Managing supplier relationships remains one of the biggest challenges in retail. Even with sophisticated supply chain technology, many organizations struggle with fundamental supplier performance issues: inaccurate shipments, inconsistent fill rates and chronic delivery delays.

Recent industry research reveals the scope of these challenges, with over 80% of businesses reporting ongoing issues with shipment accuracy and more than two-thirds facing persistent problems with late deliveries.

Among the various tools available for improving supplier relationships, supplier scorecarding stands out as a common approach. But traditionally, supplier scorecarding brings to mind penalties imposed by retailers or grocers onto their supplier community. Scorecards are often associated with chargebacks for noncompliance in areas such as late shipments, incomplete shipments or even improperly placed shipping labels.

Of course, compliance is an important part of managing supplier performance, but it’s more important to consider the strategic purpose of a supplier scorecard. A scorecarding effort with insightful supplier metrics can help both the retailer and its suppliers perform better, together.

Using supplier scorecards to drive positive change

Scorecards can foster collaboration that helps all trading partners make positive changes in their supply chain performance instead of being used as a punitive measure.

For example, if a retailer wants to improve supplier metrics such as fill rate (or the amount of product shipped as a percentage of the total order), they can work collaboratively with suppliers to make improvements. This can involve activities such as making sure suppliers acknowledge orders and communicate any changes in what they plan to ship versus the original order.

By doing so, the retailer knows what to expect from suppliers and can send additional purchase orders at a later date for the remaining quantity.

Supplier scorecarding has significant benefits for suppliers as well. If suppliers have ready access to tangible metrics on performance, they gain more insight into what to improve.

For example, SPS Commerce worked with a supplier who was not consistently sending required advance ship notices (ASNs) to a retail customer. As a result, the supplier’s product got stuck on the receiving dock and was delayed getting onto store shelves, causing both the retailer and the supplier to lose sales. For reasons like this, SPS sees suppliers create their own scorecards to show retailers their performance and discuss what’s going well and what changes are needed to improve their supplier metrics.

Go beyond scorecarding to improve supplier performance

When retailers and suppliers work together to improve performance metrics, the financial results can be substantial. Research shows that companies who improve their supplier OTIF (on-time in-full) rates by just five percentage points can see dramatic revenue gains. For a $5B organization, this seemingly small improvement could generate an additional $158M in revenue.

The impact extends beyond just delivery metrics. Organizations that systematically track and improve supplier performance can see sales increases of up to 10% and margin improvements of up to 12%. When products arrive on time and orders are filled completely, retailers can maximize sales opportunities while keeping operations efficient.

Starting a conversation around supplier scorecarding isn’t always easy. Full-service providers like SPS Commerce not only provide a supplier scorecarding solution but also an expert team that can help retailers and suppliers interpret the information and formulate a plan to collaboratively improve supply chain performance.

Take the first step toward better supplier collaboration. Schedule a consultation with our team to explore your options.

At SPS Commerce, many of our retail experts were previously buyers at major retailers. They’ve hosted hundreds of meetings with new suppliers and know firsthand what it takes to impress a busy buyer.

Here is their advice on how to make your next buyer meeting a success.

1. Master your financials

Financial performance is at the heart of every buyer’s decision-making process. Retailers focus on profit margins, market share and how your product will contribute to their bottom line. You must come prepared with compelling financial data demonstrating your product’s success or potential.

If your product has a track record, share specific metrics like market share gains, revenue growth and how it has outperformed competitors. It’s also good to share the markets in which it performs best.

For new products, focus on your company’s history of successful launches of similar items. Show how each performed and how your go-to-market strategy led to financial success in an in-store or online retail environment. Use market insights, trend analysis and competitive data to support your projections. These reports may be available from Nielsen, IRI or other industry research providers.

Your goal is to create a compelling financial story that convinces buyers that your product is a profitable addition to their assortment.

2. Understand the retailer’s process

Buyers appreciate suppliers who demonstrate a thorough understanding of their internal processes. This insight, from timely sample submissions to accurate product information (such as weights, dimensions and packaging details), showcases your competence and readiness.

