to 99% ongoing ISP, and over 6 months sales have increased to 3% above last year’s figures.
V NET LAUNCHES IN FILMED ENTERTAINMENT
The Filmed Entertainment product category has over 10,000 skus in back catalogue available for a retailer to range within their store. There are also 100’s of new release films launched on a monthly basis. The category is very perishable with 50% of a new release film typically being sold within the first few weeks of its launch.
A pilot program testing the impact of V Inventory with a major film studio and a major consumer electronics retailer was commissioned.
V Net’s Director Sales APAC, Tony Bugge, commented “The pilot program was a huge success. The major improvements in processes were derived from the following key initiatives;
- Graded all stores with a product range in line with consumer demographics of location.
- The replenishment orders for all stores run twice a week using model stock numbers creating by our solution based on most recent daily sales and up to date inventory levels.
- The allocation of new release and campaign lines using our benchmarking process ensured the stock weight of these products were in line with consumer demand for each outlet.
- A V Net specialist was placed on site at the retailer store support centre, allowing them to collaborate with the buyer, planner and key account executive.
The results provided an On Shelf Availability improvement of 27% to 97.6%. This led to a 32% year on year sales improvement for the pilot vendor!”
The success of the pilot program has led to all film distributors being rolled out within the retail environment.
V Net is now the industry standard with 98% of all Filmed Entertainment products being managed by V Inventory.”
© 2017 V-NET SOLUTIONS
© 2017 V-NET SOLUTIONS