Retail customers continuously search for opportunities to further improve internal operating efficiencies and margins. While these program request are typically well-intentioned, they often result in increased process variation, labor costs and even non-compliance charges for suppliers. It’s important that suppliers respond with practical approaches capable of delivering mutual benefit to both retail customers and their own internal supply chains.
TPG Partner Ken Kappner has “hands on” experience developing practical solutions that deliver incremental benefits across the total supply chain for both suppliers and retailers. One particular example of Ken’s work includes development and implementation of an Incentive Based Pricing Program focused on rewarding and incenting efficient customer behaviors. When his client was faced with rapidly increasing back office expenses, Ken assessed the situation and determined the key drivers were the direct result of inconsistent and highly variable customer behaviors related to order placement, claims management and returns, routing guide requirements and financial payment practices. Instead of further increasing staff and expenses required to support this variability, Ken helped his client design an Incentive Based Logistic Program that rewarded customers with a rebate for adopting efficient practices such as EDI exchanges, industry standard warranty claim rates and engagement with a multi-functional customer team focused on resolving supply chain issues. The program was enthusiastically supported by customers, allowing the supplier to standardize its’ business processes and significantly reduce back office support costs. The savings were significant and used to fund the rebate program which provided improved margins for all participating customers.
Learn how TPG’s experienced Partners and Supply Chain Practice can help your organization develop practical solutions that deliver superior performance across the entire supply chain.