Retailer-Supplier Relationship:
Ease of Doing Business Wasn’t So Easy

By Rich Cunningham, SVP, Managing Director U.S.A, Advantage Group

Reflecting on 2022, we can all see the issues that affected the retail supply chain: labor shortages, high turnover rates in key sectors, unprecedented inflation, and interruptions due to unrest in areas across the world. And of course, this is coming off a nearly three-year global pandemic.

Given the challenges we’ve all faced over the past several years, is it really a surprise that both U.S. retailers and suppliers resoundingly identified ease of doing business as the most important factor in their engagement with one another. Don’t we all want things to just be easy for once?

A timely addition, ‘Ease of doing business’ was a new competency introduced to the Advantage Report in 2022. And while we can all certainly understand why it’s important to both sides of the retailer-supplier relationship, what does that actually mean when it comes to evaluating performance and actioning improvement?

As we enter 2023, we see retailers and suppliers putting more importance on supporting each other’s strategy further deepening collaboration throughout their business.

The Advantage Report identifies the tactical competencies that drive ease of doing business and provides companies with their scores to help diagnose areas of improvement in the retailer-supplier relationship.

Some key takeaways from this year’s best-in-class retailers and suppliers:

  • Agile partners are proactive, empowered, and creative: With ever-changing challenges, trend was no longer a useful measure in forecasting demand and strict fulfillment measures (like OTIF) became less important as companies valued partners that demonstrated agility in order to keep products on the shelves and in the hands of consumers.

    While certainly an industry buzzword, few companies are doing agility well, as this was one of the lowest performing competencies among both U.S. retailers and suppliers. In practice, we see high turnover, lower levels of experience, outdated corporate organization and policy structures hamper the ability for those on the frontlines to make decisions quickly enough to matter.

  • Communicate the good and the bad: We all seem to intuitively know that communication is more important now than ever, yet there is a stark difference in how companies that are easy to do business with communicate vs. those that aren’t as easy.

    The need to communicate the ‘what’ is always a given, but best-in-class companies don’t skimp on communicating the ‘why’ and ‘how’, especially when it comes to challenges. This year, we saw one supplier with nearly the lowest on-time & in-full score compensate with proactive communication and resolution follow-up to place #2 in the Overall Food Supplier benchmark.

  • Value your people as much as your customers do: This year, we saw longtime leaders on having capable and experienced people take a hit as companies faced labor shortages and the fall out of last year’s ‘Great Resignation’. Having the right people in place is integral to ease of business, and companies that were able to retain good people through this period have an advantage that will take other companies several years to recoup.

As we enter 2023, we see retailers and suppliers putting more importance on supporting each other’s strategy and delivering on their commitments. Agility will continue to be a requirement as consumers adjust their purchasing habits to compensate for inflation and the workforce continues to flex.

The State of the Retail Industry 2023

JAN 2023