In today’s rapidly changing retail landscape, the collaboration between retailers and their suppliers has become more critical than ever. This is particularly true for perishables, short product lifecycle merchandise, and a broader range of products. However, these same products also drive traffic, revenue, and margin for retailers, making it imperative for retailers to find a way to offer a wide choice to customers while managing the risks associated with these products.

The COVID crisis forced retailers and CPGs to limit the variety of products to manage supply chain disruptions. As the situation has improved, the race is now to provide customers with a broad selection of products.

This blog outlines everything you need to know about collaborative retail planning and why it’s important for your business growth.

But First, You Need to Know the Cost of Poor Collaboration

The cost of poor collaboration between retailers and their suppliers can be significantly high and manifest in various ways. One of the most significant risks associated with poor collaboration is markdowns or write-offs for perishable items; this can be costly. When retailers and suppliers fail to work together to manage inventory levels, they can end up with excess perishable items they cannot sell before their expiration date. This can result in markdowns, reduced margins, and a negative perception of the brand and product.

Out-of-stock situations can also result from poor collaboration, as retailers and suppliers need to communicate more effectively about inventory levels and demand forecasts. When a product is out of stock, customers may shop elsewhere, resulting in a loss of sales and reduced customer loyalty.

Another challenge associated with poor collaboration is a poor return on inventory investment, which can be especially challenging for retailers during the COVID crisis. Retailers need to track key supply chain metrics like Gross Margin Return on Inventory (GMROI) to understand how well their inventory investments perform. In response to supply chain disruptions, many retailers increased safety stock parameters to ensure that staples like rice and pasta were always available to customers. This has reduced inventory turnover, which can negatively impact the return on capital employed.

Finally, poor collaboration can result in failed promotions, where retailers and suppliers fail to coordinate effectively on promotional pricing, timing, and marketing. This can result in a lack of interest from customers and missed sales opportunities.

So, what is Collaborative Retail Planning?

By definition, “Collaborative retail planning” is a strategic approach that involves retailers and suppliers working together to optimize the entire supply chain. This approach requires significant communication, transparency, and trust between retailers and suppliers. This process allows retailers to make more informed decisions and plan for demand more accurately. It involves sharing critical data between retailers and suppliers, such as sales trends, inventory levels, and marketing strategies. By doing so, both parties can identify areas to improve the supply chain, reduce costs, and increase efficiency.

Collaborative retail planning has been a hot topic in the industry for years, with early conversations dating back to the early 2000s. However, until recently, planning systems have struggled to support meaningful collaboration between retailers and their partners. This has resulted in many legacy systems being unable to meet modern supply chain demands.

Fortunately, advances in supply chain solutions have made it possible for retailers and CPG companies to collaborate effectively and gain end-to-end supply chain visibility. The key to this collaboration is a data-sharing routine that provides real-time visibility into supply and demand signals, allowing both parties to mitigate the bullwhip effect and prevent unexpected changes.

L’Oréal is an excellent example of a company that uses collaborative innovation to its advantage. The annual “Cherry Pack” exhibition offers suppliers a preview of the consumer trends L’Oréal would be working on and asks them to develop packaging solutions in harmony with these trends. The trust-based forum created during the exhibition enabled suppliers to present ideas and products still in development, ultimately accelerating packaging innovation.

Why Should You Care About It?

Effective collaboration between retailers and supply chain partners offers numerous benefits, including the ability to align business objectives, anticipate and prevent potential problems, improve planning accuracy, increase operational efficiency, and reduce inventory throughout the supply chain. According to a McKinsey study, companies that collaborate effectively with their supply chain partners regularly outperform their industry peers, with 2x higher growth and 4.9% more in EBIT.

One of the primary benefits of collaborative retail planning is improved accuracy in demand forecasting. By involving all stakeholders in the planning process, companies can access a wider range of data and insights, leading to more accurate demand forecasting. This can help to reduce overstocking, minimize waste, and increase customer satisfaction. In addition, companies can identify trends and patterns that may not be visible when working in silos, leading to more informed decision-making. 

Another critical advantage of collaborative retail planning is a reduced risk of stockouts. Companies can ensure that products are delivered on time and in the right quantities by working closely with suppliers and logistics providers. This reduces the risk of stockouts, which can negatively impact customer satisfaction and the bottom line. By leveraging collaborative retail planning, companies can have better visibility and control of the entire supply chain ecosystem, from production to delivery, and proactively address any issues. 

