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How Buying Groups are Losing a Fortune to Paper and Faxes

Posted on July 05, 2019 by Chris Adams
   
2019-07-05 12_41_44-How Buying Group are Losing a Fortune to Paper and Faxes

Buying groups need data to remain relevant. And too many buying groups can’t access their data because it’s “trapped in” paper trails and faxes.

If you’ve never worked in the retail or food service sectors, you may be absolutely stunned to learn how much buying still takes place over the phone and through faxes. 

However, if you have worked in a major hardware store or restaurant, chances are very good you’ve wondered how much time and money is being wasted during this process. 

The flaws are not even so much about the 8 hours a week you may spend placing these orders. It’s more about the crucial data that is lost along the way. You’re missing out on simple data that can help you make more informed high-level decisions.

Lessons From Lowe’s

Mega-retailer Lowe's is currently experiencing very costly issues because of outdated tech and inaccessible data.

In broad strokes, Lowe’s accepted price increases from vendors on certain items, but didn’t take any actions (ie. strategically raising prices elsewhere) to offset this. Why were actions not taken? Experts are pointing to merchandising leaders who are too new to their roles, as well as a system that is too old. This legacy system was said to have prevented Lowe’s leaders from having a “clean line of sight” into the cost increases.

With the right data, Lowes could have strategically raise the price on less price sensitive items to mitigate the damage. However, they did nothing because they saw nothing.

This type of data-loss affects buying groups in every single sector, every single day.

Frontline Data is Trapped at the Point of Sale

The biggest challenge that buying groups may face in becoming data-driven is that each independent retailer has their own point-of-sale (POS) system. These systems are typically older and do not connect to the vendors or the buying group for direct orders. Some buying groups may have up to 20 POS systems that their independent members use.

Independent dealers are not interested in spending tens of thousands of dollars in upgrading their POS. Aside from the huge financial investment it represents, the existing system has become very entrenched into their business processes. 

They fear the potential onboarding nightmare that switching their entire system could present. This is particularly true in a setting like a hardware store, where a large portion of their employees may be older in age, not terribly tech-savvy, and more comfortable with a paper-based system.

This means crucial data that can drive high-level buying decisions stays trapped on the frontlines.

Independent Buyers Have Independent Needs

This data disconnect can cause independent buyers to go outside what is approved by the top level, and go rogue with their buying decisions.

Let’s say you’re a hardware store in a small Northern Ontario town. Seasonal weather shifts mean you’re going to sell far more snow blowers, shovels and salt compared to a hardware store under the same banner in the relatively mild GTA.

At the same time, demographic differences mean your customers likely have a lower household income and will be purchasing lower-end BBQs. Meanwhile, shoppers in the GTA will be more interest in the higher end Napoleon and Weber models.

This is valuable data that isn’t always propagated upwards to top-level buyers. Everyone involved is frustrated and money is lost across the board.

The Solution

The solution appears to be an agile connectivity system, that can be best described as being able to connect to multiple POS systems with multiple vendors all tied to a B2C online commerce.

But more importantly, the system needs to be able to connect to the different vendors, which then will provide electronic connectivity of transactions. This will become the data center for the groups. 

Now, the groups suddenly have the data necessary to make better buying decisions on behalf of their members and fully provide the information necessary to have an optimal product mix, in-store and online.

   
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