Today’s retail buyers, merchandisers, planners, allocators, and procurement professionals are at a severe disadvantage. Consumer needs are constantly changing. Adding to the complexity, retail professionals need to drill down into consumer needs at a more regional or even store specific levels, which presents a big challenge. Decisions that need to be made quickly far exceed the capacity of today’s workforce and procurement system.
The retail industry is a high-visibility, consumer-focused environment which brings many retailers store brand opportunities, but also exposes major issues in the process of bringing their private label products to market. The shifting needs of target audiences are increasingly demanding. Complicating matters worse are the smaller, more specific demographics. In order for retailers to be successful in a highly competitive arena, they must adopt advanced procurement software that goes far beyond the traditional focus of supplier pricing negotiation management within a small percentage of a buyer’s category.
In this article we will go far beyond the traditional focus. We’ll take a deeper dive into innovative procurement solutions that create a combination of tools and processes to empower retail buyers, merchandisers, and category managers with greater visibility, control, and insights over the entire procure system.
What Advanced Procurement Solutions Do?
For retail procurement systems, advanced procurement software tools help to operate by integrating supplier data, product data, costing, negotiations, and the sourcing of new suppliers, thereby establishing process efficiency. Retailers who are actively leveraging procurement software technology as a critical component also achieve a much greater time to market, product compliance, as well as a more transparent supplier compliance document monitoring capability across all associated activities. As a result of these improved processes, tools, and sourcing approaches, stakeholders will have better collaboration and a collective cross-functional alignment with buyers, merchandisers, planners, allocators, and category managers alike. This will ultimately accomplish goals tied to the border private label corporate strategies.
Why do Retailers Need Advanced Procurement Software?
Everyone knows consumer online shopping continues to grow, and with the introduction of COVID-19, shopping online only intensified. Traditional retailers not only face strengthened pressure to bring customers back into stores, but also face unrelenting pressure on margins as consumers have unlimited access to lower cost products online. The typical shopper often combs the internet for the products of choice and compares prices. Ecommerce outlets will often win their business unless traditional retailers take lesser margins to attract consumers.
The pandemic’s extraordinary impact on businesses across the retail industry highlights that the traditional ways of executing procurement no longer work. Previous crises have almost always been more limited in reach. This pandemic is different because of how the widespread impact is affecting B2B and B2C services as deeply as their core supply chains.
Priorities for retail leaders and their teams have instantly shifted from running sourcing processes and negotiating contracts to partnering with business leaders so that they can immediately understand leaders’ requirements and bring new suppliers onboard.
For traditional retailers, slashing prices and taking smaller margins is not sustainable. Large brick and mortar retail chains have started to mount a comeback through the increased share of private brands. Winning the loyalty of customers is the strategy to set traditional retail apart from the growing online competition. Sourcing new and unique own brand items through advanced procurement software will help traditional retail channels to stage a comeback. Increasing private brands will not only change the face of retail but make a deep impact on procurement management software capabilities.
The procurement system process is not fixated on annual negotiations with twenty five percent of a buyer’s category anymore. Instead, procurement software technology has evolved, and the focus is increasingly turning to entire category reviews, the ability to increase store brand sku’s, and adding new suppliers who produce unique products.
Overall, the first priority should always be ensuring that people, operations, customers, partners, and suppliers are safe. This is an opportune time to challenge how things have been done traditionally. Leaders thrive on challenge, and retail executives are some of the most resilient and resourceful leaders. We should all look for new and innovative ideas and ways of working that can deliver long-term value to the business — beyond the immediate COVID-19 crisis.
Retailers Turn to eProcurement Software
eProcurement software OR procurement management software in the cloud gives retailers a long-term advantage to remain competitive in an increasingly digital world. Retailers who move their procurement software to the cloud, enable the agility and innovation that organizations need to be proactive when it comes to sourcing activities, negotiation, and strategic selection of goods that are all part of the overarching own brand strategy.
With the flexibility offered through a procure system cloud subscription, retail buyers, merchandising, sourcing teams, and category managers can make sure they’re effectively managing existing suppliers and finding new suppliers while extending the capacity of their internal resources. Overall, cloud-based procurement software (eProcurement software) includes scaling more affordably, improving team productivity, and reducing overall cost of ownership as compared to on-premise environments.
A strategic investment into enterprise procurement management software in the cloud can help both retailers and their suppliers adapt to change, reduce time to market, and reduce costs.
Cloud technology has transformed the way retailer’s source and share data and information with suppliers, allowing companies to quickly adapt to and lead change, increase delivery velocity, and reduce time to market. At the same time, cloud software allows companies to maximize their IT budget, creating new efficiencies and improving team productivity.
In general, the question isn’t whether retailers should move their procurement systems to the cloud—it’s how quickly can they make the shift? Gartner estimates that by 2025, 80% of all enterprises will migrate entirely away from on-premise servers and data centers, making it easier to quickly scale retail operations in the cloud, and integrate applications and data into a seamless customer experience.
With cloud procurement software (eProcurement software), retail teams can stay integrated and aligned—even if they’re distributed all over the world—while maintaining the maximum flexibility in managing license costs. Another area of interest for software in the cloud is purchasing management software, which is slightly different than procurement software. In the next section let’s review the differences of each and dive into the details of procurement systems a little further.
Purchasing Management Software vs. Procurement Software
Both purchasing software and procurement software perform very similar functions. Procurement and purchasing systems software are both utilized when a retailer needs to acquire products. But these two functions have different focuses and different methods for achieving their respective end goals. Let’s talk about the end goals for each.
Procurement Software – To identify company needs and fulfill the procurement of those needs. Strategic, proactive process.
Purchasing Software – To arrange company expenditure and buy goods/services for the company. Reactive process.
