Calculating Costs: Switching to Scan-Based Trading

Margins are thinning, and competition growing. The supply chain is one place to start cutting costs.

In a typical retailer-supplier relationship, the retailer manages stock it owns--it purchases goods from suppliers and settles discrepancies in inventory, invoices and promotions periodically through the sales cycle. Scan-based trading (SBT), by contrast, leaves ownership of the goods in the hands of the supplier until they pass through checkout.

Here, a household goods company that sells $2 billion in products through supermarkets each year learns that five retail partners are adopting SBT, and decides to join them. As a result, the supplier will manage its 500-item inventory at each store, creating invoices only when an item is scanned (i.e., sold).

For this project, the partners will create a shared database to track inventory and sales. The supplier and the retailer must clean the data they collect individually so it can be easily synchronized in the database. They share their information via an intermediary that manages the shared database.

Click here to download the assumptions and the Microsoft Project 2000 file behind this planner, which are stored in a WinZip archive.