Keep Your Product Vendors in Line

Multichannel merchants could be doing a better job keeping tabs on their merchandise vendors, according to Curt Barry, president of operations consultancy F. Curtis Barry & Co. Specifically, Barry told attendees at the NCOF show in Las Vegas last month that more direct merchants should be using vendor scorecards.

“The retail industry is about 15 to 20 years ahead of direct on vendor analysis or scorecards,” Barry said.

If you don’t have a vendor scorecard, take your vendor compliance program—which is something else Barry says you should have—and build on it. A vendor compliance program should identify procedures and practices, inspection requirements and return to vendor procedures.

The concept of a vendor scorecard may sound negative, but it doesn’t have to be, Barry said. “You can turn it into a positive” by pointing out what vendors are doing well. Vendor scorecards help you rate vendors on quality, margins, damages, and even factors outside of the warehouse such as store training.

You can also use these report cards to show vendors how they stack up against your other suppliers, he said. The bottom line is that understanding where your suppliers are falling short can help you fix problems. And eliminating costly mistakes will save you money.

Here’s another quick tip on reducing warehouse expenses: If you want to cut your receiving costs, don’t leave the carrier selection up to the vendor, Barry said. “You pay a premium for vendor-paid freight of 5% to 20%.”

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