Scan-based trading or SBT, is an innovative retail system that helps retailers, suppliers, and distributors align processes based at the point of sale (POS). Unlike traditional retail–supplier models, SBT is effectively a consignment model, where the vendor retains ownership of the inventory at store level and is paid once the product is sold to the consumer.
The supplier or distributor has access to daily POS information in an SBT model, which automatically records data when a product is scanned and sold. Scan-based trading reduces operational costs, increases visibility over the supply chain, helps suppliers streamline distribution, automates processes, and improves business relationships between retailers and distributors. If you are ready to explore an alternative business model, here are scan-based trading pros and cons you should know.
Purchasing on consignment is a retail model that streamlines the logistics for retailers, suppliers, and distributors. Here, the supplier or distributor owns the inventory in the retailer's store. This means retailers can forgo upfront inventory costs and remit payment to suppliers once the item sells to the consumer. Suppliers enjoy more control over the types and quantity of inventory stocked and are better positioned to grow sales with access to retailer point of sale data.
Real-time visibility over sales and available inventory allows the supplier or distributor to better manage stock and the replenishment process. How? When retailers sell products to the customer, they collect point of sale data and send it to the supplier. The supplier then uses the POS data to create an invoice for goods sold, including details about specific goods sold (UPC specific), by store, and by day of the week.
Both retailers, suppliers, and distributors want to sell products to consumers. However, logistical constraints in the conventional retail model often limit the efficient flow of goods.
However, with SBT, the supplier retains inventory ownership, which means the retailer does not have to worry about carrying costs. The retailer also delivers payments once a good is scanned and sold to a consumer. Thus, it's only at the point of sale that ownership of goods moves from the supplier to the retailer. The supplier also has a better understanding of the demand for their product and can optimize stock.
SBT depends on synchrony between a retailer and a supplier. First, both parties should agree on their priorities to avoid any confusion. For example, both parties need to be realistic about achievable sales to reduce inventory problems. As the supplier, you cannot understock an item to ensure that it sells out. Therefore, a good SBT model relies on a good business relationship between the retailer and supplier.
Once you've aligned your priorities and management issues, it's time to consider an SBT software solution. Customizable solutions are the best way to achieve efficiency in the SBT model. An SBT solution that captures the following is essential:
An advanced SBT software automates data collection and sharing, reduces manual input and effort for either party. Once you move the inventory to the system, the stock levels change automatically when you scan an item during a sale.
The supplier, on the other end, has access to real-time sales and inventory data –using sales records to create an invoice and send via software. As the retailer, invoice reconciliation is simplified since all the data you need is available in the system.
Retailers and suppliers can improve business through consignment arrangements, more commonly known as scan-based trading. With SBT, you can reduce inventory costs, solve oversupply and undersupply, avoid manual data entry and enjoy timely payments. Partnering with the right software vendor helps you achieve the benefits of SBT. The iControl Scan-Based Trading (SBT) system improves automation and data management in SBT. Reach out for a free demo.