Better Supply Chain Communication Needed in Convenience Channel

NEW ORLEANS -- It is said talk is cheap. But when it comes to the retailer-supplier-manufacturer relationship, talk can be very profitable.

At the closing session of the American Wholesale Marketers Association (AWMA) C-Metrics Convenience Industry Outlook Forum in New Orleans yesterday, panelists from all branches of the supply chain stressed communication as a key component to any successful retail relationship.

Better communication among all three main players -- retailers, suppliers and manufacturers -- will help build new product launches, fill voids in inventory and get the right merchandise mix inside a convenience store, the panelists said.

Joe Hamza, vice president of sales and marketing at Tedeschi Food Shops Inc., explained that an improved dialogue about new products would spell success for the retailer. "New products are what drive growth in any category. They are important for retailers," he said. "However, there is a big challenge with communication on these products."

Specifically, Hamza said retailers need enough lead time on new products from their supply and distribution partners to effectively execute the process of getting those products into the stores. In addition, retailers need to know who the targeted consumer is for each new product.

Another major challenge is the lag time in communication from manufacturers about what products to remove in order to accommodate new products, he said.

"Manufacturers are slow to delete existing items, so space is limited for new products," Hamza noted. "We need our manufacturing partners to be more forthcoming."

Successfully executing a new product introduction into c-stores is only part of the battle. The challenge then becomes keeping those products in stock. It’s very difficult to successfully build on a new product if it is out of stock soon after introduction, according to Hamza.

All new products have a trial period, which is critical to the success of the product and out-of-stocks compromise that trial period, he said.

Wilson Friend Jr., director of trade marketing with Altria Group Distribution Co., acknowledged that automated replenishment systems do not necessarily keep up with new products. This is where having access to retailers' point-of-sale data comes into play.

It can become tricky, though, keeping up with new product stocks because manufacturers have no historical data to rely on, according to Bill Henry, sales director for Kellogg's Convenience Team. Instead, they need to forecast based on similar products already in the marketplace and even that has its challenges.

"It’s either feast or famine," Henry said. "If you have a hot launch, you can't keep up. Or you have the reverse and sales don't meet expectations."

All in all, wholesale data combined with information from other industry sources can help identify any gaps in ordering and distribution, relayed Keith Canning, managing partner at distributor Pine State Trading Co. "The whole purpose of C-Metrics and InfoRhythm is to garner as much data as possible," he said, adding that the information becomes more invaluable with every participant that joins the effort.

InfoRhythm Inc. partnered with AWMA on the Outlook Forum.

"Manufacturers, suppliers, retailers, consumers -- for that to work effectively, everyone has to be in sync," Tedeschi’s Hazma said. "The only way to be in sync and work in harmony is by sharing information."

Retailers may be hesitant to share their information, which is why their partners in the supply chain need to respect that proprietary information and be willing to share their own data, stated Sonja Hubbard, CEO of E-Z Mart Stores Inc.

"Everybody has to look at it as a win-win-win [situation]," echoed George Abdoo, vice president of business development with S. Abraham & Sons. "It's a win for everybody from the ground up."