The iControl Blog

The Advantages Of Scan-Based Trading For Distributors

9 October 2017

Scan-Based Trading

Can your distribution supply chain benefit from reduced inventory costs, increased sales, enhanced operational efficiencies, decreased merchandising time, and a boost in sales? Of course it can. Achieve this and more by switching to scan-based trading. If you’re looking to expand operations, expedite services, and increase your bottom line, scan-based trading is the perfect payment solution for your business. A well-implemented scan-based trading program can result in reduced inventory overheads, optimized product distribution and better retailer collaboration.

What is scan-based trading?

Scan-based trading, or SBT, is a widely-used payment solution that aligns supply and demand at the retailer’s point of sale, thereby providing substantial operational savings to retailers and distributors alike.

As a business model, SBT is a form of consignment trading where distributors maintain ownership of a retailer’s physical inventory within warehouses or stores until items are scanned and sold at the point of sale. This is the moment when inventory ownership automatically passes from distributor to the retailer. Distributors are then paid based on what has sold at the register.

Because the distributor owns the inventory they are delivering to retail locations, they maintain greater control over ordering, product placement and ongoing inventory levels.  

SEE ALSO: Top 5 Ways to Embrace the New Scan Based Trading

The many advantages of scan-based trading for retailers, distributors, and customers

Scan-based trading offers significant advantages to retailers, distributors, and customers. Unlike other delivery methods, the retailers don’t pay manufacturers until products are scanned or sold to consumers. The inventory carrying costs and shrink liability are usually shared by the parties, as opposed to being borne entirely by the retailer. On the surface, that may appear as a negative to a distributor, but the opposite is true.  Retailers who have less to worry about it when it comes to shrink are much more willing to experiment and to t allow distributors to roll out new products in retail outlets and determine their performance with less risk to the retailer.

Because Scan-based trading, done correctly, also includes visibility to Point of Sale data at the store and item level, and often in near real-time, it also helps suppliers get a clearer view of their own promotional performance. The result is increased responsiveness and smarter product placement and promotion, which leads to a better shopping experience for the consumer, and increased sales for retailers and suppliers. It also gives the distributor more time in-store to merchandise products and prevent out-of-stocks.

Scan-based trading with providers like iControl provides integrated inventory management where both distributor and retailer can access and share transactional and inventory data from a single platform. Visibility into inventory information is therefore increased for both.

Moreover, the centralized inventory management system provides a proactive approach to shrink reduction by improving delivery and credit reporting, and offering real time insights into product movement.

Specific advantages of scan-based trading for distributors

Another way a savvy distributor can benefit from scan-based trading is by becoming a preferred vendor. The distributor-retailer relationship can evolve into a collaborative business partnership, as both parties are working to achieve shared objectives. Because partners agree on details like item, price, promotion, and shrink at the onset of the scan-based trading relationship, distributors are able to service accounts better, and reduce billing and invoice issues.

By combining sales and inventory data from retailers with their own data, distributors have far greater insight to causes of revenue leakage. According to Industrial Distribution, this new way of doing business allows distributors to, “... take a deeper dive into derived insights and verify the data from the retailer. This ultimately gives them the ability to spot errors, reconcile inventory levels maintained at the retailer, and identify shrinkage issues.”

Scan-based trading touches many areas of the supply chain, such as increasing daily stock movement. Since distributors don’t have to meticulously check-in deliveries at every retail store, deliveries move faster and the cost of transportation is reduced. This leads to greater overall operational efficiency, and cost savings to distributors.

SEE ALSO: Take Control of Your Inventory: How The New Scan-Based Trading Helps

Don’t just switch to scan-based trading, switch to iControl

The iControl suite of billing and payment solutions is the perfect blend of creativity and technology that’s perfect to get the most out of Scan Based Trading. We designed our systems to foster collaboration between key players in the supply chain through integrated, easy to use software that keeps your data safe, keeps invoices and payments automated and flowing, while making data available for deep sales and operations insights. If you have any questions or would like to learn more about how we can help you inject efficiency into your distribution outfit, contact us today.

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