Written by Ana Jovanovic
The strongest retail industry leaders are agile, understand the need for speed and constantly explore technological advancements that could change the game. The changing patterns of consumer behavior and competitive environment have been remarkably influencing the retail businesses in day-to day operations. Being proactive in recognizing emerging trends is an essential strategy for companies to reinvent themselves and be on the top of their game. Some of the main drivers for retailers are increased consumer demands for product innovation, speed-to-market and cutting costs out of the supply chain. In order to be ahead of the pack, some global retail giants have embraced innovating their private brands, resulting in stronger profits and leading to rising confidence in the quality of private brands. Overall, we are starting to see a shift in balance between private brands and national brands on store shelves.
Reality check for current collaborative practices
In today’s retail private label sourcing and product development process, it is still a common practice for retailers to outsource their sourcing operations to independent 3rd parties. However, this process could cause uncertainties therefore, many retailers look to source direct, opposed to losing margin and paying high costs associated to the independent 3rd parties. If planned correctly, retail direct collaborative sourcing can stabilize and provide joint benefits up and down the supply chain for suppliers and buyers alike. Retail direct collaborative sourcing falls under the umbrella of the pre-product lifecycle management phase (Pre-PLM). Theme/range/line planning is a critical stage in the development of a product, category or seasonal themes. The entire retail industry bases their strategy on an accurate roadmap of line/range/theme planning viability and profitability. However, the expansion of product ranges, adds to the complexity and volume of the information exchanged between retailers and suppliers, whether through a 3rd party or not. It is a common practice for retailers and suppliers to share reams of information through emails, phone calls and face-to-face meetings, resulting in a very non-efficient way of collaborating.
Inefficiencies Slow Down Time-To-Market and Product Innovation
Due to the massive amount of work involved in the pre-PLM planning phase, buyers have limited time to invest in market research, trend analysis, trade shows and buying trips, not to mention finding and onboarding new suppliers. Consequentially, private label product developments can suffer a lack originality and initial compelling ideas from new suppliers could be suppressed. Retailers are faced with trying to find the best suppliers to make products that match their current ranges and suppliers are faced with lack of opportunities to display their products to a wider retail audience.
What Does a Successful Collaborative Solution look like?
For sustained growth and profitability, addressing all aspects of line planning though effective line/range planning software could significantly simplify and automate the sourcing, development and the final decision-making process. Through a collaborative sourcing platform, retailers have access to a digital marketplace where they can share product ideas and instantly receive products that match planned themes or seasonal ranges. Suppliers can also gain benefits by introducing product(s) and or catalog(s) to current or potential retail clients.
Collaborative sourcing software should also facilitate the exchange of supplier/factory compliance, audit and business rating information, resulting in streamlined conversations, request for quotes and sample request.
Overall, a collaborative sourcing platform is not just another finished goods on-line marketplace; but rather, it is the exclusive network in which retailers, brands, validated suppliers and factories, can connect, source, extend innovation and bring private label products to market faster. Allowing members to work “virtually”, in real time, side-by-side, seamlessly and will ultimately revolutionize how the retail industry manages product development and product sourcing for private brands.[/vc_column_text][vc_empty_space][vc_column_text]