The hidden costs of trading partners

The retailer-trading partner relationship is…complicated. While it’s necessary to have trustworthy, scalable and collaborative partners, many retailers might not have the resources needed to fully manage and optimize their partnerships — and it’s costing them.


The following outlines key areas for hidden costs associated with trading partners, and solutions to manage them.


Inventory visibility

One of the sneakiest cost areas for retailers is inventory, including where it is, where it’s going, how much of it there is at any given point in time. Managing inventory effectively is crucial for retailers and their trading partners, but doing so requires a high level of visibility across each stage of the supply chain.


Companies need to anticipate inventory needs and work with trading partners to achieve precise manufacturing, shipping and storage down to the single SKU. This is a lot easier said than done, given the numerous variables that can impact a supply chain – from weather delaying a shipment, to orders getting stuck in customs because of a paperwork error. Using “what-if” costing methods and tools to run and test various scenarios that impact a supply chain allows retailers and partners to better plan and deliver products at the right time, in the right place and in the right amount — and keep costs in check.


Product profitability

With Walmart and Amazon playing ‘race to the bottom’ on prices, it makes sense for retailers to price competitively and offer promotions on their products to entice consumers. That’s great, so long as everyone is on board with the fully landed cost of a product. Without accurate cost information across the product lifecycle, inaccurate pricing could cause serious revenue problems.


Trading partners have a significant impact on landed cost – from communicating real-time changes to material costs, tariffs, shipping fees, etc., to negotiating materials given availability, and so much more. If a retailer is trying to manage and make decisions on all of these variables using a static excel file, unexpected costs are practically guaranteed and they may likely be pushing their products into the red. Alternatively, with a fully visible PLM platform retailers and their partners can stay updated throughout the product journey and make better decisions given the full picture.


Customs and regulatory compliance

Global supply chains add even more complexity and opportunity for hidden costs. One area retailers should pay particular attention to is customs/regulatory compliance. These rules change often and differ country to country, so ensuring that a partner is providing complete records in accordance with current compliance rules is necessary to avoid sudden fees and delays that cost revenue. Global trade management (GTM) platforms can support this function by integrating with the Harmonized Tariff Schedule, as well as monitoring all suppliers to ensure they are meeting regulatory requirements like REACH, CPSIA, RoHS and others.


With ample opportunities for hidden costs to creep into a supply chain, the best way to manage costs is through collaboration and planning, increasing visibility. Tools like the Bamboo Rose platform allow retailers and their partners to see all pertinent data in one place, ensuring the utmost accuracy and cost control throughout their product lifecycles. As a bonus, with all the time saved on managing trading partners, retailers can give teams time back for creativity.


Learn more about the opportunities of a fully visible retail supply chain with Bamboo Rose and the value of what-if costing in our latest whitepaper.