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Why Supplier Management Matters for Grocery Growth

By
Steve Norris
November 13, 2020

Food has always been essential, but in the wake of extending stay-at-home orders, “panic buying” and the closure of thousands of bars and restaurants, supermarkets and grocery stores have become pivotal in the ability of the public to stay healthy and nourished at home. And while the general public may be frustrated by lag times, empty shelves and reduced hours, those of us in the supply chain industry have something else to say: Bravo.

The exponentially increased demand for household items, food staples, and care products has required the grocery industry to reevaluate and revamp every part of their supply chain, from procurement to order processing to fulfilment. Not only has this meant major shifts for the retailers themselves; it’s also required the constant attention of manufacturers and distributors.

The grocery ecosystem thrives on collaboration between retail stores like Sainsbury’s, Tesco and Iceland, and the huge number of suppliers who make the products we see on the shelves. With so many suppliers to work with, supermarkets need to be adept at connecting with partners of all sizes, maturities-- and technological capabilities. Supply chain digitalisation has already widened the gap between supplier abilities, and in the current climate, it’s more important than ever that supermarkets offer equal partnership to all their suppliers.

What is Supplier Management?

Supplier management is the process by which a customer, like a grocer or supermarket, effectively communicates and transacts with their suppliers. The concept is incredibly broad, covering every aspect of the supplier-customer relationship, but for the purposes of this article, we’ll focus on just one facet: managing inbound and outbound transactions.

In this context, supplier management refers to the responsibility of the customer to provide clear guidelines and communication methods for transactions. The idea goes hand-in-hand with supplier enablement, which speaks to the ability of a customer to use connectivity and technology to boost collaboration and transaction efficacy. Essentially, supplier enablement gives your partners the tools they need to trade with you, while supplier management helps you communicate your needs with ease.

Dealing with a Range of Suppliers

Supermarkets handle a huge diversity of products, the vast majority of which come from outside suppliers. Yes, some chains have their “store brand,” which is helpful for creating buyer loyalty and driving competitive prices. And of course, there are well-known brands on the shelves, like Hovis bread, Dannon yogurts and, Jimmy’s Iced Coffee

Along with these pillars of industry, supermarkets are also trading with startups, and other SMBs. While these products are necessary to provide the product diversity customers crave, as well as providing a space for innovation and new products to “hit the scene,” smaller operations are often at a disadvantage when it comes to technology.

The Technology Disparity

For example, EDI is a popular form of automation that helps businesses to standardise, track and process transactions. Larger institutions use EDI to accelerate order processing and scale their businesses to work with a multitude of partners and handle huge order volumes. But for a smaller supplier, especially one that may be newer to the market, they may lack the technical sophistication to implement a comprehensive EDI solution. Instead, they may be sending order confirmations, invoices and other documents by email, or even fax. 

Supermarkets have a few options here. They can require EDI and forego businesses that don’t comply-- but this risks losing out on new products, and stressing existing relationships with compliance standards that aren’t supported by communication.  They can try to manage suppliers manually by monitoring email and faxes and hand-typing document details into the ERP-- but manual efforts take a ton of time and often lead to errors. 

Or they can invest in a supplier enablement solution from TrueCommerce, which automatically transforms and standardises documents - be they EDI documents or PDF attachments - from suppliers to meet grocer standards.  The solution makes it simple and cost effective to achieve the highest level of integration and collaboration with their entire supplier community. 
Not only do these processes lead to more efficient transactions, but also increased communication fostered by the solution can help ease stress and tensions between suppliers and retailers, leading to a more collaborative relationship and increased success across all partners.

Using Supplier Management to Bridge the Gap

When you have some suppliers using EDI, some sending information in the bodies of emails or as attachments (which can range from excel documents to PDFs), and some faxing in hard copies, handling an array of suppliers can quickly become overwhelming. That’s where supplier management comes back in. A solid supplier management strategy combines support and communication with technology that helps level the playing field for your suppliers while reducing the time you spend sorting through various documents.

The TrueCommerce solution is designed to help supermarkets and other supplier-reliant retail businesses to easily connect and transact with suppliers across a range of technical maturities. The solution includes both primary software and a support service that empowers you to create a customized, automated workflow for both inbound and outbound documents. There are three primary functions of the supplier enablement solution:

Translation/Transformation
To get the best in product diversity, you’ll need to work with suppliers at all levels of technical sophistication (even the ones still using fax machines). The solution starts by working with you to determine the document standards that work best for your business. Then our software automatically reformats messages into your desired format. No matter what kind of document your supplier sends in, you’ll receive all your data in your preferred format, making it easy to process transactions and send the data to your business systems.

Validation

It’s no good having automation if the software is sending through incorrect information. The supplier enablement solution includes powerful verification and validation features that scan documents of all types for any potential errors. If an error is found, or key data is missing, we automatically notify the supplier and our Managed Service desk helps them rectify the issue. What this means is, with most errors, you, the supermarket, won’t even know they happened, because they’ll be fixed before the data enters your system. By proactively managing communication issues, you can spend less time issuing chargebacks, and more time building positive relationships with your partners.
Transmission

By automatically sending data from your suppliers to your business system(s), the supplier enablement solution can also accelerate other business processes. For example, incoming order confirmations might trigger outbound purchase order updates, while inbound shipping details automate the reception of advanced shipping notices (ASNs). This automation not only saves you from having to respond to incoming messages manually but also ensures that all parties receive key information as quickly as possible, so orders can be processed and delivered faster than ever.

Support for Supplier Management 
Technology is one side of the supplier management coin; the other, equally important aspect is communication. In addition to its behind-the-scenes automation, the TrueCommerce platform also offers a user-friendly interface with both customer and supplier portals. These enhance supplier relationships by giving both parties a clear view of their interactions, needs, and capabilities. 

The platform also facilitates effective communication with a fully managed service model that provides support for both you and your suppliers. We proactively monitor message exchanges to alert you to any issues and resolve them before they impact your business. Our streamlined onboarding process helps your suppliers understand your needs while giving them the training they need to send transactions with confidence-- and does so without requiring involvement from your team.

Final Thoughts
Why is it so important for supermarkets to offer equal opportunities for large and small businesses, old and new products? Because in times like these, product diversity helps keep shelves stocked when some suppliers fall short.  Because product diversity drives competition and lowers prices, making it easier to provide your customers with affordable choices. And because despite the risk of taking on a new product, you might just be first to market with the “next big thing.” 

With that in mind, now is an excellent time to take stock of your supplier management strategy. If your communications or technology aren’t offering equal opportunities to all your suppliers, we encourage you to reach out and speak with one of our specialists to see how we can help. You can also learn more about supplier enablement strategies like scan-based trading on our blog.