Executive Briefings

Scan-Based Trading Technology Isn't Going Away. Distributors Need to Adapt to That Reality

Scan-based trading (SBT) is often thought of as a process solely for larger big box retailers. This business model transitions the relationship with suppliers from purchased inventory to vendor-managed inventory, with the checkout scan data serving as the channel to pay for the goods to the distributor. The data collected from the transactions is then delivered to the distributor, as a form of a receipt.

Since SBT takes the responsibility and ownership of the merchandise off of retailers, it has continued to grow in popularity in the retail world. Being only accountable for those items that actually sell, retailers are able to reduce their inventory holding costs and minimize risks of spoilage and shrinkage. It also enables them to have more control over their relationship with distributors, allowing them to easily shift with the changing needs of consumers.

Meanwhile, on the distributor side, scan-based trading technology is mostly seen as a negative. Not only are they now solely responsible for the product and, therefore, shrinkage, but they’re also faced with issues of ensuring they have accurate data and proper inventory management, items that are all supported by information sent to them from the retailer. While these challenges can certainly be frustrating for distributors, SBT systems aren’t going anywhere. Therefore, it is increasingly important for distributors to understand how they can use this business model to find new opportunities that help them overcome these challenges. Distributors have a lot to gain from the data shared by the retailer. By incorporating the pools of information collected from SBT, distributors can find ways to improve and maximize profit.

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Since SBT takes the responsibility and ownership of the merchandise off of retailers, it has continued to grow in popularity in the retail world. Being only accountable for those items that actually sell, retailers are able to reduce their inventory holding costs and minimize risks of spoilage and shrinkage. It also enables them to have more control over their relationship with distributors, allowing them to easily shift with the changing needs of consumers.

Meanwhile, on the distributor side, scan-based trading technology is mostly seen as a negative. Not only are they now solely responsible for the product and, therefore, shrinkage, but they’re also faced with issues of ensuring they have accurate data and proper inventory management, items that are all supported by information sent to them from the retailer. While these challenges can certainly be frustrating for distributors, SBT systems aren’t going anywhere. Therefore, it is increasingly important for distributors to understand how they can use this business model to find new opportunities that help them overcome these challenges. Distributors have a lot to gain from the data shared by the retailer. By incorporating the pools of information collected from SBT, distributors can find ways to improve and maximize profit.

Read Full Article