Understanding Your Customer – Retail Buyer Buzzwords You Must Know – Part One

The post last week reviewed retailers’ response to the dramatic change in consumer expectations and what that means to your small business.

The posts this week and next week will review important buzz words that your retail buyers may use when negotiating with you either during the establishment of your company as a supplier or as your relationship evolves.

Understanding these buzzwords will help you better understand their perspective and goals so that you can forge a long-term profitable relationship.

Omni-channel – The use of multiple channels to provide information, pricing, selling, and delivery of product to consumers. Channels include online internet sites for PC’s, tablets and smart phones, brick-and-mortar stores, television, and old-fashioned direct mail. Omni-channel is typically associated with consumers use any of the channels whenever they want, where ever they want and with the expectation that the experience will be consistent and seamless.

Push Supply Chain – Products are procured based on a top-down approach to predicted demand. Requires higher inventory costs and is slower to adjust to dynamic market conditions. Has lower shipping costs due to larger and less frequent shipments. May drive volume discounts from bulk purchases from suppliers.

Pull Supply Chain – Products are procured based on a bottom-up process that is uses actual end-consumer purchases. Inventory costs are minimized. Shipping costs are higher due to more and smaller shipments. Volume discounts may be less likely from suppliers due to suppliers’ higher inventory costs and increased shipment labor costs.

Demand-driven Supply Chain – Similar to pull supply chain. Incorporates demand signals from end-customers and may include forecasts as described in the push supply chain definition. May include more extensive sharing of demand of information with suppliers in order to help prevent inventory outages or excess inventory anywhere along the supply chain.

End-to-end Supply Chain Process – Designing supply chain responsibilities as a holistic unit from consumer to retailer to first tier suppliers to second tier suppliers. Efficiency and win-win goals are taken into account to facilitate an approach that works for all parties in the face of rapidly evolving competition.

The post next week will cover inventory buzzwords you must know in order to understand your buyers.

Retailers’ Responses to the Extraordinary Change in Consumer Expectations

The post last week covered the extraordinary and permanent change to consumer expectations. Retailers focused on competitive service have to confront fulfilling orders from anywhere, at any time.

Unlimited inventory at all retail locations and distribution centers would solve the problem, but would ruin bottom line profitability.

Some retailers are evolving faster than others. The approach of leaders is to optimize inventory based on understanding their customer’s predicted behavior, adjusting the flow of product within their borders, and tailoring their supply chain delivery to accommodate demand forecasts.

What This Means to Your Small Business

Retailers will want to work with you on the delivery of product to fit their demand forecasts. More flexible distribution networks and more frequent shipping will affect your shipping requirements.

Over time, expect more orders and delivery to more locations, including distribution centers, directly to stores, and direct delivery to the end consumer.

Retailers have an expanding vocabulary that affects you as they become more sophisticated in their response to consumer’s omni-channel expectations. The next two blog topics will review retailer buzz words with which you need to be familiar.

The Extraordinary Change in Consumer Expectations

There has been a tectonic shift in consumer expectations and retailers are having to rapidly cope with it in order to remain relevant.

Consumer retail shopping behavior has changed forever. The economic downturn of recent years made consumers more price conscious. At the same time, there has been an explosion in the quantity of information available to consumers anytime and anywhere. New shopping channels have become mainstream.

Information availability on products and prices is here to stay and will only get more transparent. Competition is more intense than ever before. The result is less brand and shopping channel loyalty.

Many, if not most, of today’s shoppers expect a well-orchestrated experience no matter which channel they choose.

Examples

Consumers expect to shop online and have delivery at home or in a brick-and-mortar store. Or shop in the store, buy online, and have delivery at home. Or any other combination of shopping, buying and delivery. In short, they want an omni-channel experience that provides the convenience they want, the service they demand, and competitive prices.

Armed with smart phones and tablets, today’s shoppers are informed and able to make fast choices among alternative retailers.

Retailer Response

Retailers are rapidly evolving to meet the needs of today’s consumers. Leaders are gaining ground on their competitors. Slow responders are seeing an erosion in market share.

The blog post next week will explore retailers’ responses to changing consumer expectations and what that means to their small business suppliers.

EDI Specifications Are Like Snowflakes

Snow is forecast for Houston as I write this post. The weather report suggests a relevant metaphor for EDI implementations – EDI specifications are like snowflakes.

Although we do not deal with snow very often, we are an EDI provider on whom thousands of small businesses rely for EDI compliance. What we have found is that every trading partner’s specifications are unique, just like every snowflake is unique.

The reason for this is that every trading partner has their own systems and business rules that fit their particular way of doing business with their suppliers.

Not only are they unique, but EDI specifications change as trading partners upgrade their systems and as they work on improving their business processes.

Examples of Changes

Trading partners may upgrade all of their transactions to a new version of EDI. For example they may move from version 4010 to 4030. Or they may skip a version and move from an older version to a even newer version like 5010.

Sometimes new EDI transaction types are added that were not previously required. For example, they may add Advance Ship Notices or Payment Remittance Advices.

Other times a hard-copy requirement that is associated with EDI transactions will be specified such as shipping labels or branded packing slips. Occasionally a hard-copy requirement will be updated like requiring shipping labels to have 2D barcodes instead of 1D barcodes.

Specifications for EDI transactions may vary depending on which division of the trading partner is exchanging EDI transactions with the supplier. Delivery-to-store transactions frequently are different from delivery-to-distribution-center transactions and both of those may be different from drop-ship-delivery transactions associated with shipping straight to consumers by the supplier.

How Do Changes Get Implemented?

A trading partner will give suppliers notice when specifications are changed. During the notice period testing must be done to ensure compliance. After testing, the supplier is moved to production status for the affected EDI transaction types.

Trading Partner Examples

We’ll look at specific trading partner examples in future posts.

What Does This Mean to Your Small Business?

Changes to EDI specifications are one of the continuing headaches for suppliers who are required to be EDI compliant. Contact us anytime to learn more about affordable EDI solutions that take care all of the headaches associated with EDI compliance.