Supplier collaboration: How to unlock its maximum potential

Aug 15, 2024 • 7 min

Getting stakeholders within a single business on the same page is tough. Getting stakeholders across multiple businesses on the same page is often considerably more painful.

The recent RELEX Supply Chain Collaboration Report notes that 87% of respondents overwhelmingly reported their wish for more collaboration with their retail partners. But despite the desire to improve, the current state of collaboration leaves much to be desired. Bandwidth issues limit communication, meetings remain infrequent, and important data stays siloed.

Fortunately, the dream of better collaboration isn’t just a fantasy. Modern tech advancements have made it easier than ever to improve supplier collaboration using a smart, collaborative planning platform. Suppliers that do invest in the right supplier collaboration solution stand to gain a competitive advantage in an increasingly crowded market — and at a time when supply chain wins can be hard to come by.

What is supplier collaboration?

Supplier collaboration is a strategic process where retailers and suppliers share information to optimize their operations. This two-way exchange focuses on vital data such as demand forecasts, inventory levels, and point-of-sale (POS) data. The transparency gained from this practice ensures that both parties align their processes more effectively, enhancing supply chain efficiency.

Suppliers continuously face increased pressure to meet demand shifts with greater speed and accuracy, and traditional supply chain methods often can’t provide the necessary visibility and flexibility. Supplier collaboration enables companies to respond more effectively to market demands to reduce costs, improve efficiency, and maintain competitiveness in the face of supply chain uncertainty.

5 benefits of effective supplier collaboration

Supplier collaboration aligns retailers and suppliers while delivering operational advantages. Real-time data sharing and enhanced visibility help companies respond more effectively to market demands and optimize their processes. Effective collaboration streamlines operations, minimizes stockouts, and ensures that resources are allocated more effectively throughout the supply chain, potentially driving significant cost savings.

The key benefits of supplier collaboration include:

Access to shared POS data. Suppliers can track product demand and promotions in real time, helping them better meet market needs.
Improved forecast and planning accuracy. Shared forecasts and business insights lead to more precise supply chain planning and production schedules.
Reduced manual effort. Automated data sharing reduces the need for manual entry and analysis, saving time and resources.
Enhanced supply chain visibility. Continuous updates on stock levels and lead times allow suppliers to manage their operations more efficiently.
Higher customer satisfaction. Aligning with retailer needs ensures better order fulfillment and timely deliveries, which boost customer satisfaction.

An equally compelling argument for suppliers to improve collaboration with their retail customers is the cost of not doing so. Without real-time data sharing, suppliers struggle to align production with actual demand and find themselves burdened with overproduction or stockouts. This lack of coordination increases operational costs, lengthens lead times, and diminishes customer satisfaction due to delays and unfulfilled orders.

Such setbacks chip away competitive advantage over time, leaving companies unable to respond quickly and effectively to market shifts and continued disruptions.

The 3 biggest supplier collaboration challenges

Every supplier has unique roadblocks hindering better collaboration, and so does each of their customers. But the biggest obstructions to improved collaboration boil down to three issues: data headaches, labor costs, and a breakdown in communication.

1. Data headaches

The 2023 RELEX Supply Chain Collaboration Report reveals that 78% of surveyed suppliers receive data from their supply chain partners. Yet many pointed out various issues surrounding data collection, especially concerning:

Data quality issues
Limited data volume
A lack of a regular data-sharing cadence

Suppliers and their customers don’t always use compatible tool stacks, rendering the data one organization shares unusable to the other. And readable data is often expired or in too small a volume to be useful for suppliers.

Consumer goods suppliers also find themselves sifting manually through reams of data, only to find that what they received from customers wasn’t what they were looking for. The data most relevant to suppliers includes:

Sales forecasts
Sales volumes
Promotions data
Inventory data

Data headaches are only made worse by suppliers themselves. Many suppliers complicate data sharing within their own organizations. Useful customer data that does make it through is often siloed, remaining hard to access to much of the broader organization. Only 26% of suppliers believe the data customers share is easily accessible to everyone within the company.

2. Labor issues

Current collaborative processes remain highly manual, requiring suppliers to create teams dedicated to customer communication. While these teams should theoretically enhance collaboration between organizations, workers instead often find their time consumed with more tedious tasks — chasing, collecting, analyzing, and even reformatting customer data. The team also wrangles the internal data they send to customers, leaving little time to plan or work toward process improvements.

Consumer goods suppliers are highly cost-conscious amidst ongoing supply chain disruptions — and so are their wholesale and retail customers.

The communication these teams provide to suppliers provides immense value. But consumer goods suppliers are highly cost-conscious amidst ongoing supply chain disruptions — and so are their wholesale and retail customers. Suppliers or their customers may find it difficult to invest in or expand their workforce specifically to improve supplier collaboration despite potential future cost savings.