Before your meeting, familiarize yourself with the retailer’s submission guidelines and requirements. These are usually available online or provided to you by the company in advance. Be clear about what is expected and ensure you meet those requirements.

Be prepared to discuss if you’d consider an exclusive deal for your product and what commitment or level of bulk buy you’d require.

Be sure to highlight your ability to deliver on time, comply with their specifications, provide product images that meet their specifications if needed and navigate their supply chain processes by being EDI-capable.

3. Provide detailed product information

Buyers need to be fully informed about what they’re purchasing. Therefore, it’s crucial to come prepared with detailed product information. They’ll expect you to provide details on everything from the availability of different sizes and colors to production capacities and pricing. This level of detail will make you appear knowledgeable and reliable.

Discuss your production capabilities candidly. Buyers will want to know if you can meet their demand, especially if your product takes off and they need you to scale rapidly. This insight will also help them determine whether they should plan to carry the product across all stores or a subset of locations and what they can expect to set as available inventory online if drop-shipping. Be honest about your current production limitations and how you can scale up if necessary.

Quality is another critical factor. Make sure your product meets the retailer’s quality standards and be prepared to discuss any certifications or compliance with industry regulations. If your product has unique attributes—such as being eco-friendly or locally sourced—highlight these, as they can be key selling points.

4. Leverage samples and visuals

Samples and visuals are powerful tools in a buyer meeting. Bring live samples of your product or ship in advance (and confirm receipt) if the meeting is virtual. The items allow the buyer to see, feel and experience your product firsthand, which can make a significant impact.

In today’s environment, where many meetings still happen virtually, ensure your digital presentations are polished and professional. High-quality images, sharp photography, detailed slides and a straightforward narrative are essential.

5. Be professional and respectful of time

Buyers are busy, and their time is valuable. It’s important to approach the meeting with a clear, concise and focused agenda. While building rapport and a relationship is important, it’s crucial to keep it from overshadowing the business at hand. Every minute of the meeting is precious, so it’s respectful to keep the small talk to a minimum.

Focus on delivering the product information the buyer needs to make a decision. Start with a brief introduction, but quickly transition into the key points: financials, product details and how your offering aligns with the retailer’s needs. Avoid the trap of focusing too much on the relationship aspect; your goal is to communicate the value of your product efficiently and effectively. Their decision isn’t based on likeability. It will be based on how well your product adds value to their category.

Lastly, don’t leave the meeting without identifying how and when the buyer will contact you regarding the next step (or, if they don’t, letting them know when you will follow up), asking for feedback and determining a timeline for further communication.

Conclude the meeting with confidence

Nailing your next buyer meeting takes more than just having a great product—it’s about presenting a compelling business case, understanding the retailer’s needs and their business and demonstrating that you are a reliable and knowledgeable partner ready to do business with them.

By mastering your financials, understanding the retailer’s supply chain processes, providing detailed product information and respecting the buyer’s time, you increase your chances of securing a slot in their planogram or online assortment. Remember, the meeting is your opportunity to show why your product deserves a spot on their shelves—make it count.

SPS helps suppliers be at their very best at every buyer meeting, our experts and products ensure you have the right data and are prepared to dazzle the buyer with your product and its value to their business. Learn more today.

For decades, the process of getting a new product on store shelves was fraught with risk. Retailers didn’t want to gamble on an unproven product. If they did, they could end up with inventory that they would need to mark down at a loss. The items could even end up in the trash.

Some items were great and would surely become hits once consumers discovered them. But if the retailer wouldn’t stock them, the supplier would take the hit for all the research, development and production costs. Sometimes the dream product died before it even made it to the stores.

Test newly launched products online first

Today, eCommerce makes launching new products so much easier. Manufacturers, suppliers and even retailers can test how newly launched products sell by first making them available on their eCommerce or marketplace sites. Online sales information can help determine whether items should be stocked on retailers’ shelves and in which stores they should be stocked.

What’s more, suppliers who are confident about their products can take the risk out of the retailer’s hands altogether, making it more likely for retailers to test the product on their eCommerce sites.

