Innovative Retail Technologies

JUL-AUG 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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quantity, the supplier is forced to scramble to find additional inventory. As a result, the supplier must either overproduce to a retailer's forecast or "borrow" from another retailer's planned allocation. This is a big reason why fill rate is such a challenging issue. There can be tremendous risk involved. If there is too little inventory avail- able, sales are lost for both trading partners. If there is too much inventory available, margins for both trading partners suffer as markdowns are taken to sell-through. In less collabora- tive relationships, whoever is left holding this excess inventory can be exposed to significant unplanned costs. Will Fill Rate Performance Get Better? Our survey suggests improvement is coming. Half of retailers and more than half of suppli- ers expect fill rate performance to get better. Activities within both retailer and supplier organizations, as well as collaborative efforts among trading partners, are raising awareness and changing behaviors. Although there is plenty of optimism, com- ments from retailers and suppliers indicate that this will not be an easy or painless process. Get- ting tougher won't solve fill rate problems, and neither trading partner can realistically force an incomplete solution onto the other. Comments confirm that business process improvements, better communication, deeper data sharing and, most importantly, an understanding of risk and shared risk management are required to deliver collaborative improvements in forecasting, purchase order management, and supplier fill rate performance. The Role Of Service Providers Retailers and suppliers rely heavily upon ser- vice providers to offer technological solutions and services that improve accuracy, reduce errors, simplify operations, and facilitate seam- less communication and information sharing. There is more than one methodology to produce a forecast. Trading partners must come to an agreement with regards to the methodology and the type of forecast being used. Service providers must be able to speak intelligently about not only the tools and services they offer, but the methodology being used. Retailers and suppliers must be fully educated about the differences in methodol- ogy before choosing a solution. There are also various EDI documents that support forecasts. The majority of retailers aren't creating or sharing these documents with suppliers. If the retailer doesn't indicate that a particular document is mandatory or whether that document is even offered, the supplier won't do the necessary mapping. EDI service providers should push for the introduction of EDI documents and explain how trading these documents can improve adoption. Having information about inventory and setting proper expectations will help to strengthen the trading partner relationship and drive higher fill rate performance. Finally, service providers need to enhance or create better forecasting tools that provide retailers and suppliers with the ability to measure the right information, reduce forecast volatility, better manage inventory, and im- prove fill rate performance. Conclusion For the remainder of 2017, RVCF will continue to drive initiatives to support fill rate perfor- mance improvements. This will require us to identify and drill down into many of the nuts-and-bolts issues that contribute to known supplier difficulties. We'll also collect data and provide insights into what can and should be done by both retailers and suppliers to address these issues. Discussions at RVCF conferences will be centered on these topics, which include but are not limited to: • Port delays and dock strikes • Weather-related interruptions • Shorter routing request notice win- dows • Retailer-specific product prep expense on forecasted but nonordered inven- tory • Fill rate measurement at the SKU rather than "style" level (apparel) • Lack of use of EDI documents support- ing forecast communications (such as 830o and 830i) Our goal is to bring retailers, suppliers, and service providers to the table, listen to the concerns and ideas of all parties, conduct further research, and use this information to determine best practices for improving fill rate performance. We encourage all retail industry stakeholders to participate in these initiatives and help to drive positive change in a way that benefits all parties involved. 23 Jul-Aug 2017 Keep your customers shopping while you keep the fraudsters at bay. OTP+ is the solution that dramatically reduces fraud with less handling time, saving you money and keeping your customers happy in the process. | 855.703.9292 | Crook or customer? Can you tell the difference? We can.

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