How abusive vendor compliance programmes are affecting retail store success

Abstract

The retail industry is seemingly one that is at odds with itself. It is an industry that seeks to deploy cutting-edge technologies such as facial recognition, Artificial Intelligence, data analytics, and hand-held devices to improve the customer experience. However, the retail industry still relies upon 40 year-old technologies — namely barcodes and Electronic Data Interchange (EDI) — as the backbone of its vendor-supported supply chains. Inasmuch as the science behind these technologies has advanced, (eg faster laser scanners, Internet connectivity versus dial-up modems), the technologies themselves remain essentially unchanged. What also has stayed effectively the same are retailers’ supply chain vendor compliance programs. This paper explores how abusive vendor compliance programs are a contributing factor to the current state of disenfranchisement between retailers — both brick-and-mortar and online — and the vendor community today. The paper highlights how, in an era where brick-and-mortar retailers are struggling with their business models against their online competitors, vendor compliance programs are an overlooked opportunity. It provides real examples of how retailers’ abuse of vendor compliance standards and best practices only serves to drive up both their own and their vendors’ operating costs, extend compliance timelines, and delay order fulfilment. Using various industry study statistics, this paper showcases how vendor compliance has worked to contribute to supply chain disruption, not supply chain collaboration, which reduces retailers’ ability to collect and analyse critical data. As the paper concludes, for the overall good of the retail industry, retailers — as the industry leaders and authors of their vendor compliance programs — must take immediate improvement action as the results will enhance the supply chain partnerships they have with their vendors in key beneficial ways.