Collaborative retail planning helps to increase efficiency by reducing the need for multiple, separate plans. This can increase efficiency, cost savings and improve supplier and retailer relations. When all stakeholders work together towards a common goal, they can identify areas to streamline operations and eliminate redundancies. This can lead to better communication, faster decision-making, and a more efficient supply chain.

Overall, collaborative retail planning is essential for any retailer looking to improve their supply chain. By working closely with their suppliers and partners, retailers can reduce costs, improve forecasting accuracy, and build stronger relationships. This approach can help retailers stay competitive, increase profits, and provide better customer value.

What’s Next?

Collaborating between retailers and their suppliers is essential for managing the risks associated with perishables, short product lifecycle merchandise, and a broad range of products. Retailers must work closely with their suppliers to manage inventory levels, communicate effectively about demand forecasts, and ordinate promotions to meet their customers’ needs and drive revenue and margin growth. By doing so, retailers can stay ahead of the competition and succeed in today’s dynamic retail environment.

PartnerLinQ is a robust supply chain transformation cloud-native platform that helps bring multi-enterprise collaboration with network visualization, intelligent planning and forecasting, and actionable insights. Join PartnerLinQ with Forrester on this upcoming webinar to explore more about collaborative retail planning and how it can help bring supply chain resilience. 

The global supply chains are becoming more volatile than ever. Customer expectations are shifting, triggering modern technology adoption for many enterprises. Difficulties in onboarding trading partners further add to the struggle. What are the possible types of EDI solutions to address the matter of exchanging EDI transactions holistically, and do these various types of EDI solutions include other things, such as different types of EDI Transactions? 

An effective Electronic Data Interchange Solution simplifies the exchange of electronic documents among partners through system and app integrations and cultivates collaboration via EDI and non-EDI exchange. As a result, the solution packages and delivers visibility, control, and optimization. In simple terms, it’s a feature-packed solution that enables intelligent decision-making in real-time. While these EDI technology solutions are critical to driving tangible business outcomes, particularly in recent years, the decision process is complex at the same time. This is why parties investigating Electronic Data Interchange Solutions must have a relatively deep understanding of the different types of EDI solutions before investing.

Identifying the Best Electronic Data Interchange System

The best way to develop a sound understanding is to start right from the beginning. EDI solution providers are organizations that offer EDI software and services to companies looking for data exchange services, in short, a solution to assist with the transportation, transformation, and integration of trade. EDI systems, from this perspective, help you seamlessly exchange business documents between your partners by leveraging an EDI solution which could be on-premises or cloud-based. Some are provided as managed, while others are self-service. The solution ensures completeness, data validity, and security.

Before we proceed, it is critical to understand the types of EDI solution providers in the market so that you can identify the best electronic data interchange system.

Types of EDI Solution Providers

There are five types of EDI solution providers offering one or more types of EDI solutions. In addition to services, they also differ in terms of industries and the business size they cater to. Take a look at these to identify which type will work best for your enterprise.

1. EDI Broker

An EDI broker typically provides a comprehensive set of EDI solutions. They offer value-added network (VAN) connections and, at the same time, help companies connect to particular trading partners or networks.  EDI brokers typically do not have their own network; instead, they serve in the capacity of an outsourced EDI staff, typically focusing on one or several industries. They provide everything from data entry to data translation services, ensuring that your EDI documents are transformed from your core systems to that of your partners while adhering to customer requirements and guidelines for various standards. 

An EDI broker ensures that any company and startup, in particular, can easily share EDI documents with their partners without investing a great deal or compromising security. EDI brokers most often assist when a trading partner lacks EDI software of their own, and a few EDI brokers even support non-EDI formats. EDI brokers are typically engaged with the market where revenue is at the lower end of the industry spectrum and are ideal for small companies and startups.  Eventually, these users reach a point where the brokered solution can no longer serve their needs. If your business involves complex integrations hybrid EDI scenarios, EDI brokers may fit your business. If your business is already involved with a brokered type of EDI solution and you are not getting the needed services, you may have outgrown your present solution.

2. Fully Managed Service Provider

Fully Managed service providers offer end-to-end EDI software and/or services just beyond the scope of an EDI broker. They may offer software or cloud-based services and help you translate EDI messages in multiple formats and transform and transfer your data. Their services may be an overreach for some as they are also involved in partner mapping, ERP integration, error handling, and resolutions. 

