- August 4, 2017
How do Consumers Effect Global Sourcing? How Can Retailers Scale their Business and Source Better, Faster, and Smarter?
Let’s face it; most of us are consumers who love to shop. Often we don’t take the time to think about the effects consumers have on the retail industry and its global sourcing operations. Many consumers are loyal shoppers who tend to frequent the same retail outlets again and again. However, as demands change so does loyalty. Today’s consumers want both quality and variety at a decent price. And they deserve it. If shoppers can’t find what they’re looking for in one store, they will take their business to another. If retailers want to stop losing business, they need to source better, faster and smarter.
Retail sourcing and quality teams have a very important role to play – all while consumers are making the job more difficult. The sourcing arm stretches across the globe, dealing with an ever-increasing supplier base. Yet retail teams use antiquated systems and processes to maintain their sourcing operations. In fact, it’s widely known across the industry that retail professionals use email applications as the base of their sourcing program. Excel is routinely utilized to manage sourcing and product development projects and internal legacy databases house supplier/factory information. This begs the question: how can today’s retailers meet consumer demands for unique assortment and quality at fair prices?
How can retailers scale their business and source better, faster, and smarter? I’ll be brutally honest, I don’t see it happening for all retailers. Scared yet? I am. Some of my favorite retail stores won’t be here in 2020 if consumers continue to shift their loyalty. On the bright side, the retailers who do solve their sourcing problems will see great rewards.
To help prevent this loyalty shift and to shine some light on the topic of Global Sourcing, I’ve spent the last few months interviewing top retail sourcing professionals around the world. I learned that these antiquated systems and processes contribute to a high supply chain cost that constitutes approximately 1/3 of the total product cost. These inefficiencies are not only time-consuming, redundant and unreliable, they are also inflating costs. Imagine your savings if you could shrink that cost by 5%.
During these conversations I uncovered a list of common key drivers for change. If retailers want to beat the competition and be here through 2020 and beyond, they need to address these 5 key drivers:
– Fast isn’t fast enough
– Product assortments are more dynamic than ever
– Increased demand for quality and compliance
– Continued trend of smaller more frequent orders to reduce inventory
– Gaining total visibility and control throughout the order/production life-cycle
To further my interview conversation, I asked each sourcing professional how he/she plans to address these change drivers. What will it take to reduce supply chain cost and become more efficient in their retail sourcing and quality operation?
Below are the six most common answers:
- One centralized platform to have real-time visibility into their supplier network.
- Automated RFQ process for multiple suppliers & products.
- Ability to easily compare multiple quotes side by side – no more cut and paste or toggling back and forth between sheets.
- Using a consistent, reliable, and accurate “what-if analysis” function to compare costing scenarios.
- Ability to track products in real-time to eliminate surprises that effect the delivery window.
- Maintaining standardized supplier scorecards that can quickly determine which suppliers are the best and which are the worst.
In conclusion, if you are a sourcing, quality, merchandising or supplier & compliance management professional, do not wait to find a solution that addresses these 5 key drivers for change. Solutions exist although most retailers don’t like to share their secrets. To find out more about these solutions and for a complete list of the retail industry top providers, please contact me here. If you want to learn more about today’s global sourcing trends and industry best practices, please subscribe here at Global Sourcing Society.
Written by Mark Hudson, Global Sourcing Society contributor – August 1, 2017