Joint business planning: stronger partnership through analytics & automation
Retail Express’ Ed Betts explores the difficulty and inequality of legacy joint business planning, and reveals the ways in which retailers can revolutionise the practice
For all that unites them, retailers and suppliers plan in very different ways. Suppliers typically look for certainty to manage production runs and supply chain logistics efficiently and want a plan which allows them to build their business safely, steadily, and surely. Retailers need certainty, too, but also need to respond quickly to changes in market dynamics while looking to achieve the best possible margin, tight stock management, and a good profit. Both sides agreeing to a joint business plan (JBP) can help put these goals into focus. But the sheer number of moving parts – the people, products, and promotions which form the core of a JBP – means the process can be arduous, stressful and error prone. They can also end up lopsided, as both parties struggle to achieve their own goals. This helps nobody, and certainly does not foster strong relationships between the two parties. If there is no partnership, there is no point to making a JBP at all, so emphasising the ‘joint’ aspect of a joint business plan is crucial to unlocking all of its potential benefits. A supplier that knows the intimate details of its retailer’s plans can adapt its offering to match them; a retailer that knows its supplier’s capacity can build powerful promotions around it. A well-managed JBP, and in some cases more than one, can lead to successful partnerships and a path to incremental volume growth.
The rocky road to establishing a JBP The problem is, JBPs are traditionally difficult because they’re resource heavy. Plans made between large retailers and major suppliers must be carefully managed and controlled if a dividend is to the achieved for both sides. The path from negotiation to sign off to reporting has historically required huge amounts of time and effort. Suppliers really just want to work with retailers that are easy to do business with, and a complex or unclear JBP could have the opposite effect. It is hard enough to define the initial terms of an agreement, let alone the products and categories it covers. A good plan needs to tie supplier efforts to retailer media and marketing activities, agreeing these sometimes twelve months in advance, and drive promotional opportunities to meet seasonal demand and price establishment periods. For busy retailers, this means creating pinpoint alignment not only with suppliers but between internal departments – again, a serious effort, and one prone to collapse if just one of these elements misfires, or changes cannot be made to meet the demands of market dynamics.
Intricate financial terms must be agreed. Compliance must be considered. And JBPs must do all this while remaining fluid enough to weather personnel changes and the renegotiation which may follow. On either side, the person that negotiates a JBP may well not be the person that delivers it, and their opinion on its direction may differ.
The new shape of JBP management Given the pressure that they apply and the number of moving parts, cleanly establishing and operating JBPs demands sharp planning, clear communication, and united data. To achieve this, retailers could certainly attempt to follow the processes they have established over the past decades, but in retail’s increasingly fast-moving and cutting-edge environment, these legacy systems are far from ideal. They are slow, brittle, and difficult. The rise of technology, though,
offers retailers a better route forward. Consolidating data and employing the power of predictive AI unlocks a set of tools which can help smooth the sharpest corners of JBP
management,
create consistency and clarity, and unite suppliers and retailers in confidence around the way plans are being managed.
Past, present and future When retailers merge inter- department data, they create a single source of truth – one which helps align all hands without the effort. It ensures that decisions are made based on what is happening as well as what has happened, and enables complex, guardrailed automations which streamline and speed up common tasks. JBPs are fluid, and reacting to changes is as critical to their execution as establishing a clear baseline at their outset. With all parties crystal clear on the figures, this becomes far easier.
Bringing AI into the mix can
provide a view of the future, working with external market data to make predictions. These might suggest new trends or products. They might help define efficiencies, ensuring suppliers are fully aware of what a retailer will require, and reduce waste by preventing overstocking. And if there is data that matters, however niche, retailers can make the most of it.
Working together to improve Most importantly, the combination of big data and AI improves JBP outcomes for everyone. A retailer that is united within its own departments is far less likely to miss a media opportunity or fall foul of price establishment regulations in promotional activities. A retailer that is able to offer its suppliers a clear, accurate, and up-to-date picture of its plans and expectations is, frankly, far easier to work with, and may inspire stronger relationships leading to better deals.
None of this changes the desires of suppliers or retailers, but it does satisfy them without detracting from robust negotiations. Suppliers get that clear picture and solid plan they need. Retailers find the maximum efficiency allowing them to generate the most profit. And both do so with less effort, leaving them open to innovate. AI is a game changer – and it enables the advanced analytics, automations, agility, and insight- driven strategic decision making that will drive retail forward for the next decade and beyond.
Unlock real-time supplier interaction and collaborative promotion planning:
https://www.retailexpress.com/solutions/supplier-collaboration/
www.diyweek.net AUGUST 2024 DIY WEEK 9
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