July 2, 2008

Become a Demand Driven Trading Partner

Share Data, Insights and Value

Many companies are attempting to make a fundamental shift in the way they do business by implementing a demand-driven model, coordinating processes and technologies to better understand and more effectively respond to customer expectations. This is noticeably different than traditional business methods as it realistically identifies and responds to customer needs. To become demand driven and consistently fulfill customer expectations, trading partners must collaborate more effectively then ever before to facilitate a real time, profitable response across the supply network. Here are three tangible initiatives that trading partners should do to create operational efficiencies and profitability throughout the supply chain.

1.Establish a solid foundation by synchronizing clean data. Data Synchronization is the foundation for many inter-enterprise activities. Initiatives are designed to gain short term labor efficiencies during item setup and maintenance processes. Longer term payback is achieved through more mature demand driven operations – delivering faster speed to market, increased on-shelf availabilities, lower transportation costs, lower reconciliation expenses, improved customer service and increased sales. While longer term benefits of data synchronization are designed to create a competitive advantage many companies adopt data sync because of mandates or trading partner pressure rather than for the financial gains and process improvements.

The Industry Data Warehouse (IDW) is the best and most efficient way to get business information synchronized. In addition IDEA can complete data match reports and VENN analysis of manufacturer and distributor business data to gauge the level of data synchronization between the trading partners.

2.Become Demand Driven by Sharing Customer Insights. As trading partners become more demand driven, merchandising and marketing functions move from traditional supplier driven events to more collaborative and customer driven promotion strategies. To optimize marketing activities and accurately forecast advertised product demand, trading partners are beginning to work with each other to coordinate the acceptance of vendor deals, promotional product selection and placement in the collateral concurrently. Throughout these customer centric merchandising processes, distributors should share as much purchase/transaction information as possible via Point of Sale (POS) reports (EDI 867).

Suppliers are clamoring for this information and are eager to analyze it. Manufacturers/suppliers should in turn share the results of the POS analysis with their distributor trading partners so they can address any downward trends and collaborate on product mix.

3.Sustain Effective Collaboration by Creating Joint Value. To leverage clean, accurate and granular demand data trading partners should establish collaborative relationships based on joint value creation. The imperative to shape and fulfill customer expectations is driving leaders to figure out the right win-win-win equation (supplier, distributor and customer). A key component is the joint value creation meeting which includes:

a. Top-to-Top meeting – top managers from each company explore how the supply chain can be aligned to improve joint value, like using IDW and IDX. Performance metrics must be established and the business champions (those in charge of fostering ongoing collaboration) from both sides should be included.

b. Open Dialogue Amongst Cross-Functional Teams – To gain the most benefit, the meeting should be comprised of cross-functional people from both partners; those chartered to rethink the relationship for greater value.

c. Focus on True Collaboration – the meetings are sustainable and have the greatest results if the focus is on joint value creation. These relationships need to be created with the view to an outside-in process to redefine value. Benchmark industry practices, improve performance through dialogues by using scorecards, understand industry trends and drivers and better define the desired customer experience.

Benchmark industry practices, improve performance through dialogues by using scorecards, understand industry trends and drivers and better define the desired customer experience.