For example, say a supplier has a new cosmetic they’d like to get into stores. Retailers don’t want to take a chance on an unproven product, only for it to languish on the shelf, get marked down and sold at a loss.

By negotiating to have the new product on the retailer’s websites and taking responsibility for inventory and drop shipping, the supplier can remove much of the retailer’s risk. In this scenario, the retailer is much more likely to agree to a short trial.

Then, if the newly launched product is successful and appeals to the retailer’s customers, the retailer is more likely to order the product and put it on the shelf because it was proven online first.

Piloting the product to store shelves

Once the product has been proven online, the supplier and retailer can negotiate a pilot program and decide which stores should have the product.

It’s even possible to split products up based on customer preference, such as sending certain popular colors to stores while less popular ones go online. 

Finally, the supplier can prove their success and get the retailer to pick up all their items as part of the general inventory. Of course, this means the supplier needs access to sales and inventory data from the retailer for both in-store and online sales.

For more insights on how to maximize your success with new products, contact our team.

The order-to-cash process involves all the steps that start from when a customer places an order to when you get paid for an invoice. Automating the order-to-cash process is essential for ensuring accuracy and an efficient order cycle. Steps in the process include:

• Order management
• Credit management
• Order fulfillment
• Order shipment
• Customer invoicing
• Payments
• Order and data management

Accurate data allows all parties to collaborate, helps the process run as smoothly as possible and prevents human errors that can cost time and money.

A common challenge in the order-to-cash cycle

One issue that many suppliers face is getting paid on time. It’s already difficult when some retailers push payment terms out as much as 60 and 90 days. But additional delays can occur, thanks to problems with the invoice and related documentation.

We previously discussed how suppliers can get paid “faster” with EDI. It’s not that you get paid sooner; it’s that you get paid on time by eliminating delays due to discrepancies between purchase orders, packing lists and invoices. By using automated fulfillment solutions:

• The supplier receives an electronic purchase order (PO) and sends a purchase order acknowledgement (POAs) to confirm and make any revisions to pricing and quantity.
• Later, the supplier sends an advanced shipping notification (ASN) based on the POA.
• The order arrives on time, with an up-to-date packing list, based on the ASN.
• The supplier sends an invoice, which matches the ASN and POA.
• The retailer compares these to the PO in a three-way match. When it matches, the retailer pays the invoice on time.

Before automation came along, retailers did all this matching by hand, which often created delays because the details of the transaction didn’t match. They had to investigate the discrepancy and correct it. By hand.

However, it’s possible to make the reconciliation — and payments — happen automatically. With a robust EDI solution, the three-way match occurs automatically. Once a match is successfully made and there are no discrepancies, the invoice is scheduled automatically. Any invoices with mismatches can be set aside for further research, avoiding any scheduling delays for successful matches. Through electronic funds payments, money can transfer on the specified date from the retailer’s bank to the vendor’s bank. Depending on the agreements and relationships between the retailer and vendor, payment for the invoice could potentially be exchanged within hours of the invoice being electronically transmitted.

A by-product of electronic payments is a reduction in the payment mailing process for the Retailer and automated remittance reconciliation for the suppliers. Managing manual check issuance requires the printing and stuffing the checks in envelopes. By remitting payments electronically, the staff/resources needed for this process is reduced, if not eliminated. In addition, the remittance detail can be shared with suppliers electronically, allowing those partners to conduct systematic matches of the payment to their accounts receivable systems.

Similar to exception management of retailers’ three-way match with invoices, suppliers can conduct a two-way match using the remittance detail to match the transaction in their Accounts Receivable system.

An automated order-to-cash system can cut float time

But here’s the issue. Today, many retailers still prefer to write checks and mail them. The time it takes for the check to travel by mail is called the “float.” In the past, retailers appreciated the float, because they could hold on to their money a little longer. Several years ago, when the post office wasn’t as efficient, the float could be anywhere from 5 – 7 days. These days, it’s usually 3 – 5.

One reason for retailers to embrace electronic payment is that vendors sometimes offer early payment discounts—as much as 1 to 2 %—if retailers pay before a certain deadline, such as seven days early. By using electronic payments, retailers can take advantage of those early payment discounts, and save thousands of dollars—even tens or hundreds of thousands—per year. But they lose that float time.

