The gloves are off in the battle for retail domination, with many organizations finding themselves knocked out, not by competitors, but by their own supply chains. In a bid to stay relevant, brick and mortar stores have shifted their focus to eCommerce, investing heavily in the infrastructure necessary to support online sales and the ever-growing demands of today’s consumers. Unfortunately, the complexities involved in onboarding and managing multiple trading partner relationships have spawned costly setbacks that erode already razor-thin margins. Here’s an example:
A buying organization orders 1,500 pairs of shoes for an upcoming sales event, but the supplier does not see the order and fails to initiate delivery. The buyer spends $10,000 on advertising for the sale of the shoes featured. Two days before the sale, they reach out to the supplier, concerned that they have not received an ASN. The supplier notifies the buyer that due to an oversight, the shoes were not sent. To get them there on time, the buyer will have to pay for air freight shipping, costing $8,000. They are now stuck with 2 options:
- 1. Postpone or cancel the sale, wasting all the previously spent advertising dollars and possibly losing dissatisfied customers, the cost of which is immeasurable.
- 2. Pay for air shipping, cutting into the already slim margins the sale was expected to produce. In addition, extra employees will be needed to rush the products onto the shelves, adding to the costs. The buyer may attempt to recoup some of the loss with chargebacks against the supplier.
Ensuring Business Rule Compliance Across the Supplier Community
The relationship between buying and supplier organizations is dynamic and in a perpetual state of flux. Managing the supply chain when so many factors are at play requires a well-orchestrated process of ordering, shipping, tracking, and paying for goods. Business rules are introduced by buying organizations to help them monitor these processes, manage efficiencies and improve collaboration. It’s not unusual for retailers to maintain thousands of unique business rules to satisfy the increasing demands of customers, adapting those rules based on necessity.
In 2013 reports began circulating that Walmart was dealing with an out-of-stock issue affecting sales nationwide, with customers turning to competitors. As a result, the superstore tightened down on suppliers with a new program called ‘On-Time, In-Full.’ The goal was to improve product availability while reducing inventory by implementing more hefty chargebacks on suppliers that delivered early or late. By 2018 their in-stock rates are at an all-time high with 13 quarters of positive comp sales while continuing to reduce excess inventory (Kory Lundberg, Walmart spokesman).
For suppliers, failure to comply can result in chargebacks, quality deductions or the potential end of a partnership. For retailers, the financial loss incurred by compliance violations can be incalculable. Empty shelves and delayed orders lead to dissatisfied customers, many of whom will not return in the future.
After just one negative experience, 51% of customers will never do business with that company again. New Voice Media
Ensuring Seamless Automation
The increasingly competitive nature of the global market is forcing organizations to reduce budgets, do more with less and become more efficient. This has resulted in a growing reliance on automated business rules management to keep the supply chain running smoothly. Keep in mind that automation is just one step in a process. Maintaining that automation requires nimble technology that can adapt quickly to new rules. In the past, this has been a lengthy process, but in today’s economy businesses simply can’t afford to take too long.
Preventing Rule Violations
The best way to ensure compliance throughout your supplier community is by using business rules management, with proactive technology monitoring the supply chain for anomalies. As soon as potential rule violations arise they are flagged, allowing members of the buying organizations to review transactions that are in exception before they become integrated into the ERP or back-oﬃce system. Recommendations and pertinent information are embedded in the alerts to help guide the buying organization to a positive outcome. In the example presented previously, had the buyer and supplier invested in business rule management, they would have been alerted of the noncompliance errors long before they caused an issue.
The Benefits of Business Rules Management
Business rules management provides quality control checks that can be completed in real-time, resulting in improved customer satisfaction, and a staff that is able to engage in tasks that add value to the business. Exceptions are spotted and quarantined before they create bottlenecks, and alerts include actionable recommendations to help fix the issue quickly and avoid similar problems in the future.
Register for the webinar below to uncover how to surface exceptions and prevent chargebacks before they occur.