SAN FRANCISCO -- Scorecarding as a tool to evaluate business partnerships has its merit but only pays off when both parties are forthcoming about their objectives and willing to share accurate information.
That was the take from Robert Schwartz, executive vice president of Red Apple Cos., New York, who discussed his company's experience with the evaluation procedure during a scorecarding conference hosted by The Marketing Institute, New York, this month.
"Scorecarding is a way of sitting down and creating a methodology to formally rate success," he said, noting it can also be used to perform self-evaluation. One of the key goals is to examine various programs to learn what worked, what did not work and what remains to be done to maximize efficiency of the total supply chain.
"We have to find ways to take cost out of goods, and look at what is taking cost up," he said. "At Red Apple when we looked at fluid milk in depth we were able to take 3% [of the cost] out by efficiently buying and looking for ways to reduce cost.
"Cost reductions are often sought through manufacturers partnering with wholesalers and retailers. But when the retailer takes the cost out of the vendor, where is the 'partnering,' " he asked, emphasizing that the sharing of benefits must be equitable to all parties.
Schwartz noted that manufacturers seeking out retailers for scorecarding projects but sometimes complexity can stall progress. "Manufacturers are finding out that retailers don't know about it or consider it too complex," he said.
A company's familiarity with the scorecarding process is not as important as its willingness to freely share information, such as that relating to product movement, he said.
Analyzing case movement, for example, may not produce good data because of diverting and the use of accrual systems, both of which serve as major obstacles to accurate scorecarding, he said.
"The vendor and the retailer both have hidden agendas," Schwartz said. "The retailer wants more money, the vendor wants more volume. The industry says it wants EDLP, they are wrong -- they want deals.
"There is no such thing as a level playing field. If that were so, then there would be no deals and everybody would get their fair share based upon consumer demand."
Schwartz said scorecarding should be approached as seriously as any business relationship. "Partnering is like entering into a marriage, the main stumbling block is trust. Once you step out of line, the partnership is null and void and you're going to pay dearly," he said.