Scan-based trading

Scan-based trading (SBT) is the process where suppliers maintain ownership of inventory within retailers' warehouses or stores until items are scanned at the point of sale.

Traditionally scan-based trading programs use Electronic Data Interchange solutions as the key component to synchronize information on store locations (Organizational Structure 816), items (Price/Sales Catalog 832), daily sales (Product Activity Data 852), receivings (Receiving Advice 861), billings (Invoice 810) and payments (Remittance Advice 820) between a retailer and its Scan-Based Trading suppliers.

While at first it would seem that the benefits of scan-based trading are mainly derived from savings for the retailer, in fact, the scan-based trading supplier is usually the driver of the trading as they receive huge benefits. In the magazine industry alone, the full implementation of SBT has been estimated to provide operational savings to the retailers and suppliers of $220 million per year. The benefits to the supplier to implement SBT include:

For retailers, the implementation of SBT has been seen as a goal as it saves money and improves customer satisfaction. The following is a list of benefits derived by retailers switching to SBT:

The Grocery Manufacturers Association (GMA) ran a test of the concept in 2000 with Schnuck Markets in St. Louis, Missouri, and Andronico's Market of Berkeley, California and a dozen suppliers. Sales went up 3% to 4% for the retailers and between 2.5% and 5.2% for suppliers. Mispricing of stock items were decreased by 70%.

Scan-based trading is primarily applicable to products distributed through direct store delivery, commonly referred to as DSD. The most common application of scan-based trading to DSD products involves garden seeds, DVDs/Blu-ray Discs, newspapers and magazines. Nearly all newspapers and magazines are distributed to retailers by the DSD method of distribution. According to an analysis by one vendor, "most major retailers in the U.S. - including CVS, Safeway, Kroger Ahold’s divisions, A&P and its subsidiaries, Hess, Barnes & Noble and Rite Aid - conduct their newspaper business using the SBT model." According to Poff "Most [retailers] rely on a third-party partner to provide oversight.

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