If you are looking to outsource your entire EDI function and invest your resources in other tasks, this might be a suitable choice for you. If you want to invest in EDI, EDI talent, and do some things yourself, while these service providers may help you achieve your goals, they can also inhibit your growth. While fully managed services work well for many SMEs (Small to medium enterprises), some of the drawbacks of a fully managed service include limited control and visibility. This can lead to unexpected costs and challenges to upgrading to a new ERP, MRP, CRM, WMS, CMS, or TMS.

3. VAN Providers

VAN providers have been around since the inception of EDI. VANs provide secure, outsourced networks that connect organizations with their trading partners across the globe. A value-added network (VAN) can help you securely send and share data with your partners and provide an outsourced network enabling seamless connections between global trading partners. Large enterprises can leverage this type of network to securely transmit documents from their EDI mailbox to a particular trading partner’s EDI mailbox through a service like a post office, but electronically. By enabling a secure network, they simplify communication between cloud-based EDI providers or internal networks using pre-connected connections with trading partners.  

Some EDI VAN providers also offer supplemental services like data backup and recovery, document mapping, compliance, and performance tracking, and have grown largely through acquisition. If your partners are spread across the globe, and you lack needed network capabilities, a VAN service may be helpful to your business. However, VANs were initially developed for large companies and may be costly if your data exchange volume is high or may cause difficulties if your partner’s messaging format varies from yours. While VANs have long claimed to have a competitive advantage by way of their networks, the supply chain today is full of complexities, something that cannot possibly be resolved by way of a single network.

4. EDI AS2 Providers

Breaking away from the traditional VAN providers are the AS2 Providers.  EDI AS2 (Applicability Statement 2) providers allow for the secure transmission of various types of data, such as EDI and XML, over the internet using HTTP and TCP/IP. AS2 can also be used to transmit images and complete PDF documents, something a traditional VAN is unprepared to do. Among these variations today associated with conventional EDI, these AS2 services are widely used to ensure seamless integration with trading partners, allowing you to handle any file format.  

AS2 providers are typically an addition to a VAN, managed service provider, or brokered EDI relationship. AS2 services require message disposition/delivery notifications that acknowledge the reception after the electronic message (document or data) transmits to the sender via AS2 protocol. One of the stated benefits of using AS2 over FTP is the message delivery notification or MDN.  Although some may argue that the MDN replaces the Functional Acknowledgement (997), the message delivery notification (MDN) used in AS2 only indicates a message received. In contrast, the Functional Acknowledgement (997) also confirms the delivery of a document, any formatting errors, or data loss.

Enterprises can leverage MDNs using in-house IT resources or through a cloud-based vendor to determine if a partner is struggling to keep up with transaction volumes and adjust accordingly. If you are looking for an EDI solution that ensures an end-to-end process and helps you securely send unlimited data while being kind to your partners and easy on your pockets, AS2 has proven to be a worthwhile investment.

5. Complete EDI Solution/Providers

A complete EDI solution/provider is the type of EDI solution provider that develops, implements and maintains EDI software for your business and businesses like yours. This is the type of EDI solution capable of bringing to bear many or all of the solutions described above by catering to your core business and enabling seamless connectivity visibility, onboarding, and training. A type of EDI solution that provides an EDI platform, EDI solutions, connectivity and interoperability by delivering, for example, a VAN and an AS2 solution from within the core of the product or platform.  

Enterprises employing such EDI tools can use their own EDI experts to manage day-to-day activities efficiently. Even activities such as error tracking, handling, and alerting can also be automated with a complete EDI solution.  This EDI solution considers integration with one or more platforms or systems, once relegated to custom code as ‘out of the box’, in other words, included with the platform. This EDI solution provider also tends to keep their solutions up to date and improve upon them by regularly updating these platforms, their customers’ instances and keeping their users informed.  

Complete EDI Solutions/Providers also include and deliver training to ensure that your EDI experts stay current with the latest technologies and can use them to deliver critical or time-sensitive transactions across your partners and networks efficiently and without errors. If you are looking for or are expecting to have or maintain complete control and visibility over your entire set of B2B, B2C messaging and/or your API/EDI practice, then a Complete EDI Solution/Provider might be a good fit for you.

