SURVEY: COLLABORATE IN ORDER TO STAND OUT

Christine Blank

Relationships between trading partners have not advanced enough to keep up with the challenges posed by the blurring of retail channels, according to a new study.

The 2003 Logistics Study for the Mass Retail Industry was released by the International Mass Retail Association, based here.

The 60 vendors and retailers surveyed (including supermarkets and mass merchandisers) said more collaborative relationships between trading partners are needed to differentiate both assortment and presentation in a marketplace where consumers can buy groceries at mass merchants and gasoline at grocery stores.

"One of the most striking things about the survey is that [retailers] generally agreed that neither of these challenges could be met without establishing closer relationships with their suppliers," said John Champion, vice president of Kurt Salmon Associates, Atlanta, which conducted the survey for IMRA.

Commitment, communication and shipping on time were seen as keys to a successful relationship. "You can buy the technology and refine your processes and systems. In the end, it all comes down to people," said one senior executive in the survey.

Less than 30% of respondents said they exchange planning and forecasting data through Collaborative Planning, Forecasting and Replenishment (CPFR). The majority of those who do share forecasts are doing so over the phone, while 20% use technology such as EDI or packaged software programs.

Those who exchange forecasting data said it reduces distribution center inventory and errors. One retailer said total inventory turns doubled and lead times decreased by 67% as the company implemented collaborative programs.

The biggest internal challenges to sharing planning and forecasting data, the survey said, are technology gaps, lack of resources and data integrity/interpretation.

Forty-four percent of those surveyed said EDI was the most important supply chain program companies have implemented with their trading partners in the last few years, while 28% said CPFR was important and 24% said VMI was helpful.

Other results of the IMRA survey:

Out-of-Stocks: Thirty-six percent of retailers and vendors said data integrity is the biggest issue impacting out-of-stocks, while 32% blamed poor forecasting, 32% cited inconsistent demand, and 32% reported varying supplier lead times. Out-of-stocks linked to data integrity are often "self-inflicted" because of improper internal and external SKU setup, communication and execution, according to IMRA.

Meanwhile, several retailers that implemented computer-assisted ordering (CAO) programs said they have seen dramatic improvements in out-of-stocks, along with reductions in store and distribution center inventory levels.

Transportation Management: "Retailers are increasingly seeing the value of controlling their own inbound transportation," according to the report, noting that top retailers now control more than 70% of inbound volumes.

While vendors and retailers agreed that this trend is advantageous, both identified some concerns regarding the calculation of retailer "pickup" allowances. "This perceived inequity has driven some retailers to expedite the process of self-routing," according to the survey.

Sourcing: Retailers said they would expand more into global rather than domestic sourcing because of the cost advantages. Retailers said supply chain visibility for global sourcing is important, but reported a lack of tools to support global sourcing decisions.