The often complex relationship between Supermarket Chains and their Suppliers can be improved by increased transparency.
Just a few decades ago, it’s likely that the five a day you bought from the supermarket were sourced from regional and local wholesale markets. At that time, retailers purchased unbranded, undifferentiated produce on an ad hoc basis – taking what was offered on the basis of best price and quality at that time.
With so much variability, it’s not surprising that over time, the wholesalers were squeezed out and producer groups scaled up operations to supply the supermarket giants directly. Fresh produce isn’t your everyday commodity. High levels of perishability and fragility require special packaging for protection and rapid, temperature controlled, transportation. In some cases 24 hours is the maximum time available to bring the crops from the field to the point of purchase by the consumer.
A problem halved
Such a hire wire act requires rapid harvesting, packaging, distribution and shelf stacking. A short shelf life combined with a perishable, fragile product means that the potential for damage and wastage is high. It’s a problem owned by both retailers and suppliers and one that binds them with the common goal of making their supply chain more efficient. Working together on the problem not only addresses issues with waste but also enables Supermarket chains to minimise cost so they remain competitive.
While both partners work together to streamline operations, suppliers are generally in a position of weakness relative to the supermarkets who dictate commercial terms. Driving margins downs to 3 or 4 per cent, retailers are free to pick and choose the companies they work with. The ‘Preferred Supplier’ status can be quickly withdrawn if suppliers fail to meet with price demands, quality thresholds or delivery schedules. Usually, the suppliers blink first. Losing a multi-million pound contract can devastate a department or threaten the stability of an entire business.
Despite this apparent power imbalance, retailers and fresh produce companies continue to develop successful long-term working relationships. Recognising that consumers often evaluate fresh fruit and veg as key indicators of overall value and quality, supermarkets rely on their supplier partners to protect their brand and reputation by delivering high quality produce on time - at the best possible price.
The key to this relationship is trust. When trust is established between supplier and retailer, it can support open communication and mutual problem solving in order to ensure seamless supply and profitability on both sides.
If you care, share
At KisanHub we believe that transparency is the key to developing trust between supplier and retailer. It’s about providing the right information to the right people at the right time. Sharing data allows all stakeholders to check that contracts are running to schedule. When business critical data can be aggregated and presented in easy to understand reports, Suppliers can show predicted supply volumes, quality indicators and more accurately estimate delivery dates,
Sometimes it’s not all good news. If the weather has impacted harvest, leading to compromised yield or quality, then the facts are clear and inarguable – it’s not the suppliers fault. The partners can then work together to overcome the shortfall.
Data in the right place, at the right time
Finding the perfect mix of information to make an informed decision can be tricky. Sometimes there’s too little data available, sometimes too much to process – especially when it's spread across multiple systems or spreadsheets. It’s also a speed problem. Critical information that would have prevented a sticky situation arrives too late.
KisanHub's supply management platform provides the perfect blend of supply, operational and commercial information side by side to help Suppliers and their retail clients analyse the situation and act quickly. No more interrogating spreadsheets, no more guesswork.
KisanHub simplifies supply management - easily create and share reports with stakeholders
Keeping customers close & contracts renewed
With greater visibility across the supply chain and the ability to share regular reports, Suppliers can provide a better quality of service than their competitors. Supermarket chains can expect easy to understand updates on a regular basis to help them plan and manage stock levels. With both sides referring to one source of truth, they can work more closely. The result - more transparency, closer partnerships and contracts are renewed year on year.
There’s no need for Retailers to be left in the dark – no more surprises when a delivery doesn’t materialise. The progress of the crop is available from the moment it's planted, through harvest and store, down to the date and time set for delivery to the Packhouse.
For contracts that can be worth millions annually, it’s not asking too much for Supermarkets to expect regular reports on the progress of their order. KisanHub provides Suppliers with all the tools they need to not just monitor crops, track inventory and identify quality - it also makes sharing that data with the Supermarkets so much easier.
With stronger relationships in place, suppliers and retailer organisations can operate as one to reduce waste, bring the best possible products to consumers and improve their margins.