Retail companies start losing potential turnover whenever a specific product is not available in one of their stores. The customers who want to buy that product become dissatisfied as well. Here, we will look at how developing a sound automation strategy and using a modern data exchange solution (such as an EDI platform) can help retailers improve their supply chain and facilitate communication between them and their suppliers.
Everyone is aware of the consequences when there are some supply-chain-related problems. There are several approaches that companies can take to be more proactive and thus avoid the hassles which are often encountered in such circumstances.
Why use a document management platform – like an EDI system - anyway?
The first is the business information approach. Retailers exchange large volumes of data with their suppliers on a day-to-day basis. The introduction of automated exchange of business documents (such as orders, delivery notes, and invoices) can help all parties save time and resources. Orders are sent right away, and retailers and suppliers can share up-to-date product availability info with zero effort. Such automated exchanges can be implemented using an Electronic Data Interchange (EDI) solution. A fast return on investment is often reached even without including all the indirect costs in the balance.
Retailers also exchange product data to provide their customers with up-to-date and reliable information concerning all products in their catalog. Here, Master Data Management (MDM) is a solution that can be used to introduce reliable communication. When all business partners are connected, product information can be exchanged seamlessly across the entire supply chain.
With MDM, business reactivity within retail groups can also be improved using algorithms that allow replenishment orders to be sent automatically to suppliers when stocks are running low. Levels are defined by product, and as soon as the stock reaches a given limit, an order is automatically sent. By implementing such an approach, you can avoid supply disruption and be sure that your customers will always find the products they want.
What else can be done to facilitate business communication?
Another interesting approach is to share stocks levels with your partners. When this is implemented correctly, retail companies are periodically informed about product availability at their suppliers. Thus, they can quickly determine if future orders will be able to be handled or not. It allows buyers to split orders among different suppliers and avoid supply disruption.
To go further with automation in retail companies, deadlines can be attached to orders. If a specific supplier does not acknowledge an order on time, this order is canceled and pushed to another supplier who can provide the same goods. Such an approach needs dynamic and robust cooperation between buyers and sellers and cannot be achieved without electronic data interchange.
The above mentioned strategies are but a few examples of how automation can dramatically improve reactivity and efficiency in business exchanges. Those automation strategies were inconceivable a few years ago, but today’s technologies – such as EDI and MDM - make it all possible, and so much more.
Author: Arnaud François Pre-Sales Engineer at Comarch
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