vcf and dicentral scorecard presentation webinar 3 14-2012
TRANSCRIPT
Mary KleespiesDirector of Supply-Chain Consulting
Paul WagnerRetail CIO & Management Consultant
VENDOR SCORECARDINGDiCentral/VCF Research Results
•Participants of the study represent approximately $600B in revenue.
•A mix of both public and private companies, but majority of companies participating are public.
•Almost all retailers participating enjoy revenue in excess of $1B.
VENDOR SCORECARDINGDiCentral/VCF Research Results
Sample of Participants in Study
Key Reasons WHY retailers use Vendor Scorecards
Higher frequency of responses
Higher frequency of responsesLower frequency
of responsesLower frequency
of responses
What is Collected in Vendor Scorecards
• Obvious Reasons for Compliance • Avoid Chargebacks• Develop a good partnership with Retailer • Cut cost of manually receiving orders and keying in paper invoices
• Expedite the flow of merchandise through supply chain thus generating more business
• Track documents and have complete visibility of merchandise that is shipped to Retailer
• Get invoices paid faster
How do Scorecards Benefit Vendors
• Hidden Reasons for Compliance • Great Compliance grants you the privilege of getting your shipments cross docked
• Cut risk of getting a charge back due to items that was substituted
• Move you to the top of the buyers list• Opportunity to negotiate better terms with the buyer• Supplier Compliance Managers will be more willing to work with you when charge backs do occur
How do Scorecards Benefit Vendors
(Ranked by recipient response )• Proactive tool to drive vendor performance and improve growth.
• Vendor rationalization and vendor ranking.• Drive supply-chain compliance through use of charge-backs.
• Buyer negotiation / impact on purchases.• Promotional activities and supported funding.
Key reasons Retailers produce Vendor Scorecards
(In order of frequency of response)
Key Benefits Realized When Deploying
•Improvement in receipt metrics – often citing double-digit gains •Improved awareness and communication in both merchant and vendor communities
•Improvement in retailers’ internal processes and data integrity
•Reduction of inventory investment
•Improved financial performance (sales, margin)
• ASN store number is a mismatch to PO store number
• Items on the ASN were not on the original PO
• Item quantities on the ASN do not match what the received on carton
• Items on ASN are not received in carton
• ASN is received past the cancel date on the purchase order
• Carton listed ASN not received
Metrics for ASN
Scorecard Results-Pass Fail
•To the supplier, pass or fail is determined by whether or not its business grows with the retailer, it recognizes the revenue expected, and conducts business without penalty.
•Individual metrics can have contractual implications – often around delivery and quality.
•Composite scores don’t often have contractual implications unless it is identified in the purchase or vendor agreement. However, composite scores can significantly influence the relationship.
• Composite scores may have numerical grading with some definition around acceptable and unacceptable scores.
• Other composite scores may simply be defined in terms of Excellent, Good, Fair, Needs Improvement, Unacceptable.
• Composite scores often have weight to individual components.
Scorecard Results-Pass Fail
• Educate vendors on what you will require of them before initiating a compliance program
• Clearly state that your goal is to receive the correct merchandise on time and not to make money off of charge backs
• Educate your Distribution / Warehouse personnel emphasize that you are working to get vendors to ship correctly and need their help to accomplish this goal
• Provide a concise list of penalties for non-compliances
How Build a Scorecard that will reflect your compliance Goals
• The shipment arrived with product that was not ordered
• Items were sent without hang tags
• Items to be shipped on hanger were sent without hangers
• Cartons received with hangers on the bottom and items on top
• Shipment did not have certificate of origin
• Items were not packed according to business requirements
Metrics for NON EDI Business Requirements
Have a strong integration with your suppliers – B2B / EDI.
Have a strong integration with your suppliers – B2B / EDI.
Be focused on the specific outcomes you want, resource the initiative appropriately.
Be focused on the specific outcomes you want, resource the initiative appropriately.
Ensure a strong, cross-functional team is properly engaged.
Ensure a strong, cross-functional team is properly engaged.
Test your scorecard and ensure data integrity before rolling out.
Test your scorecard and ensure data integrity before rolling out.
What Makes Scorecard Initiative Successful
Opportunities for Advancement
In Summary
