A few major (and often conflicting) objectives have been driving retailers to turn to information technology (IT) to streamline their sourcing and logistics processes. One objective is the pursuit of lower prices, which often involves excessively extended supply chains to remote, lower cost regions. The other is the quest to shorten cycle times, which is essential—but so is having quality control to ensure that companies get their merchandise on time and according to the exact specifications. With suppliers on the other side of the globe, it can be hard to check to see how things are going, and one typically finds out about problems after the fact, when the goods arrive. Therefore, although some vendor relationships are smooth and run on "automatic pilot" (for example, companies might simply casually monitor purveyors of office supplies for best prices and basic service requirements), a much deeper and more involved relationship is essential for strategic vendors such as retail goods suppliers, who must deliver to specifications, on time, and at the right cost. These vendors might be evaluated on many key performance indicators (KPIs) in a holistic scorecard-based fashion, such as on-time delivery, quality, innovation (organizational health and technology), responsiveness and customer service, security, social compliance, and so on.
Part Two of the series The Gain and Pain of Global Retail Sourcing.
Certainly, even without IT deployment, retailers must become more agile, efficient, and timely with product development, planning, procurement, manufacturing, and execution (logistics and transportation) if they are to maximize benefits from their private-label strategy and opportunistic buying. While technology plays a major role, organizations must better coordinate activities and bridge handoffs among product design, sourcing, and logistics groups to shorten lead times and ensure that "hot item" goods are on the shelf exactly when the customer wants them. Still, global sourcing is substantially more complex than domestic sourcing, and should not be attempted without adequate technological support and business process controls. Executive global sourcing mandates that are not supported with such tools to execute typically either fail or do not meet expectations. For further discussion, see The Gain and Pain of Global Retail Sourcing.
The ideal situation would be for a retailer to establish a collaborative trade platform that offers the tools, content, community, and business infrastructure to support global commerce communities and a transparent trade process. Yet, many realities typically entail the politicization of global sourcing by polarized functional and infrastructure camps inside the organization, which hampers the ability of the organization to produce necessary strategic changes. There is also little opportunity to train buyers, partners, and suppliers across an extended supply chain within such infrastructures. Ironically, control over the extended supply chain should be driven by the common need to impact delivery before the production begins, since on the tactical level, a lack of visibility results in costs becoming multiple times higher to fix problems onshore (when the goods have already arriived) than offshore.
Part Two of the series The Gain and Pain of Global Retail Sourcing.
Certainly, even without IT deployment, retailers must become more agile, efficient, and timely with product development, planning, procurement, manufacturing, and execution (logistics and transportation) if they are to maximize benefits from their private-label strategy and opportunistic buying. While technology plays a major role, organizations must better coordinate activities and bridge handoffs among product design, sourcing, and logistics groups to shorten lead times and ensure that "hot item" goods are on the shelf exactly when the customer wants them. Still, global sourcing is substantially more complex than domestic sourcing, and should not be attempted without adequate technological support and business process controls. Executive global sourcing mandates that are not supported with such tools to execute typically either fail or do not meet expectations. For further discussion, see The Gain and Pain of Global Retail Sourcing.
The ideal situation would be for a retailer to establish a collaborative trade platform that offers the tools, content, community, and business infrastructure to support global commerce communities and a transparent trade process. Yet, many realities typically entail the politicization of global sourcing by polarized functional and infrastructure camps inside the organization, which hampers the ability of the organization to produce necessary strategic changes. There is also little opportunity to train buyers, partners, and suppliers across an extended supply chain within such infrastructures. Ironically, control over the extended supply chain should be driven by the common need to impact delivery before the production begins, since on the tactical level, a lack of visibility results in costs becoming multiple times higher to fix problems onshore (when the goods have already arriived) than offshore.
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