How retailers and suppliers can achieve seamless data collaboration

The modern retail landscape relies heavily on data, strategy, and collaboration. Yet, there's a gap in the connection between retailers and suppliers, making the ideal seamless relationship hard to achieve.

A recent report by RELEX Solutions shines a light on this disconnect. A significant 87% of consumer goods suppliers express the need for more profound collaboration with their retail counterparts. However, while 78% of these suppliers receive some form of commercial or supply chain planning data, only 16% have access to the crucial inventory data. This discrepancy leads me to ponder: What's causing the gap?

Challenges Hindering Collaboration
A significant hindrance to collaboration arises from data disparities. Even though most suppliers receive data from their retail partners, the accuracy and depth of this data are frequently questionable. Often being presented at an overly aggregated level, such as across locations on a weekly basis, when the CPG would ideally want it at the channel or store level daily. This limits its utility for analysis and forecasting.

Another layer of complexity emerges when suppliers and retailers operate using distinct data models. This mismatch often results in data interpretation discrepancies requiring extensive data cleansing and normalization of the data. Consequently, this requires manual work to interpret and make sense of the data.

Moreover, in today's digital age, where immediacy is valued, sharing data too seldom, such as once a week, causes significant latency in the process. If there's a change or update, the CPG doesn't see it immediately but has to wait for the next data batch to arrive. Ideally, data should be shared near real-time, at least on a daily basis to avoid these delays. Furthermore, when this data is compartmentalized within different sections of a business, often referred to as data silos, its practicality diminishes.

Another obstacle is labour bottlenecks. Despite advancements in automation, many businesses still lean heavily on manual processes. This not only consumes time but also requires a workforce dedicated to tasks that can otherwise be automated, such as data reformatting. Coupled with the challenges in hiring and retaining skilled professionals in today's job market, businesses often find themselves trying to keep up. However, leading companies have now implemented automated exception reporting that identifies discrepancies, such as those between the forecasts of retailers and CPGs. This allows planners to concentrate solely on the main issues and topics that really matter to the business.

Lastly, communication gaps pose their own set of challenges. A proactive approach is vital in the fast-paced world of retail, but several organizations fall into the trap of reactive management. This often leads to rushed decisions and, in some cases, communication breakdowns. Further exacerbating the situation are trust issues. When data sharing is inconsistent or when unforeseen challenges arise, the bond of trust between suppliers and retailers can wear thin. Joint metrics and KPI dashboards are crucial in enhancing communication as both parties can maintain a shared view of the situation, fostering mutual understanding.

Decoding Data: The Pivotal Role of Information Sharing in Retail Collaboration

Diving deeper into the data challenges, it's clear that it's both a blessing and a curse. While data has the potential to drive informed decision-making, its inconsistency in quality and quantity often leads suppliers astray. This is akin to navigating a complex maze with an incomplete map.

Furthermore, the format in which the data is shared can be equally problematic. It's like trying to decipher a code without the key. If that wasn't challenging enough, some retailers impose a fee for data access. Most baffling is when vital pieces of the puzzle, such as sales data, are omitted entirely, leaving suppliers with an incomplete picture.

For a robust and cohesive partnership, proactive measures from retailers are essential. Ensuring the quality and relevance of data shared is paramount. It begins with sharing data that's both relevant and of high quality. Retailers should also consider setting consistent data-sharing intervals and possibly rethinking the policy of charging for data access. Moreover, key data points, such as sales figures, should always be at the forefront of this exchange.

On the other side of the coin, when retailers are diligent in sharing the right data, it's imperative for CPGs to be equally prepared. They must have the appropriate processes, tools, and skilled personnel in place to leverage that data effectively across the organization. This ensures optimized planning and strategic decision-making, maximizing the benefits of the shared data.

The benefits of collaboration between retailers and suppliers cannot be understated. When both parties actively share and interpret data, they unlock efficiencies that streamline operations, reduce costs, and enhance customer satisfaction. This synergy not only leads to better inventory management and accurate forecasting but also facilitates faster response times to market changes, ensuring that consumers always find what they need on the shelves.

Additionally, a collaborative approach fosters trust, promoting longer-term partnerships that can weather challenges and uncertainties. Ultimately, when retailers and suppliers move in harmony, they create a more robust and resilient supply chain, benefiting all stakeholders, from the production line to the consumer.