22 Jul The Supplier Engagement Toolkit: Transparency
Solutions for Retail Brands (S4RB) provides software and services that help retailers to work with their suppliers in a way that saves time and money, whilst at the same time driving quality and innovative thinking. We specialise in the area of Private Label.
For those of you who don’t know, Private Label is where retailers team up with manufacturers to create own brand products – which is a tricky business, to say the least.
One of the key principles that we hold to, and which is vital to the success of our work, is Transparency. Which is a good thing. Of course.
But what do we actually mean by Transparency in the world of retail and Private Label products? I interviewed one of the S4RB directors, Jan Fura, and asked him to tell us a bit more about it.
Q: What does S4RB mean by Transparency?
A: In the context of a retailer/supplier relationship, transparency is about trusting the supplier with the same level of information that the retailer has. That’s the good news and the bad. They can see as much as the retailer can see – be it sales, complaints or testing information. It’s about being as open as you would be with someone in your own organisation.
Part of that openness is also sharing how suppliers are performing compared to others, and in terms of things like sustainability targets, quality standards, punctuality and so on. If you don’t share what’s going on, you’re never going to get the results you want.
Q: Why is Transparency important?
A: If you truly want your own-brand products to compete with national brands, then you need to behave like them. National brands have a single company built around a brand. Everyone in the company is working to make the brand the best. If you’re now working with a manufacturer to produce your branded products, you have to act as a joined-up team too.
Q: Is there risk involved?
A: Classically, retailers fear that being too open with suppliers will drive prices up, because their negotiating edge will be lost. But it’s wrong to look at it that way; things really work in reverse. Hiding things from your suppliers is what leads to a lack of cooperation. If you’re really serious about creating a world-leading brand, then you’ve got to go into it with a partnership mindset. It’s true shared success you’re looking for, rather than creaming off a good margin.
The risks of not being transparent with suppliers are far more tangible. If, for example, there are positive statements (like consumer feedback) that aren’t being shared – “love the colour”, “enjoyed the change in the recipe” – suppliers won’t know they did a good job, or that further improvements could be made. They end up working in the dark. Suppliers can only do better if they have more information.
Q: What are the benefits of Transparency?
A: Transparency leads to better teamwork, and to teams that are both better informed and more motivated. The result is better quality products and increased revenue (although not necessarily bigger margins). This all has a marked impact on your brand as a whole, because improving a Private Brand reflects well on your customers’ perception of your retailer brand. Better own-brand products keep customers coming back to your store.
Q: How can retailers create transparency?
A: People can only take in so much information at once. So, to go about creating transparency, retailers need to share relevant facts and figures in a way that is easy for suppliers to absorb. At S4RB, we recommend displaying data in the form of charts arranged on online dashboards – what we call Visual Management. When retailers communicate transparency data in a form that people can quickly digest, it helps suppliers to identify what they need to do with the information. The skills and technology provided by S4RB facilitate this kind of data sharing to create smooth transparency, and all the benefits that come along with it.