Get the basics right III

You need to communicate (electronically) with customers

You have heard us say many times your sales people need to communicate with your customers. Definitely an important part of their job. To work with the larger retailers your business also needs to communicate with your customers when there are no people involved. This electronic communication is referred to as electronic data interchange or EDI. If your business is not capable of EDI you will not be able to sell into these retailers. It is one of the basics of selling into retail.

We find it interesting that suppliers are surprised when they learn about EDI. They expect retailers to help with this or perhaps try it make it easier. That is not the case. Retailers expect you to show up ready to do business and that means communicate with their system, electronically. Just to make things more challenging they all have their own way of doing it.

Electronic Data Interchange (EDI)

You need a relationship to get listed, but for the ongoing everyday interaction, your customers will communicate with your business electronically. This includes purchase orders and advance shipping notice (ASN) if your product moves through their warehouse network, store receiving if your product is DSD and payments. Each retailer has their own system and your business needs the ability to interact with the systems used by each customer.

Often this interaction will require some form of intermediary. Common options are:

• WebEDI
• Cleo
• Meade Willis
• Crisp
• Commport
• SPS commerce
• Vantree  Focus on food service
• Edict Systems
• Orderful
• EDI Gateway
• iTrade Network Produce focus

With so many choices, it is important to find the right solution for your business. Some platforms are more integrated with some retailers or even departments within retailers. If you are new to EDI, talk to other producers and processors who are working with the retailers you want to sell into.

Considerations for the right EDI intermediary include costs, functionality and the ability of your staff to work with the system. The personal relationships are important but so are the electronic interactions. Your customers will expect this to be in place and the ability of your business to interact with their systems is not negotiable.

Logistics

One major cost of doing business is moving your products into and within the value chain. In Canada, there is a lot of geography to cover and the population is not as dense as many other markets. The distances and lower volume lead to high cost per case. The reality is that every cost for distribution is reflected in the final retail price. Producers, processors and retailers should be trying to find the most efficient method of distribution to keep these costs as low as possible.

Retailers will have very specific expectations for products moving through their network or into their stores. Producers and processors need to understand those expectations and figure out how to meet and exceed them. Many of these interactions will be defined in your listing agreement. When you receive a listing agreement it is the right time to negotiate and find a solution that is realistic for your business. Do not sign the agreement to get on the shelf and believe you can do it ‘your way’ or re-negotiate later. If you need 5 days lead time to produce product for orders or the cost you have negotiated required full pallet quantities, this must be agreed upon up front. Once you are both in agreement, then your business can focus on delivering for your customers.

Each retailer will have their own standards for pallets, pallet configuration, pallet labelling, service level, product temperatures and deliveries. These standards will apply for warehouse and DSD. It is important to communicate these standards throughout your business so everyone understands what is expected. Retailers have imposed ‘compliance fines’ onto suppliers who fail to meet the standards set. These can amount to a lot of money and be very frustrating.

Your sales people should be asking these questions

Your sales people should be aware of the expectations your customers have for EDI and logistics. They might not be experts in either area but they should be able to figure out what is needed and work within your business to facilitate the conversations with your customers.

I do have travel coming up to Toronto, Guelph and Winnipeg so if you want to connect or have an event in any of these locations give me a call or send me an email.

Peter