History
Traditionally scan-based trading programs use electronic data interchange solutions as the key component to synchronize information on store locations (Organizational Structure 816), items (Price/Sales Catalog 832), daily sales (Product Activity Data 852), receivings (Receiving Advice 861), billings (Invoice 810) and payments (Remittance Advice 820) between a retailer and its Scan-Based Trading suppliers.Pros and cons
In the magazine industry, the full implementation of SBT has been estimated to provide operational savings to the retailers and suppliers of $220 million per year. SBT can lead to improved retailer relationships. The greatest competitive advantage for a supplier is increased collaboration and visibility in its retail-trading partner's organization, including reduced cost for sales staff to service retailers. By using the coordinated “bi-directional item information synchronization approach" inherent in SBT, suppliers have reported a 7% to 13% reduction in sales force time spent communicating basic item information to customers, following up, and resolving queries.A.T. Kearney, ''Data Synchronization Proof of Concept: Case Studies from Leading Manufacturers and Retailers''. With partners agreeing on details like item, price, promotion and shrink at the onset of an SBT relationship, suppliers are able to better service accounts and reduce billing and invoice issues. The improved relationships also allow suppliers to use SBT as a competitive weapon to gain exclusivity at retailers. SBT suppliers are becoming increasingly aggressive in approaching retailers and offering to use SBT on all of their products in exchange for exclusivity in the retailer's stores. Another benefit can be increased sales. SBT suppliers have estimated that their increase in sales by switching to a scan-based trading model is from 1% to 5%.Kurt Salmon and Associates, Secrets to Developing a Successful Scan-Based Trading Program, Fall 2004. Despite what this industry- paid for study shows, sales are not increased by SBT. As long as sufficient product is in the store prior sales remain the same in newspapers. Actually given theft of the product due to non scanning sales will decrease when inventory is adjusted to reflect real sales, not just used product. SBT may also cause improved visibility of product sales. As a part of SBT programs, suppliers receive sales by item by store by date. This information provides the supplier with an up-to-date view on the sales of product which is useful in sales forecasting and inventory management. There is also a reduced cost of inventory. In the supply chain for supplier-merchandized product, retailers will experience a reduction in cost of inventory. With SBT, product deliveries are based on store inventory of individual items. There is a large reduction in product held in the supply chain (typically by suppliers agents/merchandisers/jobbers). It generally causes a reduction in non-sellable product: Suppliers use SBT to lower the costs associated with non-sellable products (i.e., discontinued, damaged, or out-of-code products that retailers return). SBT provides greater visibility into scan-sales data, allowing suppliers to better understand the demand chain so that they can anticipate and reduce obsolescence and improve overall profitability. Another thing it may do is reduced time to market. SBT allows suppliers to put new products into retail outlets at no risk to the retailer, since the supplier continues to own the inventory until it is scanned at the point of sale. This allows the supplier to determine new item performance and adjust selection before wide-scale rollout. The result is increased selection of timely products which results in a better shopping experience for the consumer and increased sales for both the retailer and supplier because the "expert" on product, the supplier, who is in charge of inventory selection. On average, the time to roll out new CPG product is four weeks. Introducing new product with the “advanced” item synchronization business processes and the elimination of the item approval process inherent in scan-based trading reduces the time by at least one half. One disadvantage is the initial technological cost. There may be some other disadvantages to scan- based trading, such as increased inventory shrinkage. Also, employees have been known to take, steal consigner items for their own use, give them away, or even charge and keep; doing so can be thought to hurt their employer vendor's bottom line less that stealing vendor owned product. In addition, management could sell without scanning thereby realizing the revenue but with no cost therefore the entire sale goes directly to profit on the bottom line, but doing so isEarly History
In 1998, regional magazine and newspaper distributor Current News became one of the earliest distributors of magazines to offer scan-based trading to retailers. TheApplication to direct-store-delivered items
Scan-based trading is primarily applicable to products distributed through direct store delivery, commonly referred to as DSD. The most common application of scan-based trading to DSD products involves garden seeds, DVDs/See also
*References
*Retailer Quick Start for Scan Based Trading – SoftCare EC Inc. – January 6, 2006 *Lindner, Brian. "Scan-Based Trading (SBT) Basics – Why, Who, and How." ''TrueCommerce Blog'', 5 Sept. 2019, www.truecommerce.com/scan-based-trading-basics-why-who-and-how. {{DEFAULTSORT:Scan-Based Trading Supply chain management