Suppliers: you want the capability to take on larger orders and more buyers. But how do you scale your business while juggling the tasks of keeping products in stock, and complying with your customers variable business rules? Every year, buyer’s rules become more demanding and the penalties become more severe.
This year alone, Wal-Mart and Target announced updates to their compliance rules and penalties: Wal-Mart is cutting the window for deliveries to within 1 to 2 days and Target plans to hike chargebacks for late deliveries and labeling inaccuracies to fines of up to $10,000. In a 2016 B2Bi study conducted by the University of Tennessee, 69% of organizations interviewed said that they were able to more efficiently respond to changes in their customer’s requirements when using B2Bi Managed Services.
5 Steps to Reduce Costs & Increase Revenue with Buyers
Step 1: Automate your Supply-Chain
For years’ business have operated using spreadsheets. Lists of clients, KPI’s, sales data, inventory data sitting on a personal computer in the back office. This may have worked 10 years ago, but the pressures to operate and react instantaneously to customer demands require a more real time and automated environment.
There are three inherent problems with spreadsheets to operate your supply chain:
Spreadsheets lack the capacity necessary to track large inventories and buyer demands
Spreadsheets increase the risk for human error and chargebacks
Spreadsheets are inefficient at keeping track of ERP data points
An automated supply-chain system solves these problems: Such as managing complex buyer driven business rules, ensuring compliance; tracking inventory, sales, shipping and financial operations; and collecting data every step of the way to the business make better informed decisions.
94% of organizations interviewed in the same B2Bi study saw a significant improvement in their electronic connectivity capabilities after using B2Bi managed services.
However, an automated supply chain is only as good as the data that feeds it. This leads us to Step 2.
Step 2: Leverage Internal & External Data
Your business works with two types of data: internal data and external data.
Internal data is any metric or process that comes from within your operation: your sales, inventory, and rules. External data is any metric or information that comes from outside your operation: purchase orders, SKUs, buyer rules, and payments.
Your ERP or back-office system will provide your team with insight into your internal data, much of which you share with buyers, such as your item master file; however, as you increase or reduce product lines and add or delete SKUs, what reconciliation processes or visibility are in place to ensure your product data is consistent with that of your customers?
In this example, when external and internal data are asynchronous, you run the risk of receiving POs for out-of-stock items, inaccurate pricing and outdated item numbers.
Suddenly, your automated supply chain screeches to a halt, and reverts back to the manual mode of email and phone calls.
This challenge is compounded as you adapt to an ever-evolving omni-channel world in which inventory must also be synchronized across your e-commerce website and those of your buyers.
When internal and external data is synchronized, you can receive a purchase order, make a shipment, complete an invoice, and receive a payment, and you will know that your supply-chain will be automatically updated and include data surrounding any and all processes.
Synchronizing the data will be explained in the next three steps.
Step 3: Create an internal scorecard to proactively measure customer compliance requirements
Improved visibility and real-time data has huge implications across your entire organization.
Three steps to creating an internal scorecard
Review your customers’ KPIs.
Collect internal data that impact customer KPIs. For example, consider data such as on-time performance, fulfillment and invoice accuracy.
Create a shared data and reporting repository for key stakeholders to proactively monitor and take action when necessary.
With a self-governing approach to customer compliance, you will increase the likelihood of fulfilling orders on time and in compliance. You will also be seen as a trustworthy supplier with the capacity to fulfil large orders. When you consistently deliver what’s expected, how it’s expected, on-time, you will attract more buyers and larger contracts.
Step 4: Use Digitally Integrated Data to reduce Days Sales Outstanding (DSO)
When you have an opportunity to automate your accounts receivable process with customers, you need to take advantage of it. Companies that reduce Days Sales Outstanding can reinvest the cash back into the business.
1. Identify customers that are willing to participate in B2B integration.
2. Select your B2B integration strategy On-premise vs Managed Services.
3. Develop a timeframe for implementation that meets the requirements of your customers.
According to the University of Tennessee’s Global Supply Chain Institute study, suppliers processed invoices 4.5 days faster when using B2Bi managed services resulting in an overall reeducation in Days Sales Outstanding
Step 5: Use Sales Data to strengthen relationship with buyers
The world’s largest buyers, such as Target and Walmart, prefer to work with suppliers that help them avoid excess inventory; Target's stores nationwide in 2015 had 8 to 9 billion items on store floors, in transit or in warehouses at any given time. This enormous volume of product flow puts more pressure than ever on you to understand end consumer demands: popular products, seasonal trends, niche variables related to specific SKUs, etc.
With a digital archive of past sales data, you can forecast the fulfillment needs of buyers to consistently deliver the products that end consumers purchase, making the overall supply-chain as effective as possible.
Find new sales opportunities for buyers to deepen buyer loyalty and ensure orders continue to flow your way.
Open up an ongoing conversation with buyers to be sure that what you’re supplying is what their consumers will buy.
Analyze trends by industry, holidays, geography, and customer demographics to grow your relationship with buyers.
You are half of the supply chain relationship; you have a stake in its success and an interest in generating revenue. Your buyers want to guarantee their customers will find what they are looking for without the cost of carrying extra inventory; you want to make sure you can anticipate and fulfill their orders promptly. This means setting up a system that can automate compliance demands and analyze the needs of end consumers to create a strong relationship with buyers that will flourish in the face of a vast, volatile market.
For more information on solutions that will transform your organization into a partner buyers can depend on, download University of Tennessee’s study “Transform your Supply Chain with Collaboration” for the latest research into business to business integration.