The discussion that’s taking place today between the retailers and suppliers is the matter of splitting the float, so everyone still benefits from electronic payments. Retailers and suppliers are agreeing to split the float down the middle, so retailers can hang on to their money a little longer, but the suppliers get paid a little faster. Discounts are being offered and payments are being made quicker.

If you would like to learn more about how your organization can use automated EDI and electronic payments to save money (or get paid on time), please visit the SPS Commerce website for more information.

Specifically, I’m talking about companies like Fastenal and Grainger, as well as NAPA and AutoZone. If you’re not in the trades, you’re probably not familiar with them. These are the “stores” (they’re actually called branches) the contractors and auto mechanics go to for tools and parts. Rather than going to the hardware store, a contractor can call a distributor to order the specific new hammer drill or sump pump needed for their worksite or job.

Fulfilling special order requests

In the past, anything that wasn’t in stock at the branch was processed as a special order, where the sales associate would look up the item in a paper catalog and fax or phone the supplier directly with the order. The supplier would ship and fulfill each order, and send individual invoices to the branch who relayed them onto corporate or the customer. This is the retail special order system.

Special orders have always been a particular pain point for distributors, but today many are streamlining this order process. SPS Commerce has been working with dozens of distributors to automate their ordering and inventory systems as a way to eliminate special orders and place them through the automated electronic trading process used with all orders. This allows each branch to place special orders, but everything runs through a centralized system. It’s streamlined and operates more efficiently, and its tracked and monitored for improved customer service.

Branch personnel still place and receive the order, but suppliers love it because now 60 – 80% of their orders are placed from a single source per distributor not the hundreds of branch offices, which means they improve the accuracy and timeliness of their shipments.

Lastly, distributors can easily measure the popularity of special order items to determine whether they should stock these products or sizes at the branch. If they see the same part or tool being frequently ordered at a site, the distributor can include the item in its inventory at the branch.

Ultimately, streamlining the retail special order system and regular orders into one process has been important to distributors, both for the cost reductions as well as the improved customer service. Now that the order cycle is automated, they have access to order status information and shipping details from advanced shipping notifications (ASNs). And they can confidently communicate these details to their customers.

Streamline the replenishment of the retail special order system

SPS Commerce can help maximize the efficiency of warehouses and distribution center by optimizing order management and warehouse throughput. This will remove warehouse bottlenecks by improving the way distributors work with suppliers.

If you’d like to learn how your business can automate its own ordering process and how we’ve helped distributors achieve success, please contact us today.

The EDI 214 (Transportation Carrier Shipment Status Message) is a key piece of the shipment visibility puzzle. Carriers use this EDI document to provide retailers and suppliers information about the status of an LTL (less than truckload) or TL (truckload) shipment.

Note: Carriers of smaller shipments provide status updates using the 240 Motor Carrier Package Status EDI document.

Want more detailed specs on the EDI 214? Check out our handy EDI guide.

How does EDI 214 benefit retailers and suppliers?

The EDI 214 is important for checking on the status of a shipment, confirming the expected delivery time, and tracking down a lost or late shipment. Here are some of its benefits.

Improve receiving efficiency

With a more accurate ETA of inbound shipments, retailers can reduce staffing needs for warehouse or store receiving personnel. The EDI 214 lets the retailer know when there are delays in the shipment so they can make adjustments to their loading dock schedule, staffing assignments and more. It prevents scenarios like having people scheduled and waiting for a load when it won’t arrive until the next day. 

Manage trading partner performance

Large buyers often have specific delivery times and windows for each of their suppliers. The EDI 214 helps them keep track of the on-time rating of their suppliers and carriers, allowing them to scorecard performance against service level agreements. This information helps retailers determine if any changes need to be made to the supply chain and the delivery providers. 

Enhance customer service

The EDI 214 improves visibility for customer service staff on in-transit shipments so they can better respond to customer inquiries. When used in conjunction with a Purchase Order Acknowledgement and Shipment Confirmation, this EDI document can reduce customer service requests for order status by 40 to 50 percent.