PartnerLinQ by Visionet: Enterprise Connectivity at the Speed of Business

PartnerLinQ is an innovative, cloud-native platform that delivers supply chain visibility and resilience by simplifying trading partner connectivity and interoperability. PartnerLinQ’s native app ecosystem adds business context to the traditional integration, minimizing disruption by increasing set-up velocity and improving implementation speed resulting in overall efficiency gains between 30 and 500%.  

PartnerLinQ comes completely preconfigured and installed with capabilities for intelligent hyper-automation, multi-channel integration, and real-time analytics while allowing your team to take control if that’s what they want to do.  It seamlessly connects multi-tier supply chain networks, channels, and marketplaces with your core ERP, MRP, CRM, WMS, CMS, or TMS, delivering unified connectivity to a global client base. PartnerLinQ connects with more than 77 Commerce Platforms, Market Places, B2B Portals, Social Channels, enterprise-level systems and shipping solutions today, so you are ready for today and the future.

– Integration at the Speed of Business

PartnerLinQ simplifies the partner onboarding process through its Common Processing Workflow. Complemented by the Business Rule Manager, an entire migration process involving more than 1,000 partners and customers can be completed in weeks rather than months or years. 

– Scale in Transaction Volume

The PartnerLinQ platform scales automatically from transactions number in the hundreds to more than 60 million transactions. It is available in PartnerLinQ’s Azure-based hybrid cloud architecture and in the Google Cloud Platform, managing more than 8,000,000 transactions per day – nearly twice any required capacity.

– Simplified IT Infrastructure

It integrates seamlessly with your core ERP, MRP, CRM, WMS, CMS, TMS, or legacy systems, as well as Commerce Platforms, Market Places, B2B Portals, Social Channels, enterprise-level systems and shipping solutions to ensure that you are better positioned to drive even greater efficiencies with cooperative technologies, that provide real-time updates and actionable insights.

– Enhanced Visibility to Address Pain Points

Real-time insights are critical for today’s supply chain executives, and PartnerLinQ delivers consistent customer value at every touchpoint. PartnerLinQ’s biggest success comes with its ability to turn falling service ratings into top scores with the biggest clients by providing greater visibility into the operations and the ability to consistently deliver on service-level commitments.

For more information, visit our website.

Raw materials are not only the building blocks of any product we consume but also the starting point. From consumer electronics to food products, manufacturers are involved in procuring, shipping, and storing massive volumes of raw material every day. This makes ensuring adequate supply and efficient management of raw materials critical for all companies involved in the production of goods. Moreover, raw materials are often an investment that affects cash flow as raw material costs have soared in recent months.  Listed as an asset on a company’s balance sheet, soaring costs often mean increased value even during a decline in sales.

Over the last few decades, product companies have been expanding their sourcing networks for cost optimization, looking to strike the best deals in terms of material and logistics costs. This, in turn, has led to increasingly complex supply chains for raw materials filled with single producers of raw goods and strategic partnerships. However, following the disruptions brought about by COVID-19, manufacturers face increasing “cost pressures”, primarily due to shortages in the global workforce. At the same time, they are facing a scarcity of raw materials and, in particular, ingredients. This has led to increased complexities in the supply chains.

Such complexities can easily disturb the delicate balance between supply and demand if not effectively managed. Overstocks, understocks, and product quality and compliance issues can add even more complexities to transportation and warehousing and disrupt the production process. Many smaller producers lack adequate cash flows and reserve capacity to recover from these challenges despite higher company value.

Issues to Address

Working with our clients, many of them are product companies, we have identified the following key issues impacting the supply chain of their raw materials:

– Cost

A raw material supply chain incurs several layers of cost related to energy, transportation and communication, logistics, labor, and even the adoption of newer technologies. While controlling operating costs is often a continuous challenge, a company cost management model can often be short-term and functionally focused. Therefore, optimizing supply chain costs demands greater insight. Through insight, companies can develop analysis models that align with their business values, functional outcomes, and long-term business valuation.

– Visibility

Traceability and transparency are essential in minimizing raw material safety and compliance issues, and visibility is the first step in that process. Companies need the ability to trace materials from the point of manufacture through their entire journey to the point of delivery. Whether inbound or outbound transactions and product flow, it is no longer ‘safe’ to use an age-old “one up / one down” methodology for tracking trade goods. Additionally, consumers are becoming increasingly curious about where their ingredients come from. So, accurate and real-time information from every node across the network can help enhance your brand value and increase customer loyalty. On the other hand, a lack of visibility exposes a company to undue risk and expenses.

