As retailers step up collaboration with suppliers on private label product design, two opposing consequences emerge: they can bring new products to market faster, but at a cost -- control over the quality of that merchandise.
That's the conclusion of a report from Retail Systems Research, PLM Squared: Product Lifecycle Management Powers Private Label Merchandise, sponsored by Eqos and Microsoft.
"On the one hand retailers create long term contracts with trusted suppliers and collaborate with those suppliers on product design to improve their speed to market," said Paula Rosenblum, managing director and author of the report. "On the other hand, those same vendors cut corners to achieve that speed, resulting in inconsistent and sometimes fatal quality problems."
The study found that keeping dependable partners, inconsistent product quality, and erratic conformance to specifications top the list of business challenges in a collaborative world. It also found a "huge gap between idealized transit times from factory to point of demand and actual times."
RSR found that retailers don't evaluate their suppliers frequently enough. Collaborating with factories requires post-production audits to insure product quality is acceptable, and these audits should be supplemented by regular supplier scorecarding to insure consistency over time.
"Whenever possible, use your own employees as inspectors, rather than outside agents," the report states. "If you must use outside agents, score their results, much as you would scorecard any other vendor. Scorecard frequently to avoid any temptation to cut corners and review scorecard results regularly."
Besides improved monitoring, the report also urges retailers to capitalize on PLM technology when expected results aren't achieved. Thirty-seven percent of respondents reported a 10 to 25 percent improvement through the use of technology. However, the report also noted that the best technology isn't often used. While RSA finds supply chain visibility, supplier management and supplier scorecards are most valuable, the most commonly used technologies by retailers are product specifications and requirements, sample management and sourcing applications.
"Outsourced manufacturing is a double-edged sword," said Ms. Rosenblum. "Retailers are getting faster, but their products are not necessarily getting better. A comprehensive program of supplier management is critical to insure standards are met consistently."
Discussion Questions: Have you also seen drop off in the quality of private label assortments by retailers with the push for speed to market? What are some best practices to ensure the quality of private label offerings remains consistent? Why aren't more retailers making full use of the latest PLM technologies?