Manufacturers Have Issues with SBT

Mar 14, 2003
George Anderson

By George Anderson

Proponents of scan-based trading (SBT) claim the technology produces a win-win situation for manufacturers and retailers alike. Others, however, claim the reality of SBT is lower profits for manufacturers.

Because manufacturers receive payment for actual sales, the supplier now assumes total financial responsibility for shrink. As a Baseline article points out, “items that fly under the radar of the retailer’s point-of-sale reports never get invoiced.”

American Greetings discovered the shortcomings of SBT in a pilot program with Target and Wal-Mart. The greeting card manufacturer had to reduce its sales figures by $65.5 million when it took back cards from the retailers.

Moderator’s Comment: Do the positives of SBT outweigh
the negatives? How can SBT be made more effective?

It is important to note, despite its $65.5 million lesson,
American Greetings remains committed to SBT. “While the charge associated with
the conversion will have a one-time negative impact on profitability, the Corporation
is optimistic that scan-based trading will ultimately reduce costs, result in
a reduction in working capital, maximize retail productivity and throughput,
and continue to enhance retailer relationships.” [George
Anderson – Moderator

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