Thursday, April 28, 2011

The Case Against Category Management – An Urgent Message To Suppliers

The benefits of creating Managed Supplier Partnerships through the implementation of ‘Vendor Managed Inventory’ are amazing. The latest figures I’ve seen promise an increase in supplier sales of a whopping 28 to 40 percent. Why? Because by delivering the inventory stores can sell, you will be selling more of it; and gaining control of your retailers’ order patterns will significantly decrease your cost of operations.

For suppliers, a retail store is the end of your supply chain. This is where the problem is.  When you start viewing your retailers’ stores as outlets for YOUR inventory instead of being merely customers you sell to, your sales will explode. Your retailers need your help, and those of you who choose to give it, will be giving them something no other vendor can.

We have the tools to help you create a seamless, integrated environment with your retailers and their stock. You will be able to see what’s selling and what’s not, what’s profitable and what’s not, and what they need and what they don’t need; and most important of all, what they will need next week, next month, maybe even next year. This will allow you to plan like you’ve never planned before.

Let me offer an example: As a supplier myself, for over two decades I sold computers and software to oil marketing and convenience store customers. Oftentimes, when a small operator would contact me about my products, I would discourage them because I knew the hand-holding that would be required to support a smaller company would cost me too much money to be profitable.

Eleven years ago, my environment suddenly changed. I stopped selling computers and software and became a service provider on the Cloud. It wasn’t long before it became apparent: Cloud Computing allowed me to service smaller customers as good as, sometimes even better than I had been able to service my larger customers in the past. Why? Because, each node in a client’s company became a customer, rather than simply a department the company itself had to support. I quickly figured out by providing services to the individual stores, small difficulties ceased becoming big problems at headquarters.

I could have never accomplished this in my prior setting. So, rather than hours of trying to explain to one person how they could help another person… help another person, I found I could just take control of the situation when and where it was happening and eliminate a minor issue before it escalated into a BIG problem. And it saved me a huge amount of time and money.

As a supplier to convenience stores, you are accustomed to dealing with retailers that are made up of hundreds, sometimes thousands of smaller stores; far too small to be serviced in your current plan. As a result, by the time you hear about an issue, everybody at headquarters has had a chance to hear the story and blow it out of proportion. When you have a way of knowing what’s going on in each of your retailer’s stores, it will change the way you run your operations.

For instance: if you were to instruct your drivers to pick up merchandise occupying an unprofitable space, you might be able to make that space profitable with something the retailer could sell, providing profit for the retailer as well as for yourself.

When a retail customer has a log-jam of dead inventory, as many of them do today, it’s costing you BIG money.


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