The Advantage Report identifies the tactical competencies that drive ease of doing business and provides companies with their scores to help diagnose areas of improvement in the retailer-supplier relationship.

Some key takeaways from this year’s best-in-class retailers and suppliers:

• Agile partners are proactive, empowered, and creative: With ever-changing challenges, trend was no longer a useful measure in forecasting demand and strict fulfillment measures (like OTIF) became less important as companies valued partners that demonstrated agility in order to keep products on the shelves and in the hands of consumers.
  
  While certainly an industry buzzword, few companies are doing agility well, as this was one of the lowest performing competencies among both U.S. retailers and suppliers. In practice, we see high turnover, lower levels of experience, outdated corporate organization and policy structures hamper the ability for those on the frontlines to make decisions quickly enough to matter.
  
  
• Communicate the good and the bad: We all seem to intuitively know that communication is more important now than ever, yet there is a stark difference in how companies that are easy to do business with communicate vs. those that aren’t as easy.
  
  The need to communicate the ‘what’ is always a given, but best-in-class companies don’t skimp on communicating the ‘why’ and ‘how’, especially when it comes to challenges. This year, we saw one supplier with nearly the lowest on-time & in-full score compensate with proactive communication and resolution follow-up to place #2 in the Overall Food Supplier benchmark.
  
  
• Value your people as much as your customers do: This year, we saw longtime leaders on having capable and experienced people take a hit as companies faced labor shortages and the fall out of last year’s ‘Great Resignation’. Having the right people in place is integral to ease of business, and companies that were able to retain good people through this period have an advantage that will take other companies several years to recoup.

As we enter 2023, we see retailers and suppliers putting more importance on supporting each other’s strategy and delivering on their commitments. Agility will continue to be a requirement as consumers adjust their purchasing habits to compensate for inflation and the workforce continues to flex.

To keep up with changing consumer demand, build their competitive edge, and reduce shrink, grocers must embrace tools that help them run their operations more smoothly. 60% of fresh departments still use pen and paper to forecast inventory or calculate orders – but 92% of grocery leaders agree that using modern technology will help them attract and retain talent. As grocers struggle with frequent out-of-stocks and higher-than-normal employee turnover, they need technology that transforms operations so stores can actually meet demand.

Fresh departments using flawed forecasting and ordering processes based on perpetual inventory end up dealing with excessive shrink that leads to additional costs for both the company and consumer. Shrink has a significant impact on bottom-line performance, but it increasingly affects the customer experience too. Knowing that grocery stores are responsible for 43 billion pounds of food waste per year, 71.6% of consumers would be more likely to support a grocery retailer that is committed to reducing food waste.

Investing in and scaling built-for-fresh technology in grocery is one important example of a more significant, overarching trend I’m seeing: the increasing adoption of technology for more foundational areas of functionality. Specifically, after Amazon bought Whole Foods, retailers raced to adopt technology for their digital e-commerce functions (things like partnering with Instacart, building mobile apps and e-commerce websites, digital advertising and marketing applications, etc.).

We are now in the second wave of innovation, where grocers are driving innovation in their core functions: store operations, supply chain, and physical merchandising, all in their brick-and-mortar stores. With more digital tools entering the physical world, grocers will be able to realize the dream of “digital transformation”--not only powering e-commerce and omnichannel applications with modern technology but also reducing food waste, increasing in-stock rate, and delighting shoppers with better quality goods.