Integrating Vendor Inventory Selling a vendor s inventory without taking possession of it provides retailers with numerous benefits. Inventory levels, cost of inventory on hand and warehouse space requirements can all be significantly reduced while keeping an extensive amount of product offerings available on the Web. Effort, error and cost associated with manually placing purchase orders can be reduced or eliminated entirely. Whether drop-shipping orders directly from your vendors or receiving products immediately ready for turnaround to your customers, retailers can get the right product at the right time. If you are a retailer who wants to reap the benefits of selling inventory before you have purchased it from a vendor, you need a reliable software system that can align with your existing technology and communicate with a variety of partners using disparate platforms and procedures. With a myriad of software solutions available to meet the challenges of vendor inventory integration, how do you decide what system is right for your organization? This paper will discuss some important considerations that can assist in your selection process. 1 2011 Retail Backbone www.retailbackbone.com Integrating Vendor Inventory
Does the solution provider have a proven record of vendor inventory integration? Ask the software provider for examples of clients and vendors they have successfully paired. A good starting point in selecting a potential software provider is to ask: who has done this before? No one likes to be a guinea pig or pay for a development firm to figure it out. Ask your software provider for specific examples of vendors and retailers for whom they have done successful integrations. Are the vendors the type of vendors your organization uses? Are there any specific vendors mentioned that your company uses? How long has the software provider been working with these vendors? Does the software support industry standards? Reliable flow of data between retailer and vendor is crucial. Many vendors rely on industry standards such as the ASC X12 EDI Transaction Sets. Many vendors rely on Electronic Data Interchange (EDI) to interact with retailers. Does the system you are considering support EDI transaction sets? For example, Retail Backbone typically uses version 4010 of the EDI 846 document (inventory available to sell from vendor to retailer) and the EDI 850 document (purchase order from retailer to vendor). The uniformity and universality of these standards based documents can lower the burden and cost of exchanging data with vendors. 2 2011 Retail Backbone www.retailbackbone.com Integrating Vendor Inventory
How flexible is the software solution? Will your vendor inventory software solution support standard and nonstandard exchange methods? In what ways can communication be done between partner organizations? Smaller vendors may not have the technical ability to implement data exchange via EDI or even automate their systems. Can your software system support alternate exchange methods such as flat file and web service data capture? Can the software system support a variety of communication platforms? Retail Backbone has the flexibility to work with large Value Added Networks (VANs) using EDI standards and automated data transfers. However, Retail Backbone can simultaneously integrate with smaller vendors to exchange data in simpler formats such as CSV or HTML. Communication can be done in almost any way that computers can exchange data such as: Web Services, FTP, or Email. Will the system order the correct products in the correct quantities? Ultimately, it is the customer s experience that is most important. Adding vendor inventory to your site can be profitable as long as it doesn t create order fulfillment problems and customer service nightmares. Accuracy and reliability are paramount when integrating vendor inventory. If you have products in stock that overlap with what your vendor has, you will most likely want to sell your inventory first. If the vendor inventory data flow is interrupted or incomplete, the product offerings that appear on your website will be outdated and potentially unavailable. The keys to a successful vendor inventory integration environment are the accuracy and continuity of the data. Your customers will not care that you didn t receive the correct file from your vendor they will only care about you delivering the product that they ordered. Ask your potential software provider how they minimize errors and respond to interruptions in the data flow both of which affect your ability to fulfill your customers orders. 3 2011 Retail Backbone www.retailbackbone.com Integrating Vendor Inventory
What other ways can the system ensure a successful integration? Integrating your When a vendor s products land on your website, will they look like your products? Does the vendor inventory system provide the means to manage product descriptions and product attributes? What reporting is done with regard to vendor inventory? Can you see the purchase orders you have placed and the orders that have been filled? Can you get customized reports if you need them? Is this software a good fit for my company? If done correctly, vendor inventory integration can allow a retailer to keep their product offerings current while off-loading many of the burdens of inventory management to the vendor. Does your vendor inventory system allow you to see what is happening? Do the products you order from vendors look like your products on your web site? If done incorrectly, vendor inventory can cause order fulfillment problems and customer dissatisfaction. In order to successfully integrate vendor inventory, retailers should choose a software system that is flexible, reliable and integrates seamlessly with the retailer s current system. If you are a retailer considering selling vendor inventory, Retail Backbone has the experience to assist you. Please visit us at www.retailbackbone.com for more information or to schedule an online demo. 4 2011 Retail Backbone www.retailbackbone.com Integrating Vendor Inventory