A new study commissioned by Advanced Supply Chain (ASC) has revealed that approximately half of all businesses supplying retailers are failing to meet supplier terms and conditions, resulting in significant financial penalties and lost business.
The research found that 51% of manufacturers and brands supplying products to retailers have incurred financial penalties for noncompliance with supplier manuals.
A third (34%) of these brands have been hit with penalties in the past 12 months alone, with an average penalty of £1,658 ($2,219). For 10% of suppliers, penalties have exceeded £5,000.
The most common pre-retail compliance challenges include missed delivery deadlines (67%), quality issues such as damaged products and packaging (60%), and labelling problems (45%).
A fifth of the surveyed suppliers (20%) admitted to losing business with a retailer due to noncompliance, with many reporting lost business exceeding £75,000 in the past three years.
The study also found that 42% of suppliers have chosen not to trade with a retailer due to stringent supplier terms and conditions.
When setting key performance indicators for suppliers, retailers prioritise time to market (44%), fulfilling order quantities (30%), and packaging compliance (18%).
The research highlights that manual processes are often the root cause of pre-retail logistics challenges.
Businesses relying on written labels and paper-based inventory management systems are more prone to errors and delays.
A single handwritten error, for example, can disrupt an entire order or lead to rejection by a retailer.
Despite these challenges, 90% of surveyed businesses are seeking solutions to improve their pre-retail logistics, with the aim of eliminating errors, reducing lead times, and enhancing retailer satisfaction.
By optimising pre-retail logistics, suppliers can increase efficiencies, reduce waste, and improve sustainability.
ASC has developed a guide outlining five steps to streamline pre-retail logistics and deliver retailer satisfaction alongside the aforementioned metrics.
The research was conducted by Sapio Research on behalf of ASC, which surveyed 200 senior key decision-makers responsible for pre-retail logistics and compliance in the UK.
Interviews were conducted online in April 2024 among decision makers working for businesses with an annual turnover of £10m or more.
