Prescient: Scan-based Trading Up in 2005

As competition and cost-cutting intensifies, retailers and suppliers are focusing more on consumers, provider says

West Chester, PA — February 3, 2006 — Besides tallying groceries at checkout, register scanners are capturing detailed purchase information. Time was the retailer would use that data for basic accounting, plus knowing how many loaves of bread to order. But not any longer.

Competition and cost-cutting among retailers have yanked the traditional supply chain completely apart, commented Jane Hoffer, president and CEO of Prescient, a provider of supply chain and commerce solutions for retailers and suppliers.

To survive in today's price-driven economy, she said, retailers and suppliers must unite. According to Prescient's year-end data, they are doing just that.

Survival: Stores Soon Won't Own What They Sell

Hoffer said that in scan-based trading, the retailer doesn't own the merchandise on its shelves — the supplier does — until it scans at checkout. That means a dramatic reduction in inventory investment, one of retail's most burdensome line items. It also means more efficient operations on the suppliers' side, using real-time scan sales data for manufacturing and distribution planning.

Scan-based trading, in turn, allows both retailers and suppliers to spend more time on activities such as stocking and merchandising store shelves; resulting in a better experience for the consumer, she said.

In 2005, the number of supplier-to-retailer data connections managed by Prescient for scan-based trading jumped to approximately 25,000 monthly from approximately 15,000 monthly in 2004. That 67 percent year-over-year rise means more stores are embracing this model as competitive pressures mount.

Additionally, Prescient said year-over-year invoiced transactions between connected suppliers and retailers are up 35 percent, representing approximately $850,000,000 in 2005 industry sales versus approximately $625,000,000 in 2004. If the trend continues, Prescient said it is on track to facilitate more than $1 billion of its customers' scan based trading transactions in 2006.

The days of supply it and they will come are over, Hoffer said. So, now all eyes are on the consumer. Being able to see them clearly is mission critical.

Prescient Zooms in on Consumers

Having followed this metamorphosis in the supply chain since the late 1990s, Prescient has unveiled its Consumer ZOOM Demand Network. According to the provider, the model positions the shopper at the center of the transaction between supplier and retailer, yet introduces transparency so that consumer-purchasing habits are visible to each and drive the supply chain.

Prescient said that its trading community includes national retailers and suppliers in almost every category — from grocery, to automotive, to pharmacy, to quick-service food operators — conducting or converting to scan-based trading.

For retailers, Prescient said its coordination of scan sales data with supplier partners enables collaboration of other related activities, such as demand planning, trade promotions, inventory management and reconciliation. For suppliers, properly analyzing scan sales data helps in forecasting, reducing inventories, and making and selling more goods more efficiently.

Store and brand loyalty — a winning combination for retailer and supplier — increase when trading partners collaborate and share sales data with each other, improving customer satisfaction and building destination-faithful traffic, said Hoffer.

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