Retail Sector

The BPG ‘Optimise’ Method is evidenced from over 500 complex supplier relationships. It shows there are 8 characteristics present in every successful complex relationship. We can help you successfully implement these quickly to improve service innovation, supplier relationships and drive down BAU costs.

Click here to see how the ‘Optimise’ process can help you drive maximum value in your strategic supplier relationships.

We’ve dealt with optimising over 500 complex supplier relationships. More than 50% of complex supplier relationships experience misunderstandings between client and supplier over your requirements and expectations.

If the right foundations are not in place to drive maximum value, you may experience:

• Additional charges and costs for ‘misunderstood expectations’
• A lack of understanding of contractual roles and responsibilities
• Governance and performance escalation not clearly delineated
• Senior client executives not being clear on their expectations and dynamics of the relationship
• Not enough investment by senior executives in the resourcing or skills of the client supplier management team
• Loss of key in-house expertise to the supplier (inadvertent staff poaching)
• Employee resistance to new working methods from the supplier
• Clashes of culture between client and supplier staff and so forth.

The retail sector today is faced with unprecedented challenges, ranging from shifting retail formats, overabundance of consumer choice, fast-changing technology, greater focus on quality and price, and a tough economic climate.

There are five key supply chain challenges that retailers face. Separately, there are some strategies to address them based on research and direct experience in supporting retailers to maintain a competitive advantage:

1. Slipping Profit Margins—A perfect storm of retail challenges. The global economy is ‘Brexiteered’ and causing devastating uncertainty for retailers. This is coupled with changing expectations, increasing price-sensitivity and reducing brand loyalties.
2. Operational Inefficiency—Managing complexity and rapid change. Inappropriate reporting technologies and IT systems inhibits managing complexity and rapid change . This is often compounded by a lack of visibility of key supply chain functions leading to poor communications and collaboration across silos in the organisation.
3. Trend Responsiveness—The unrelenting consumer. Consumers are focused on convenience and driving the demand, and they expect their retailer of choice to provide this convenience across all channels. They want a greater variety of cheaper, high quality, socially responsible products, delivered across multiple channels, consistently and in less time.
4. Quality and Regulatory Compliance—Compliance is not a choice. Consumers expect quality products that are compliant and socially responsible. This is regardless of whether they are branded, private or exclusive label.
5. Omnichannel Integration—Variety breeds complexity and dissociation. Known brands that provide multiple consumer shopping channels buy up to 10 times more and have a significantly increased sense of customer loyalty. To sustain this impetus, it is important that retailers consider aligning organisational objectives, transform business processes, streamline order and inventory management, and deliver consumers pertinent information.

Top 5 Strategies to Meet the Challenges

In order to meet these challenges head-on, retailers and brands will need to ensure that their design, merchandising, logistics and suppliers are much more integrated process-wise than before. They will need carefully selected supplier partnerships set-up to provide them with a high degree of visibility into the end-to-end supply chain.

1. Drive Profitability—Preparing for the storm. Expanding private label ranges, along with providing more features and choice, will be critical. Renegotiating supplier agreements to more of a partnership, together with rethinking distribution channels by using supporting technologies, will be critical.
2. Streamline Operations—Build a visible collaborative supply chain. Retail supply chain process improvements, supported by best-in-class technology, allow you to connect disparate functions and enable true end-to-end supply chain collaboration.
3. Swift Response—Flexible, able and ready. Technology enabled process solutions and integrated strategic sourcing help retailers to streamline their supply chains to manage growing complexity and fast track their product development. Collaboration internally, and with external extended supply chain of suppliers, is essential to providing flexibility and the ability to react quickly to meet delivery dates.
4. Proactive Compliance—Anticipate compliance requirements. Some of the approaches towards compliance of best-in-class retailers include; working with suppliers/partners to build management capacity; training workers and managers on labour rights, health and safety protocols; tracking key performance indicators; empowering workers; examining purchasing practices to assess violations, and increasing reporting and audits to provide the supply chain with real-time findings.
5. Seamless Channels—Integrating processes builds same experience. Retail channel integration has become critical. Back-end systems must be in place to ensure the supply chain is working together without silos to provide integration, process visibility, along with the sharing of accurate and timely information.

The growth of online and mobile retail sales, relative to brick and mortar sales, is exponential. To thrive, retailers have to extend their own brands and find new markets to source and sell their products. An efficient supply chain, where products are manufactured and distributed to consumers seamlessly through multiple channels, is likely to be the way forward.