{"id":3105,"date":"2001-06-01T17:47:39","date_gmt":"2001-06-01T22:47:39","guid":{"rendered":"http:\/\/smperformance.wordpress.com\/?p=3105"},"modified":"2001-06-01T17:47:39","modified_gmt":"2001-06-01T22:47:39","slug":"stratvantage-consulting-llc-mikes-take-on-the-news-060101","status":"publish","type":"post","link":"https:\/\/stratvantage.com\/index.php\/2001\/06\/01\/stratvantage-consulting-llc-mikes-take-on-the-news-060101\/","title":{"rendered":"StratVantage Consulting, LLC &#8212; Mike&#8217;s Take on the News 06\/01\/01"},"content":{"rendered":"<table cellspacing=\"0\" cellpadding=\"0\" width=\"100%\">\n<tr>\n<td>\n<h3><a href=\"http:\/\/evernote.com\/\">From Evernote:<\/a><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<h1>StratVantage Consulting, LLC &#8212; Mike&#8217;s Take on the News 06\/01\/01<\/h1>\n<p> Clipped from: <a href=\"http:\/\/www.stratvantage.com\/news\/060101.htm\">http:\/\/www.stratvantage.com\/news\/060101.htm<\/a><\/td>\n<\/tr>\n<\/table>\n<h1><strong>T<\/strong>he News \u2013 06\/01\/01<\/h1>\n<p><strong><em>Scan-Based Trading<\/em><\/strong><\/p>\n<p>There\u2019s a revolution a-brewing in retail<strong>.<\/strong> It\u2019s called Scan-Based Trading, and if it really gets off the ground, every aspect of the supply chain of businesses involved in retail will be changed<strong>.<\/strong><\/p>\n<p>PriceWaterhouseCoopers defines SBT this way:<\/p>\n<p>If you could somehow marry the retailer\u2019s goal of not wanting to own inventory with the manufacturer\u2019s goal of a just-in-time, no excess inventory supply chain, then you would have something<strong>.<\/strong> The key to this marriage would be to allow market demand to dictate the supply<strong>.<\/strong> And probably the best proxy we have in the market today for demand is capturing real-time consumer purchase activity<strong>.<\/strong><\/p>\n<p>In this union of marital bliss, a manufacturer would produce a product according to demand<strong>.<\/strong> It would be transported to the retailer\u2019s shelves just in time to be picked up by a customer who would take the item to the checkout<strong>.<\/strong> The item would be scanned, the customer would pay, the manufacturer would be paid automatically, and a replacement order would be placed electronically<strong>.<\/strong> The retailer has no inventory investment, the manufacturer has optimized its supply chain, and a consumer transaction controls settlement all along the supply chain<strong>.<\/strong> That is the essence of scan-based trading, or SBT for short<strong>.<\/strong><\/p>\n<p>This is a drastically different world than the one we\u2019re living in today<strong>.<\/strong> Supply chains today are relatively inefficient, resulting in overstocks, out-of-stocks, excess inventory (and subsequent markdowns), and money lost to out-of-date merchandise<strong>.<\/strong> SBT intends to address these various inefficiencies by extending the just-in-time concept to the retailer\u2019s shelf<strong>.<\/strong> Donaldson, Lufkin &amp; Jenrette put it this way:<\/p>\n<p>We believe that the next wave in supply chain management or B2B is about to be rolled out<strong>.<\/strong> We expect the next wave to <strong>reduce retailers net investment in inventory to near zero<\/strong>, pull inventory out of the channel reducing markdown pressures and transaction costs, and substantially reduce out of stocks<strong>.<\/strong><\/p>\n<p>Basically, in SBT, retailers pay the manufacturer for the merchandise only after it has been scanned at the point-of-sale cash register<strong>.<\/strong> The retailer doesn\u2019t own the goods in its stores, or its warehouses<strong>.<\/strong> Obviously, there are many issues to solve, not the least of which is, what to do about shoplifting<strong>?<\/strong> Alert SNS reader John Gehring asked the following questions about SBT<strong>.<\/strong> I provide what answers I can<strong>.<\/strong><\/p>\n<ul>\n<li><strong>Do suppliers actually get paid 30-60 days after the sale is made<strong>?<\/strong><\/strong>\n<p>Payment is generally made a good deal more quickly after the sale using SBT<strong>.<\/strong> That\u2019s part of the upside for the supplier. There are actually three concepts involved in SBT: Scan-based Settlement, Scan-based Replenishment, and Scan-based Promotion<strong>.<\/strong> Each speeds up the ability of the supply chain to respond to events at retail such as out-of-stocks and promotions, while getting money to the supplier much faster<strong>.<\/strong> See the PWC white paper link at the end of this article for more information<strong>.<\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong>Will there finally be a backlash against retailers adopting this policy<strong>?<\/strong>\n<p><\/strong>It\u2019s hard to say. The retailers own the customer and that won\u2019t change<strong>.