Reimagining Vendor Compliance
By: Andy Chesnut
If you attend RVCF, you know that a key focus of their fall conference is compliance. Compliance, and all the challenges and friction that come from retailers and brands trying to work together to meet customers’ needs.
Let’s back up for a minute.
RVCF’s fall conference was originally designed as an opportunity to set standards. It was designed as a platform for making life easier for companies working together and trading together as partners.
And yet, that’s not what you really see there.
The discussion gets split right down the aisle between retailers and suppliers. Such a set up means that toxicity is bound to happen. Retailers go into retailer-only sessions to rant about suppliers. Suppliers go into supplier-only tracks to rant about retailers. This is a real cause for worry because according to science, that’s not the way to build up partnerships.
In studies performed at The Ohio State University, randomly assigning individuals to arbitrary groups (such as retailer or vendor) nearly immediately alters our brains’ ability to process information related to those inside and outside that arbitrary group label. In fact, your orbitofrontal cortex, a part of your brain heavily involved in cognitive processing and decision making, becomes far less active when processing information related to people of an opposing, yet still arbitrary, group label. And when words like “orbitofrontal” and “cortex” are being bandied around, you know the situation is serious.
In short, biology is against all of us if we look at each other as vendors and retailers.
This fact is clearly on display in the industry’s approach to compliance.
Concepts like “Vendor Compliance” have become all about finding creative ways to micro-manage (ahem, retailers) and game (yes you, suppliers) each other. Chargebacks have become a source of PROFIT for some drop shipping programs. When asking retailers what they think happens because of chargeback and penalty programs, many program managers are certain that it ends up with suppliers finding creative ways to put those costs back on the retailer via price. And round and round we go.
There has got to be a better way.
This unproductive “compliance” dynamic is why Dsco beats the partnership drum so so so hard. Dsco’s core motto is “Go Together” because we are all partners and potential partners working our best together to serve consumers in better and more excellent ways. None of us wins alone, and if you think you did, then you really didn’t win.
My invitation today is the same invitation the Dsco team has been inviting you to make for years. Embrace the Partnership Mindset.
Step 1 – Get a Swear Jar
- Start by setting up a Swear Jar. (if you email me at firstname.lastname@example.org, I’ll be happy to send you one).
- Put that swear jar right in the center of the meeting room your team uses most often when discussing compliance, fulfillment, drop shipping, supplier partnerships, etc.
- ANY TIME someone uses the word, “Vendor”…put a dollar (or ten) in the swear jar.
- At the end of the year, donate that money to a charity of your choice.
Step 2 – Explore Incentives With Your Trading Partners
Take time and survey your partners. Find out what they value. Find out what gets them excited to deliver. Then incorporate that into your program with more zeal than you ever did for your chargeback program.
Last year in a private forum for leaders of the largest drop shipping programs in the world, a discussion arose around how to get away from a pure consequences model for improving trading partner performance in drop shipping. These best of the best retail dropshippers knew how important a partnership mentality was, and had experienced first hand how ineffective consequences are at improving the success of their partnerships.
A powerhouse drop ship supply partner was involved in that discussion, and brought forward some excellent ideas for helping them feel incentivized to achieve, and be rewarded for, excellent fulfillment performance. As they spoke, I saw how eyes lit up around the room and how animated the discussion became. It was a conversation folks had been waiting for but what is interesting is that none of them had to wait for a special forum to have such discussions. That insight can be continuously collected from their own trading partners.
Step 3 – Change the Title
The role of Vendor Compliance has an important job in the supply chain. It ensures that the customer’s experience is always taken care of through a partner’s delivery. And yet, Vendor Compliance is really only half of what the role could be.
That’s why I invite you to evolve the title of Vendor Compliance to Partner Success, giving the role the opportunity, power, and responsibility to expand the organization’s success with each and every trading partner.
In making this change, you are communicating a terrific and clear commitment to each and every partner on your team, and your orbitofrontal cortex is going to love it.
It just got real.