Now let’s review the latest procurement software capabilities as they relate to the procure system process.What Does Advanced Procurement Software in Retail Do?• Identify which goods and services the company needs• Submit a purchase request• Assess and select vendors• Negotiate price and terms• Create a purchase order• Receive and inspect the delivered goods• Conduct three-way matching• Approve the invoice and arrange payment• Recordkeeping
These procurement solutions are a way to digitally collaborate and drive costs out of the systems without squeezing profit margins. It enables retailers to better control assortment planning, cost, and time to market. Advanced sourcing coupled with spend aggregation and supplier collaboration can help companies identify and eliminate avoidable costs.
Three Tips When It Comes to Procurement Solutions in Retail
The retail landscape has changed dramatically in the last decade, with technology being an important consideration within the private label product development journey.
The increase in technology is having a direct impact on the role of merchandisers, buyers, category managers, and procurement leaders who must now consider adding more sku’s and more suppliers to their already hard to manage categories.
Below we’ve listed the top three tips for retail teams to help deliver the best value in a sector that is continually evolving.
Review Legacy Systems
With an influx of new technology coming to market, there is always a technical aspect that needs to be considered. It’s essential for the retail teams to keep tabs on their outdated legacy systems that may need to be replaced by emerging technologies.
A More Joined-Up Approach
With retailers implementing a digital assortment planning strategy, we are seeing a new breed of retail procurement in which buying teams have to consider everything from logistics and implementation to vetting new suppliers.
For example, whereas the IT department may have previously managed budgets for software and hardware, in the case of procurement software, this may now fall under the wing of the buying and sourcing teams who will often be tasked with deploying a complete end-to-end sourcing strategy. From planning and curating their assortments digitally to digital product and supplier selection, all the way through the entire product lifecycle process.
Maximizing return on investment
It goes without saying that return on investment remains key for all retail teams who continually need to demonstrate value for money.
It can be challenging when investing in procurement systems technology that is still new and emerging. How do you find the right balance between deploying innovations versus ensuring that they’re delivering value to your business? And yet it’s important you have a period of roll-out in order to monitor success.
Consider rolling out bite-sized pieces of technology. In other words, don’t go for the big bang, end-to-end approach. In the case of procurement solutions, try to roll out the very manual process of collection planning. Look to eliminate the hundreds of email solicitations from suppliers. Work towards digitally matching products to fit your ranges without having to sift through images collected, emails, PDF’s, power points, spreadsheets etc.
Mining Own Brands through the Latest eProcurement Software
Does such a technology even exist? I can tell you that it does exist and some of the biggest names in retail are either rolling it out or already using it. In this section we’ll discuss the traditional ways to find and use private labeling manufactures and take you through the retailers who are doing away with the traditional ways of sourcing products.
The traditional way to find private labeling manufactures is through trade shows, buying/sourcing trips and 3rd party broker, pre-set factory visits. You find private labeling manufacturers wherever you find factories of all sorts. However, the issue with the old school way of finding new product sources is that it takes a lot of time and comes at a high cost. For example, if I wanted to find innovative toy manufactures to produce my store brand, I would normally fly from the U.S. to Asia, spend a week at the Canton Fair in Guangzhou and another week or two conducting factory visits that were set up by a 3rd party broker. That’s 2 to 3 weeks of travel and expenses (flights, hotels, ground transportation, food etc.), the high cost and fees of a 3rd party broker, and time away from the day to day operations. Not to mention the costs associated with vetting and making sure the new factories are compliant.
Emerging ecommerce retailers have figured out a way to cut overheard and supply low cost products to consumers.
If traditional retail stores want to compete, they have to find ways to cut costs, eliminate redundancies, lower product costs, and continue to make their current margins. It sounds simple, but most traditional retailers are stuck in the old ways of doing business and unable to make real changes to the business. However, there are leading national retail chains who I would classify as early adopters, that are already shifting their focus and it’s paying off in a big way.
Early adopters like Tractor Supply Company, who is one of the 10 fastest growing retailers in the U.S., have figured out how to maintain a healthy margin, cut costs out of the product development process, and streamline assortment planning. As discussed by Store Brands in the recent article “Tractor Supply mines own brands”.
Retailers Find Success in Their Procurement Process
Some of the biggest names around the world are turning to TradeBeyond to help make a huge impact to their business processes. Large well-known retailers like Petco, Ace Hardware, El Corte Inglés, among many others feel that TradeBeyond is the missing link in the pre-product lifecycle development phase.
“Tractor Supply Company uses TradeBeyond along with its agent group in Shanghai, China. The group exclusively works with Tractor Supply and has access to the TradeBeyond app, managing much of the in-app communication with vendors, particularly those in China or overseas”, said Brittany Snellen, product developer, pet and animal at Tractor Supply Company.
Besides Tractor Supply Company, other large retailers are seeing benefits from using the simple downloadable app with built in analytics as well. El Corte Inglés, based in Spain, and the world’s 3rd largest retail department store, is also gaining consistency in the quotation format from all suppliers. “It’s easy to contact all suppliers at the same time with same information regardless of the origin and very simple to communication with suppliers through the mobile app on specific topics. In general, it is a very useful sourcing data tool that helps to bring suppliers and products to buyers without the need of physical presence, travel or tradeshows”, says Alberto Fernandez, Business Development Manager for Household, Christmas, and Decoration at El Corte Inglés.About TradeBeyondTradeBeyond allows retailers, brands, suppliers and factories to introduce, source, and match their product with retail mood boards, ranges, and themes in a digital showroom. TradeBeyond is home to thousands of validated suppliers and is designed to extend innovation and sourcing to allow retailers to bring products to market faster. TradeBeyond is the ultimate sourcing app that not only makes connections but provides an entire industry with the tools to win. For more information, visit http://www.tradebeyond.com