<\/strong> That\u2019s a pretty big hammer. I think, however, that if the supply chain can get efficient enough and responsive enough, there will be upside for everyone<strong>.<\/strong> The key is going to be the demand chain info flowing back to the supplier<strong>.<\/strong> This info is gold, gold that <a href=\"http:\/\/www.acnielsen.com\/\">ACNielsen <\/a> has been selling for years<strong>.<\/strong> If retailers can make it work in their supply chains, and manufacturers can use it to plan demand, everyone will be happy<strong>.<\/strong> But this is by no means a slam dunk. There was a lot of activity back in \u201999 on SBT, with pilots and tests, but now I think folks are waiting to see what WalMart does with it before going crazy on it<strong>.<\/strong> Nonetheless, grocery retailers such as H. E. Butt, A&amp;P, Safeway and Schnucks, and consumer packaged goods (CPG) manufacturers, including Proctor &amp; Gamble, Gillette, PepsiCo, and Coca-Cola have all tested SBT<strong>.<\/strong><\/p>\n<p>Plus there\u2019s plenty of savings for the manufacturer<strong>.<\/strong> Dreyer\u2019s Grand Ice Cream uses SBT in more than 1,500 stores, and has been since 1994<strong>.<\/strong> But they haven\u2019t had to add any vehicles in spite of recording 10 percent to 15 percent increases in volume each year<strong>.<\/strong> Here\u2019s what the Grocery Manufacturers of America pilot tests found:<\/li>\n<\/ul>\n<p><a href=\"http:\/\/smperformance.files.wordpress.com\/2013\/07\/264545b83dc5ad2154b56a9da131520e.jpeg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/smperformance.files.wordpress.com\/2013\/07\/264545b83dc5ad2154b56a9da131520e.jpeg\" alt=\"\" width=\"575\" height=\"419\" class=\"alignnone size-full wp-image-3106\" \/><\/a><\/p>\n<ul>\n<li><strong>Will the resulting margin erosion make sales to some retailers unprofitable, especially for lower-volume suppliers<strong>?<\/strong>\n<p><\/strong>SBT won\u2019t work for everyone, initially<strong>.<\/strong> But I think it will eventually be the way of the world<strong>.<\/strong> The key to making SBT work is for there actually to be no margin erosion<strong>.<\/strong> Manufacturers make up for any price pressure by becoming more efficient<strong>.<\/strong> In addition, there is a recognition that several of the traditional retailers\u2019 costs need to be rolled in to the manufacturers\u2019 margin<strong>.<\/strong><\/li>\n<li><strong>How will the huge increase in accounts receivable days outstanding look to suppliers&#8217; lenders<strong>?<\/strong>\n<p><\/strong>Lenders have to be clued in for SBT to work<strong>.<\/strong> The point of SBT is to reduce the number of days between manufacturer and sale, so this could make things better, accounts-receivable-wise, rather than worse<strong>.<\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong>Where is the opportunity to make money on this &quot;pain&quot; being inflicted by retailers<strong>?<\/strong><\/strong>\n<p>While at first blush it may seem to be all pain for suppliers, I don\u2019t think it will necessarily be a one-sided proposition<strong>.<\/strong> Both sides have to win for SBT to take over the world<strong>.<\/strong> Nonetheless, supply chain enablers are going to be the big growth B2B firms, because of SBT and many other factors<strong>.<\/strong> In order for SBT to work, all kinds of new accounting, tracking, financing, logistics, and decision support systems need to be implemented<strong>.<\/strong> All that needs consulting and applications.<\/li>\n<\/ul>\n<p>It all really boils down to WWWD: What Will Wal-Mart Do<strong>?<\/strong> The secretive retailing giant is playing it close to the vest, but indications are that, after a rocky start, its SBT experiment is yielding double-digit same-store sales growth<strong>.<\/strong> The company has said selling 100 percent of its inventory before paying suppliers is a reasonable three-year goal<strong>.<\/strong><\/p>\n<p>Regardless of how the gorillas go, there are many obstacles to SBT, some technological, some process-oriented, and some trust-oriented<strong>.<\/strong> Nonetheless, businesses that sell into retail need to be aware of this trend, especially for products that are direct store-delivered, a segment where SBT seems to be taking hold<strong>.<\/strong><\/p>\n<p><a href=\"http:\/\/www.pwcglobal.com\/Extweb\/pwcpublications.nsf\/4bd5f76b48e282738525662b00739e22\/3839a1174481e54a852569f30069022c\/$FILE\/Scan+Based+Trading.PDF\">PriceWaterhouseCoopers White Paper <\/a><\/p>\n<p><strong><em>Briefly Noted<\/em><\/strong><\/p>\n<ul>\n<li>I\u2019ve just re-ranked my list of important Internet trends in the <a href=\"http:\/\/www.stratvantage.com\/trendspot\/index.html\">TrendSpot <\/a><strong>.<\/strong><\/li>\n<\/ul>\n<ul>\n<li>I\u2019m speaking at the <em>Designing a Handheld Computing Strategy for Your Enterprise <\/em><a href=\"http:\/\/www.campconferences.com\/pda\/\">conference <\/a> in Rosemont, IL, Tuesday, June 19<strong>.