Can ERP Systems Promise Retailers Vendor Compliance?

  • Written by Peter Needle
  • Published on 17 January 2019
  • Our Voice

Every retailer wishes for vendor compliance, but it’s difficult to enforce the rules in a turbulent industry. Enterprise resource planning (ERP) systems, while still a stalwart part of the retail supply chain, only provide part of the answer.

Every retailer wishes for vendor compliance, but it’s difficult to enforce the rules in a turbulent industry. Enterprise resource planning (ERP) systems, while still a stalwart part of the retail supply chain, only provide part of the answer.

Traceability vs speed

According to a recent study by the Chartered Institute of Procurement & Supply (CIPS), disparaged retailers must clean up their supply chains in order to overhaul damaged reputations.

In fact, 44% of supply chain professionals claimed that improving supply chain traceability should be the top priority of these retailers.

“Consumers want to know that the goods they are buying are procured in a fair and transparent manner,” explained David Noble, Group CEO of CIPS.

However, 35% of those surveyed also cited the retail industry’s speed in bringing new products to market as its most admirable quality. With this level of pressure on supply chain speed and lead times, how can retailers effectively prioritise transparency and vendor compliance?

ERP systems can help

The retail industry is fiercely competitive, and consumers have more choice than ever over where they spend their cash. For this reason, it’s essential that retailers make it as simple as possible for customers to shop. This means keeping production lines running and inventories optimised.

ERP systems are desperately needed to handle the huge amounts of data within any modern retail business. These solutions act as “the heart, brain, and backbone of a company”, tracking the movement of resources in real time.

The problem

ERP solutions enable the movement of information between various business activities, but don’t always examine the complete sourcing model. While this visibility is possible in many cases, it is often prohibitively expensive, especially for smaller businesses.

Therefore, in the majority of cases, subcontracting isn’t monitored. This means that vendor compliance with retailer’s requests doesn't always get enforced. While the ERP system will track your incoming supply of materials, it will not examine its original source.

This often becomes a problem only if something goes wrong. When poor quality, dangerous or missing orders impede supply chains, they cannot be traced back to source. Not only does this lack of traceability affect the ethicacy of products, it also affects the speed of the supply chain. If a factory fails to meet their deadline, closes unexpectedly or even suffers infrastructural damage, the end result is a hit to your inventory and damage to your reputation.

The solution

Segura can help to promote brand protection and enforce compliance, by ensuring that garment manufacturers only order from a retailer's approved supply chain. Retailers place orders within a database of pre-approved suppliers, and all sourcing and subcontracting is also required to stay within this database.

The further down the supply chain you get, the more an ERP solution will need to be modified to suit your vendor compliance needs, and the more this task will cost. However, our software works alongside ERP solutions as part of a bigger supply chain ecosystem, acting as a fully customisable sourcing framework. 

Segura’s licensing model is not user based, which means that our platform is affordable for businesses of any size. Our EDI transactional layer also enables communication to take place very easily and at any required level with any ERP and PLM systems already in place.

Originally Published 10/08/2015

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