B2B is the cure for Restocking Pain

by: Navdeep Sidhu

For a retailer, not being able to restock in time means a missed sale and sometimes means losing a customer permanently to a competitor. Empty shelves neither help the retailer nor the supplier.

Retail chain Tesco estimates that its top 40 suppliers had failed to deliver more than £6.2m cases which in lost sales opportunities had cost it £50m.

To fix the problem,  Tesco has imposed a new system of fines on its suppliers for missed or late deliveries which are causing shortages at depots and costing millions in missed sales. Tesco has started to charge its suppliers £10 for every case of goods that was either late or missing. Establishing SLAs and setting up fines for violations is the first step. If Tesco can measure and monitor the violations and then use that information to track the reasons behind missed deliveries, there is a good chance they will be able to resolve those issues.

Several successful retailers across the globe have implemented sophisticated B2B Systems to plan and manage inventories. Whether its an auto-replenishment strategy or a vendor-managed inventory, the key is in effective communication and having a solid B2B Integration strategy which can measure and track SLAs.

Read the Tesco story http://www.procurementleaders.com/news/news/tesco-fines-suppliers-for-late-deliveries