<\/strong> My topic is <em>The Next Wireless Killer Apps: Will You Have to Have It<strong>?<\/strong>\n<p><\/em><\/li>\n<\/ul>\n<ul>\n<li>I\u2019ve been pretty down on the Internet appliance market because I just don\u2019t see the appeal with cheap PCs and new Net devices on the horizon<strong>.<\/strong> Nonetheless, Cahners In-Stat Group predicts a 101 percent compound annual growth rate between 2000 and 2005 for sales of 20 million units and a total of $1<strong>.<\/strong>3 billion by 2005. Most of the growth will be outside of North America and Europe, where the PC market is well-developed<strong>.<\/strong><br \/>\n<a href=\"http:\/\/www.newsfactor.com\/perl\/story\/9986.html\">Newsfactor <\/a><br \/>\n<a href=\"http:\/\/www.nua.ie\/surveys\/index.cgi?f=VS&amp;art_id=905356601&amp;rel=true\">NUA Surveys <\/a><\/li>\n<\/ul>\n<ul>\n<li>Alert SNS reader Mike Todey sent along a reference to incredible data base research at the University of Rochester (NY)<strong>.<\/strong> At a recent conference on lasers and optics in Baltimore, researchers reported that they had invented a way to use light to do a database search of 50 items in a way that can&#8217;t be duplicated in any particle-based computer<strong>.<\/strong> Rather than relying on a digital system that uses strings of 1s and 0s to encode data, the Rochester machine is analog<strong>.<\/strong> It works on a simple principle discovered in the 19th century: When different waves of sound or light combine, they create unique patterns, called interference<strong>.<\/strong><br \/>\n<a href=\"http:\/\/www.businessweek.com\/bwdaily\/dnflash\/may2001\/nf20010530_264.htm\">BusinessWeek <\/a><\/li>\n<\/ul>\n<ul>\n<li>Insight Research says small and medium-sized businesses really want fixed broadband wireless services, and projects revenues will reach $3 billion next year, 93 percent from small and medium-sized businesses<strong>.<\/strong><br \/>\n<a href=\"http:\/\/www.nua.ie\/surveys\/index.cgi?f=VS&amp;art_id=905356774&amp;rel=true\">NUA Surveys <\/a><\/li>\n<\/ul>\n<h2>Can\u2019t Get Enough of ME<strong>?<\/strong><\/h2>\n<p>In the unlikely event that you want more of my opinions, I\u2019ve started a Weblog<strong>.<\/strong> It\u2019s the fashionable thing for pundits to do, and I\u2019m doing it too<strong>.<\/strong> A Weblog is a datestamped collection of somewhat random thoughts and ideas assembled on a Web page<strong>.<\/strong> If you\u2019d like to subject the world to your thoughts, as I do, you can create your own Weblog<strong>.<\/strong> You need to have a Web site that allows you FTP access, and the free software from <a href=\"http:\/\/www.blogger.com\/\">www.blogger.com <\/a><strong>.<\/strong> This allows you to right click on a Web page and append your pithy thoughts to your Weblog<strong>.<\/strong><\/p>\n<p>I\u2019ve dubbed my Weblog entries \u201cStratlets\u201d, and they are available at <a href=\"http:\/\/www.stratvantage.com\/stratlets\/\">www.stratvantage.com\/stratlets\/ <\/a><strong>.<\/strong> Let me know what you think. Also check out the <a href=\"http:\/\/www.stratvantage.com\/trendspot\/\">TrendSpot <\/a> for ranking of the latest emerging trends<strong>.<\/strong><\/p>\n<p><a href=\"http:\/\/www.stratvantage.com\/news\/mikestake.htm\">Return <\/a> to Mike\u2019s Take<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From Evernote: StratVantage Consulting, LLC &#8212; Mike&#8217;s Take on the News 06\/01\/01 Clipped from: http:\/\/www.stratvantage.com\/news\/060101.htm The News \u2013 06\/01\/01 Scan-Based Trading There\u2019s a revolution a-brewing in retail. It\u2019s called Scan-Based Trading, and if it really gets off the ground, every aspect of the supply chain of businesses involved in retail will be changed. PriceWaterhouseCoopers defines &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/stratvantage.com\/index.php\/2001\/06\/01\/stratvantage-consulting-llc-mikes-take-on-the-news-060101\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;StratVantage Consulting, LLC &#8212; Mike&#8217;s Take on the News 06\/01\/01&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,1],"tags":[],"class_list":["post-3105","post","type-post","status-publish","format-standard","hentry","category-sns","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/posts\/3105","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/comments?post=3105"}],"version-history":[{"count":0,"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/posts\/3105\/revisions"}],"wp:attachment":[{"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/media?parent=3105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/categories?post=3105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stratvantage.com\/index.php\/wp-json\/wp\/v2\/tags?post=3105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}