Retail EDI

The VBA serves as a window into the retail customers operation. It explains all of the guidelines, rules and EDI requirements to which vendors must adhere, typically followed by a litany of non-compliance fines and administrative fees that will be imposed should the vendor choose to ignore the requirements. Through our past experience with VBA management and the resulting deductions, we have come to realize that most vendors have similar behaviors when it comes to reviewing, approving and implementing VBA’s. Unfortunately these behaviors, more often than not, impede the vendor’s ability to properly serve their retail customer and rarely support the company’s own best interests.

The behaviors in question typically revolve around the same “silos of information” Jim referenced, and that seem to exist in so many companies. However, for the vendor, they also include an almost paralyzing fear of upsetting the customer if the VBA is not assumed to be an “all or nothing” proposition--so although the recipient may give the VBA only a cursory once over, the expectation of full compliance may remain the same. As a result, vendors move away from the very processes that support open communication and facilitate true collaboration within its own walls. If increased collaboration with retail customers is on the horizon, then vendor’s serving this market would be well advised to review their internal VBA review processes and consider making changes now.

When poorly executing a VBA review, vendors will often find themselves faced with increased operational errors, added labor in virtually every department that touches the customer’s order—whether it be Finance, Customer Service, Transportation, or at the DC level—all of which lead to reduced customer satisfaction and poor performance metrics. Proper communication and execution of the VBA review process is critical to ensure a good working relationship with the retail customer, but is even more crucial to protecting the vendors own bottom line.
 
Our white paper outlines the activities we believe necessary to ensure the VBA review process will lead the vendor to sustain their own profitability while maintaining customer satisfaction. We believe the key to proper execution is to first:

A. Clarify and limit the role of the sales team as it relates to VBA’s and operational decisions;
B. Establish a standardized VBA review process, including identification of each departments role and responsibilities, and a comprehensive approval process that includes senior management;
C. Develop a method to provide a formal written response to the customer’s VBA that is complete, timely and has been accepted by all departments;
D. Create an avenue for open communication between the various departments serving the customer and the corresponding department within the retail customers operation;
E. Eliminate “write-off” policies relating to the invoice deductions, non-compliance fines and administrative fees that accompany the retail business relationship and institute a review process to heighten awareness, facilitate root cause analysis and corrective action.
 
Prior to publishing the white paper in its completed form, each of the above activities will be discussed in subsequent postings to the Retail EDI site. Included in these discussions will be common issues that can result from the vendor’s failure to follow a predefined plan of action and approval process when establishing a new customer, contract renewal or VBA update. We encourage each of you to share your opinions and suggestions in response to these postings and look forward to your insights.