TradeFlow Optimization (TFO)- Enhancing Retailer-Vendor Collaborations By Sakeer Hassan

By SiliconIndia   |   Thursday, 28 March 2013, 12:39 Hrs
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Bangalore: The retail industry’s ecosystem revolves around meeting the needs and aspirations of the end consumer. Retailers play a key role in the value chain as the end consumer depends on the retailer to provide the products and services that s/he needs. The best positioned retailer understands the demand changes from the end consumer, and provides the services required at the right place and the right time. The best positioned retailer is also at an advantage to help the consumers realize their latent needs, and thereby sell more products and services.

In order to achieve superior business performance, retailers have to extract the best possible returns on their business processes. This has led retailers to invest in technology to improve the efficiency of their internal processes as well as the process by which they procure goods and services for their consumers, called the supply chain.

Procurement of goods and products is a significant area of cost for a typical retailer..Better collaboration with the supplier is imperative to streamline the procurement process and create a competitive advantage. However, the traditional methods of interaction between the retailer and supplier are fraught with sub-optimal processes. These traditional methods lead to lower productivity, loss of competitive advantage, lost sales, revenue leakage and trust deficit with suppliers.

In a typical scenario, negotiation of terms and conditions of a business transaction, the retailer and supplier interact via a number of modes of communication such as, face-to-face meetings, phone calls, emails, fax and printed documents. In most cases, the interactions are not accurately recorded and stored for future reference thus leading to rework and lost productivity.  

When a retailer is not able to onboard a new supplier in a timely manner, the retailer loses precious time in selling the products that this supplier has to offer. In some cases, this could lead to losing the advantage to a competitor who has a better process in getting suppliers on board. This typically happens during the busiest shopping season in the market.

Another challenge facing a retailer is stock-outs due to inadequate planning and forecasting. Since the retailer and the supplier are not in alignment due to poor methods of sharing information, the retailer is not able to meet the demand for products, leading to lost sales.

Another area that needs attention in this ecosystem is promotions. In order to improve the sales of a product during a lean season, or to sell the stock on the shopping floor at the end of a season, the retailer and the supplier typically negotiate a promotions campaign whereby both agree to reduce the price of a product by a certain percentage. However, as in many manual environments, when the supplier sends the invoice for its products, this promotion may not be included due to oversight. If the retailer and the supplier had agreed upon the terms over a conversation, then these terms could be lost when the people involved move on to a new role or leave the organization. These scenarios lead to a revenue leakage for the retailer.

The internal processes within the retail organization are another area where the retailer might face issues. These processes might not be as robust as they should be, leading to duplicate payments or overpayments to suppliers against the same Purchase Order or invoice. In cases where the retailer believes they are entitled to a refund, the retailer claims a certain portion of the payments due to the supplier in future transactions. If the supplier is not convinced such claims are warranted, it could lead to a trust-deficit between the retailer and the supplier.

SPI’s TradeFlow Optimization (TFO) is a supplier collaboration suite targeted at retailers to address the challenges mentioned above. TFO is a highly modular product with a robust architecture and its own unique workflow mechanism that streamlines the transactions between the retailer and the supplier. TFO integrates seamlessly with the retailer’s current IT application landscape and provides multiple modes of access through the web, mobile and tablet PCs.

TFO has been successfully implemented for large retailers and their suppliers across the globe. For a North American-based fashion retailer, TFO was able to reduce the cost of paper-based transactions by 20 percent while the process became 35 percent faster. For a US-based consumer products company, TFO enabled quality improvements in the contracts management process by 25 percent, and better document control for internal processing. For an Asia Pacific-based retailer in the convenience store and pharmacy category, TFO reduced the on boarding time for suppliers from 30 days to 5 days, leading to significant competitive advantage for the client.

While substantially improving the efficiency of the supplier collaboration processes, TFO provides a compelling Return-on-Investment (ROI) proposition. TFO has been proven to improve agility and adaptability within retail organizations in their effort to achieve maximum automation. All these factors are enabling retailers to achieve greater customer satisfaction and result in better returns for their shareholders.

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