Enhance trading partner relationshipsHow does EDI 214 benefit carriers?

The EDI 214 enables carriers to provide accurate and complete status updates to their trading partners. It offers many advantages over manual methods, such as calls and emails.

The EDI 214 can improve trading partner relationships by providing ongoing status of shipments. This type of electronic communication helps carriers meet trading partner requests for greater shipment visibility.

Streamline customer service inquiries

The Transportation Carrier Status document reduces the number of contacts and the amount of time spent on shipment inquiries. Using this EDI document, carriers can manage by exception, focusing their efforts on shipments with potential issues rather than every shipment.

How can you avoid common EDI 214 issues?

The most common issue with the EDI 214 document is EDI mapping. EDI maps provide the detailed EDI specifications required by a specific trading partner. You will need a unique EDI map to connect your business with each of your trading partners. 

When a trading partner requirement changes, your team will need to update the EDI maps. Mapping problems with the EDI 214 can cause an EDI transaction to fail.

The best way to eliminate the worry of EDI 214 issues is to rely on a full-service EDI provider like SPS Commerce. Full-service providers take ownership of understanding your trading partner requirements and making map changes. For example, the SPS team actively manages 9,000 map changes each year.

Want more details about EDI 214?

To learn more about streamlining the shipping process using EDI 214 or any other EDI documents, please contact an EDI expert at SPS Commerce today. 

For more insight into common EDI documents and transactions, check out our posts about EDI 850 purchase orders and EDI 856 advance shipping notices.

The Purchase Order Change is commonly known as the EDI 860. This document ensures that a final order is correct. It also helps with invoice reconciliation and proper, accurate payment.

What is an EDI 860 (purchase order change request)?

The purchase order change request is typically sent from a buyer (retailer or distributor) to a seller (vendor or supplier) when a revision to a previously submitted purchase order is required. This document provides information describing the original purchase order, as well as the changes needed.  

 Purchase order changes can occur at different times within the order cycle. For example, a buyer could send the EDI 860 to correct pricing. Or a buyer might send this document if the balance of the order needs a quantity adjustment or a new ship date. Buyers also use the EDI 860 to cancel an order. 

 It’s also important to note that some businesses don’t use this document at all. Instead, buyers provide an updated 850 EDI purchase order. 

Looking for detailed specifications of the EDI 860? Get more information in our EDI guide.

Why should buyers care about EDI 860 compliance?

Providing a consistent way to communicate order changes as well as having an audit trail is becoming more important for all trading partners.  

Here are some key benefits of the EDI 860 for buyers: 

• More accurate and faster order fulfillment
  Automation of purchase order changes allows faster order fulfillment with fewer errors. Typically, buyers can reduce lead time by two to three days with electronic versus faxed or emailed orders.
  
• Reduce in-store and warehouse safety stock and inventory
  When used in conjunction with other automated EDI documents, the EDI 860 allows buying organizations to reduce inventory by up to 5 percent. Retailers that practice just-in-time inventory should consider enabling and integrating EDI 860. It helps buyers order only as many products as needed, exactly when they are needed. 
• Improve invoice reconciliation
  Without automation, approximately 30 percent of invoices will have issues related to payment terms, quantity or pricing. Automating the order cycle eliminates the need for human intervention along with time-consuming and costly errors. Electronic purchase order changes also ensure that the retailer doesn’t overpay for items that weren’t delivered.  

How do suppliers benefit from the EDI 860?

If your retail customer has asked you to use the EDI 860, here are some potential benefits for your organization:

• Focus on more value-added work
  By automating the receipt of order changes, you can avoid time-consuming paperwork and emails. This allows your team to focus on more value-added tasks.
  
• Process orders more efficiently
  The EDI 860 reduces the time spent processing orders along with data entry errors. By automating the order process, you can reduce staffing costs and spend less time fulfilling orders.
• More accurate invoicing
  Electronic purchase order changes ensure that you invoice the retailer for the correct amount. This allows you to avoid overcharging or undercharging your customer, and having to fix invoicing errors down the road.
• Sellers can also request PO changes
  Sellers can send purchase order change requests to buyers, too. Depending on what the retailer or distributor supports, sellers might use the EDI 855 or EDI 865. This allows the buyer to choose to update or cancel the purchase order, and ultimately simplifies your order fulfillment within your warehouse. 

