Page 274 - Performance Leadership

Chapter 14 Supermarket Performance Network • 263

or per day new products can be delivered. It is also important that the
time between ordering new products and delivery is very short. The
higher the frequency and the shorter the order time, the more demand-
driven the value chain can be, making use of minimal stock levels. The
standard metric for the quality of shipments (right) is OTIF (short for
“on time, in full”). This is very much connected to being fast, in order
to run an efficient demand-driven value chain. But there is more to the
quality of an order than being complete and on time. Particularly with
perishable products; factors such as the temperature of products are vital
as well. Products should also not be damaged. If there is a continuous
stream of orders, the supplier should not make many mistakes in receiv-
ing and handling the orders. Supermarkets need to have high turnover,
as they have small margins. Next in importance only to the speed of the
relationships and the quality of transactions, price negotiations should
focus on margin. However, this should not be done only for day-to-day
replenishments, but also for special promotions. For instance, the sup-
plier should be willing to fund promotions. Lastly, it should be easy to
do business. If there is a continuous stream of orders, there should be a
customer service desk, or an account manager, or what is sometimes
called a flow manager available, especially, during off-hours.
In other types of relationships the set of metrics is reciprocal in that
both supplier performance and its requirements are taken into account.
However, in transactional relationships there is not much incentive to
take this into account. Supermarkets typically are not concerned about
the profitability of their suppliers or their growth. They are, however,
willing to provide their opinion, especially if there are problems. Other
than on a contractual level, trust doesn’t seem to be a strategic theme.
That is why the column in Table 14.1 for supermarket contributions to
suppliers for transactional relationships is left empty.

Managing Added-Value Relationships
In added-value relationships, relations are strengthened typically by
additional services. Suppliers can offer special packaging for private
label products, integrate with logistical and administrative processes,
or provide extensive information on product origin, ingredients, or how
the item is prepared. The quality of the added-value relationship can
be measured in terms of how well those adaptations are done. How
many transactions go through an integrated logistical or administrative