In today’s fast-moving retail environment, it’s more critical than ever that companies invest in strengthening the foundations of their business. To succeed in this ever-evolving market, business leaders must bring products to market faster, attract new customers, and stand out against increasing competition.
A tech-enabled approach to sourcing and supplier strategy is one fundamental way retailers can set themselves up to not only survive, but thrive. So, why should retailers take a second look at their supplier strategies with a technology lens? Especially in the areas of business agility, cost management and sustainability goals, implementing a digital solution for supplier strategy can make a surprising difference to boosting the health of a business.
1. Gain Essential Business Agility
The astronomical rise of e-commerce and broader omnichannel retail have given consumers the benefit of having near-infinite choices for the products they wish to purchase. The result? Retail trends are more fickle and fragmented than ever, making business agility an absolute necessity. Retailers must be able to respond quickly to new market trends or capitalize on micro-opportunities instead of losing potential revenue to competitors.
A sourcing function that uses technology to digitize and centralize key information (e.g., vendor data, strategic projects, contracts), all in an easy-to-use interface, enables greater business collaboration and provides powerful visibility into a company’s portfolio, which can help deliver much-needed agility. This allows retailers to bring new products to market faster and target revenue opportunities — such as seasonal trends or unexpected fluctuations in consumer demand — more effectively. This agility has the added benefit of allowing retailers to adjust product orders or available inventory for specific items in real time.
Such agility can be advantageous on both offense and defense. With procurement solution software that brings advanced, data-driven sourcing and stronger connectivity with suppliers, retailers benefit from a robust line of defense in managing supplier risk. Retailers today understand that their awareness of their supply chain must extend beyond the suppliers they work with directly. With a sharper, more informed view into their complex supply chains, retailers can better predict potential disruptions and adapt proactively.
2. Capture Valuable Cost Savings in a World of Increasing Margin Pressures
Traditional approaches to sourcing, such as using static spreadsheets, email or document management systems, can be operationally inefficient and error-prone — and retailers can’t afford to lose dollars to an outdated status quo when times are more competitive than ever. Maximizing cost savings is especially critical in an industry that’s already forced to embrace thinner profit margins in an effort to win consumers’ hearts on pricing, choice, quality and convenience. For retailers, greater transparency and connectivity between sourcing and financing teams can be integral to long-term success.
Adopting a procurement solution that digitizes processes brings synchronization and collaboration to an organization’s supply chain. This enables retailers to enjoy a more connected enterprise that turns the costs of inefficiency into cost savings. With a keener handle of their supply and demand equation, retailers can minimize instances of overstocks and out-of-stocks, cutting down revenues lost to excess inventory, heavy discounts or customers going to competitors.
A tech-enabled approach to supplier strategy also offers a level of transparency and engagement that empowers retailers to be smarter in managing their suppliers and contracts. By utilizing technology, companies are better able to identify supplier partnerships that can be financially optimal for their business — taking advantage of tools to re-evaluate their entire supply chain on an ongoing basis — to consistently secure the most cost-friendly relationships without compromise to quality.
3. Meet Sustainable Sourcing Demands
Consumers are increasingly opting to bring their business to retailers that share their commitment to sustainability, making it essential for companies to not only source responsibly, but also do so with a level of transparency that consumers can trust. A recent survey by McKinsey & Company of 64 chief purchasing officers in the apparel space — who manage a cumulative $100 billion-plus in sourcing value — found that environmentally friendly sourcing was a top priority and the area in greatest need of improvement in their companies.
Given the complexity of many retail supply chains, with many spanning different geographies and projects across the globe, the idea of achieving true, end-to-end sustainable sourcing can be daunting. Retailers must be able ensure sourcing integrity across their direct suppliers as well as their suppliers’ suppliers, and so forth. Only then will they be able to demonstrate true transparency in their sustainability efforts to consumers.
Strategic sourcing technology that uses automation can help retailers carve their own path to sustainability, alleviating much of the burden of ensuring supplier integrity. The right technology allows companies to gain better visibility and transparency into supplier relationships, giving them the ability to partner with those that align most closely with their sustainability goals.
Looking to the Future
A tech-enabled approach to sourcing and procurement gives retailers critical visibility into their supply chain and a valuable leg-up in an increasingly competitive industry landscape. By deploying an easy-to-use platform that employees can seamlessly adopt, retailers can equip themselves with powerful insights to make data-driven decisions that positively impact business outcomes, reduce risk, navigate unforeseen challenges, and, ultimately, help them to thrive. At the same time, the agility and transparency afforded via advanced strategic sourcing can help retailers expedite the process of bringing new products to market, keep up with consumer demands, and support sustainability efforts. As the retail space continues to heat up, the players primed for success will be those that realize the essential role played by procurement — and invest in optimizing the function for 21st century business.
Stan Garber is president and co-founder of Scout RFP, a leading cloud-based platform for strategic sourcing and supplier engagement.
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Stan Garber is Vice President at Scout RFP, a Workday company. As vice president, Stan sets the marketing and growth strategy. He previously was a co-founder in ONOSYS which was acquired by livingsocial in 2012. At ONOSYS, he led the business development and financial functions. Prior to this, he went to Case Western Reserve University where he studied Finance and Management. Outside of work, you can find Stan cooking, running, and traveling, plus being thankful he didn’t become an investment banker.