– Communication

Fragmented information and a lack of communication leave parties in the supply network without visibility into each other’s actions, leading to inefficiency. A trade relationship lacking collaboration will surely escalate supply chain problems, particularly as markets and raw material networks expand.

Many challenges in supply chain management and raw material partner networks are traceable to outdated systems and processes that depend on traditional paper tracking, manual inspection, and black box integrations lacking adequate reporting systems. Although short linear supply chains can be optimized using spreadsheets or siloed software, modern material partner networks are more complex, involving complicated business relations. Such network complexities include packaging and process materials, which are better served by integrated supply chain solutions that avoid mass customization.

Digital Solutions to Manage Risk

As the ‘Great Disruption’ continues, markets remain volatile. Fluctuating material prices and logistical disruptions due to lockdowns continue to affect the global supply of raw materials. Also, quarantine requirements continue to affect the manufacture of raw materials and finished goods. This raises the urgency for industry leaders to take a more innovative approach to raw material supply chain management. It comprises improvements in forecasting, flexibility, transparency, and increased visibility to capitalize on the new normal.

Industry leaders need to use such forecasts effectively to plan and minimize the impact of volatilities in day-to-day operations. Additionally, leverage a solution that drives down costs and provides a competitive edge via end-to-end supply chain visibility, gaining more stability. 

Modern supply chain solutions can go a long way in formalizing and optimizing raw materials inventory and management.

Key Data Management Capabilities for Inventory Control

A supply chain solution that seamlessly integrates with data management technologies makes a business more efficient and less vulnerable to uncertainty. Advanced data management helps you to optimize inventory control through the following key capabilities:

– Functional Collaboration:

Maintains a consistent flow of information and insights across raw material partner networks, concerned departments, and business functions within the organization.

– Centralized Data Management:

Removes the need to maintain multiple integrations, bringing historical data, open orders, and shipping and invoice data into one unified digital connectivity, integration platform, and transaction processing model.

– Advanced Analytics:

Generate reporting based on real-time transaction processing to enable real-time and data-driven decision-making.

– Forecasting:

Combines data contained by the unified digital connectivity and integration platform and transaction processing model with improvements in visibility to reduce inventory spikes and shortages.

– Financial Planning:

Delivers visibility to your team so they may allocate funds to functions like procurement, processing, and production in time to ensure the quality and timely delivery of your products.

Although supply chain leaders understand the need for streamlined processes related to raw material management, they have had to rely on historical data or educated guesses to forecast future raw material demand for too long. However, data-driven forecasting resulting from functional collaboration and a unified digital platform eliminates waste, improves efficiency, and ensures the on-time delivery of quality products while reducing overall inventory costs.

That’s not all. Organizations with such a data-driven, analytical approach to collaboration can stay more informed while keeping an eye on raw material inventory and gaining significant competitive and cost advantages.

PartnerLinQ by Visionet: Digital Agility at the Speed of Business

PartnerLinQ is a hosted integration platform for EDI, B2B, and API integration; and is the flagship product of Visionet’s industry expertise and technology leadership. The PartnerLinQ team at Visionet has 25 years of experience providing industry-focused technology, consulting, and innovative solutions that drive global supply chain transformation from the factory to the end consumer.

PartnerLinQ is an innovative, process-centric, easy-to-use EDI solution that enables API-led, cloud-native integrations. It includes a simplified B2B communication engine that combines EDI, AS2, SFTP, and real-time APIs and easily handles proprietary file-based formats and custom integrations. With its overarching capabilities, PartnerLinQ is well suited for retail, e-commerce, wholesale, transportation, 3PL, distribution, and digital and analog partner ecosystems, helping your team achieve operational efficiency and gain real-time visibility.

Visionet, a Microsoft Gold Partner, leverages Microsoft Azure for the PartnerLinQ platform.  The PartnerLinQ platform can process thousands of transactions simultaneously across a variety of transfer protocols. Moreover, it transforms X12, XML, Flat Files, CSV, IDocs, and custom formats and can integrate them into more than 74 ERP, WMS, and TMS systems.

Along with its job scheduling and batch job capabilities, PartnerLinQ’s ability to manage increased transaction volume means the entirety of the business workflow is much easier to manage than the black box integrations of yesteryear. Additionally, by optimizing its business rules engine, an extensive library, and ERP integration, PartnerLinQ enables easy partner onboarding, simplified configuration, and access to visual data mappings.