How can you avoid common EDI 860 issues?

The most common issue with the EDI 860 is EDI mapping. EDI maps provide the detailed EDI specifications required by a specific trading partner. You will need a unique EDI map to connect your business with each of your trading partners. 

When a trading partner requirement changes, your team will need to update the EDI maps. Mapping problems with the EDI 860 can cause an EDI transaction to fail.

The best way to eliminate the worry of EDI 860 issues is to rely on a full-service EDI provider like SPS Commerce. Full-service providers take ownership of understanding your trading partner requirements and making map changes. For example, the SPS team actively manages 9,000 map changes each year.

Want to learn more about the EDI 860?

EDI is fundamental for competing in the modern retail landscape. If you would like more details about the 860 Purchase Order Change Request,  contact an EDI expert at SPS Commerce today. 

For more insight into common EDI documents and transactions, check out our posts about EDI 850 purchase orders and EDI 856 advance shipping notices.

Let’s review the basics of cross-docking and some tips to help you get started.

What is cross-docking?

In cross-docking, there needs to be a distribution center (DC) or warehouse as part of the retailer’s distribution network. 

Cross-docking is a logistics practice of unloading goods from an incoming truck and loading them directly into outbound trucks. Unlike other methods, cross-docking does not involve storing goods in the warehouse or DC.

Some retailers may reference products moved “door-to-door” or “flow-through” as cross-docking, which is one method, while other cross-dock products/cartons/pallets are “marked for” a given location.

• With the flow-through model, retailers are alerted to what the suppliers have packed and shipped. The retailer will pre-allocate products for stores in advance of the delivery. When products arrive, items are pulled from the inbound delivery, relabeled for the store allocated to that carton and routed to the shipping dock. 
• In the marked-for model, the retailer communicates to the suppliers, on the purchase order, the quantity of the item needing to be pre-packed and cartons/pallets labeled by store prior to shipping. Since the suppliers have already labeled cartons/pallets, when products arrive, items are pulled from the inbound delivery and routed directly to the shipping dock, needing no relabeling. 

DCs that support cross-docking often have specialized conveyor systems to distribute cartons to their destinations.

What are the advantages of cross-docking?

Cross-docking can be advantageous when retailers order products that are shipped directly to stores by suppliers. Also, if a retailer is managing inbound transportation from suppliers using their carrier or fleet network and there are stores within the lane or route, implementing a cross-dock program allows for picking up supplier products on the return trip, eliminating “empty” miles. 

One of the main advantages of cross-docking is that it enables greater throughput without the need for opening up a new warehouse or DC. Because items spend little to no time in your warehouse, costs associated with handling and storage are reduced and deliveries are faster. 

By automating warehouse receiving processes, cross-docking increases efficiencies and reduces costs. Cross-docking creates advantages for both the buying organization (retailer or distributor) and the selling organization (supplier). This makes cross-docking a win-win for everyone.

Advantages of Cross-Docking

How do you implement cross-docking?

Automating the exchange of data between buyers and sellers is essential to successful cross-docking. Data exchange allows buyers to effectively plan for receiving the goods in the DC. 

Here is a typical workflow:

1. Buying organization sends electronic purchase order to supplier
2. Supplier sends advance ship notice (ASN) to buying organization
3. Supplier packs and labels goods, and sends them to buying organization’s DC
4. Buying organization receives goods at DC, scans barcode labels and directs shipments to appropriate trailer
5. Goods are shipped to one or more stores

Looking for expert advice on cross-docking?

SPS Commerce has helped thousands of retailers, distributors and suppliers streamline the complexity of cross-docking.

For retailers and distributors, our Community solution ensures your supplier community can meet your requirements for purchase orders, advance ship notices and labels.

For suppliers, our Fulfillment (EDI) offering is pre-built to ensure you meet all your retailer’s cross-dock requirements.