This situation is especially relevant for those companies across the globe struggling to hire, train, and retain their workforce.

3. Communication breakdown

The establishment of a regular cadence of communication can be difficult for everyone in the current topsy-turvy supply chain climate. Many organizations find cannot plan as proactively as they’d like because they are stuck perpetually reacting to adversity, leading to a vicious cycle of diminished communication:

A retailer becomes too busy to collaborate with a supplier…
…which results in inaccurate demand forecasts for the supplier…
…which leads to supply shortages…
…causing the retailer to become too busy to collaborate with a supplier.

Retailers and wholesalers don’t like surprises. Breakdowns in communication injure the trust between suppliers and their customers and can limit their willingness to collaborate. This can make it difficult for suppliers to achieve their strategic goals despite often sharing those goals with their customers. s to achieve their strategic goals despite often sharing those goals with their customers.

3 ways to improve supplier collaboration using a collaborative planning platform

One look at the issues preventing enhanced collaboration, and it’s easy to understand why suppliers have struggled to make meaningful improvements to their processes. Internal data, labor, and communications issues are often hard to handle internally, and the complexity only compounds when working suppliers factor customers into the equation.

But complex collaborative roadblocks don’t necessarily require complex solutions. The key to overcoming the seemingly impossible puzzle of supplier communication is also deceptively simple: adopting a collaborative planning platform.

The right collaborative planning platform allows supplier and their customers to:

1. Share better data more often with automation

Collaborative planning platforms resolve issues with data collection and management in a single, elegant way: automation. These tools allow suppliers and their customers the ability to automatically upload up-to-date data into the collaborative system for use by both parties. Data from various sources is unified within the platform and then “transformed” into a format that can be used in planning for both short- and long-term planning horizons.

Planning platforms allow collaborators to share a wide variety of data sets, including:

Forecasts
Points of sale data
Order plans
Promotions
Assortment changes
Lead times
Shipment schedules

Automated sharing also addresses another critical issue facing wholesalers: labor costs. Suppliers who automate their data sharing using a planning platform free up their staff to perform value-adding tasks that computers can’t do, like proactively clarifying and communicating exceptions to collaborative partners.

2. Use actionable insights

All that automated data sharing isn’t just for show. This data grants suppliers greater visibility into customer and consumer demand, allowing them to act ahead of potential supply and demand imbalances.

Collaborative planning platforms allow suppliers to use demand sensing tactics to make necessary short-term forecast adjustments. Traditional forecasting involves creating forecasts using internal data like historical and reorder information. However, these forecasts don’t account for immediate demand changes caused by events like social media events or customer promotions.

Demand sensing combines traditional data sets with customer data to allow planning platforms to better detect these sudden demand shifts and automatically adjust forecasts accordingly. Planning platforms capable of demand sensing help suppliers identify misalignments between expected supply levels and forecasted demand.

Demand sensing allows planning platforms to better detect sudden demand shifts and automatically adjust forecasts accordingly.

For instance, the platform may detect increased demand for a product affected negatively by a material shortage. Quick detection using up-to-date customer data could give the supplier enough time to increase production of a similar product as an acceptable substitution while the shortage persists.

3. Strengthen supplier & retailer communication to align on strategy

Suppliers and their retail and wholesale customers share similar goals like reduced costs, fewer Suppliers and their retail and wholesale customers share similar goals like reduced costs, fewer disruptions, and increased sales, so working together to achieve those goals benefits everyone involved. The best planning platforms come equipped with collaborative dashboards that grant collaborators greater visibility into potential issues so that disruptions can be dealt with proactively.

A planning platform enables companies to align strategies in several essential ways:

Simultaneous viewing of the same up-to-date data. Planners from suppliers and their customers alike can highlight potential bottlenecks and collaborate quickly on a solution using the platform itself instead of sending emails back and forth.
Communication of future events. Visibility into a customer’s upcoming promotions enables suppliers to increase production for a particular good in anticipation of an expected increase in future demand.
Demand shaping. Suppliers and their customers can collaborate on trade promotions, pricing changes, and more to influence consumer demand to better match their existing supply.

These capabilities streamline the collaborative process for suppliers and their collaborators, minimizing the risk of costly communications and reducing an often frustrating process into something far more painless.

Win more, together

Collaborative relationships between suppliers and retailers have certainly come with a fair amount of frustration on both sides, which could easily dissuade each party from working toward improvements. But investing in regular collaborative communication and the right technology to collect and share data can work wonders to smooth the way forward.

Success ultimately depends upon the trust built when both parties clearly understand how their plans will impact one another. When retailers and suppliers combine advanced technology with open communication, they can work together — and win together — to achieve the best outcome for the consumer.

Enhance your collaboration with RELEX