Half of the businesses supplying retailers are failing to meet supplier terms and conditions, leading to financial penalties and lost business.
New research from retail logistics company Advanced Supply Chain (ASC) found that 51 percent of manufacturers and brands supplying products to retailers have incurred financial penalties for non-compliance with supplier manuals. A third (34 percent) had incurred penalties in the past 12 months, with an average penalty of £1,658. 10 percent saw penalties top £5,000.
The three biggest pre-retail compliance challenges include delivery deadlines (67 percent), quality issues such as damaged products and packaging (60 percent) and labelling problems (45 percent). A fifth of suppliers (20 percent) admitted to losing business with a retailer due to non-compliance with supplier standards, with the majority reporting that the value of lost business over the past three years exceeded £75,000.
42 percent admitted to choosing not to trade with a retailer due to supplier terms and conditions. The research shows that, when setting KPIs for suppliers, retailers are prioritising time to market (44 percent), fulfilling order quantities (30 percent) and packaging compliance (18 percent).
Ben Balfour, Managing Director at ASC, said: “Competitive markets, high shopper expectations and tight margins mean that clearly defined standards for suppliers are a necessity. Retailers need stock inventory to be delivered to them on time, in the right format and perfect quality to ensure that products can be processed quickly for sale. Mistakes, excessive handling and delays are costly, risking missed sales opportunities and negatively impacting brand reputations.
Pre-retail logistics and compliance with retailer KPIs often proves a challenge for suppliers because of manual processes. Businesses will be using written labels and paper-based inventory management programmes in warehouses, which are time-intensive and prone to mistakes. One hand-writing error, for example, can lead to problems that delay a whole order or cause it to be rejected and sent back by a retailer.”
Further data from the research shows that 9-in-10 businesses are looking for solutions to improve pre-retail logistics, with the view to eliminating errors, reducing lead times and improving retailer satisfaction.
Ben Balfour continued: “Around half of the suppliers we surveyed want to grow the number of retailers they work with and realise that streamlining pre-retail logistics is crucial to this. Specialist services, such ASC’s Retail Ready, are designed to automate and digitalise processes during pre-retail logistics to save time, improve quality control, strengthen compliance with supplier manuals and boost speed to market.
Pre-retail logistics is an opportunity for suppliers to increase efficiencies and sustainability. Eliminating errors and enhancing retailer compliance can minimise wastage and can support optimisation of fleet scheduling to reduce vehicle dwell times and unnecessary mileage.”
ASC has created a guide for streamlining pre-retail logistics, which covers five steps for delivering retailer satisfaction, cost savings and eliminating waste. Click here to download the guide.
