Why Retailers Need A Vendor Compliance Optimization Program

Retailers face daunting and complex challenges with regard to their omni-channel supply chains. There are countless reasons why retailers can’t go it alone. Greg Holder, CEO and co-founder of Traverse Systems, provides detailed solutions, including a Vendor Compliance Optimization (VCO) program, that can help retailers leverage the benefits of supply chain visibility. 

IRT: What are some of the biggest challenges facing omni-channel supply chain today?

Holder: Inventory accuracy is one of the biggest and often over-looked challenges facing the extended retail supply chain. For example, consider the customer experience of buy on-line, pick up in store. There are reasons they send you an email to tell you your order is ready for pick-up. The biggest reason is that the retailer must confirm that the item is available for sale. Buy online and ship from store is similar to buy online and shipping from DC or e-commerce facility in that your inventory counts must be accurate. If a customer doesn’t see an item on a store shelf, they generally assume it is not available for purchase. If a customer sees an item on an e-commerce site, they generally assume it is available for purchase. The existence of the item on an e-commerce site does not necessarily imply that the item is available in the retailer’s inventory. If inventories are inaccurate, retailers must decide how to avoid customer disappointment and brand damage. How should retailers respond when their inventory count reaches falls into the inventory margin of error? Do they remove it from their e-commerce site? Other challenges include visibility-to-inbound inventory (glass pipeline), speed of service, free two-day shipping (the Amazon effect), and the endless aisle. The endless aisle is tricky, because the retailers are offering inventory they do not own and expect the vendor to ship directly from vendor to consumer. This is a retailer supply chain challenge even though, technically, the retailer does not own this supply chain nor do they have much, if any, control over it, yet is extremely important because a failure here impacts the retailer’s brand.