Featured Resource: Improving Retail Procurement Insights
Thinking Beyond Cost for Delivering Innovation
Whether addressing merchandising or non-merchandising spend, retail is facing some big challenges. Regulation, compliance and pressure to manage supply base against performance and risk are increasing. The retail industry in particular runs a high supply chain risk – perhaps the highest of any industry segment. This creates a need for better awareness of sourcing processes and supplier management.
Addressing spend, compliance, supply base management and risk have become paramount. Better insight and collaboration are needed to realize savings and manage suppliers. This paper looks at challenges in the retail industry and offers approaches for responding to the pressures.
Given the fact that 60% to 70% of a retailer’s costs are purchased goods and services, and the majority of its sales revenue goes to suppliers, the financial impact of successful procurement is enormous.”
Retailers need visibility into supply chain and supplier information to manage risk and performance. Procurement’s focus is usually on sourcing and negotiations for improved efficiencies and benefits. Direct spend, or Goods for Resale (GFR), is only half the issue. Retailers who also consider indirect spend, or Goods Not for Resale (GNFR), achieve more cost savings and increased operational efficiencies. This is because there are many underserved/mismanaged categories, such as marketing, professional services, travel management, IT and facilities management that can be optimized.
Modern Sourcing Solutions address the risks faced in the retail industry. Retailers must adopt sourcing and procurement approaches that go beyond cost-savings efforts alone. These tools offer abilities to reduce risk from the supply base, such as integrating spend, contract management and supplier management into sourcing efforts, or introducing compliance and regulatory monitoring into all of these activities.
Increasing collaboration and stakeholder alignment is the key to solving retail challenges. Retail procurement must look beyond cost savings as a measure of success. They must align their efforts with the wider operational challenges facing the industry.
* Read the full paper HERE.