National Retail Federation forecasts 3.1 percent sales growth

on Friday, February 12, 2016

National Retail Federation forecasts 3.1 percent sales growth

The global retail supply chains have been presented with a wide range of challenges over the past year. In addition to having to restructure systems to support the rise of e-commerce and omnichannel purchasing, there have also been a number of economy shifts and fluctuations in oil prices that have stagnated shipping operations.

This week, the National Retail Federation announced its monthly Global Port Tracker report, performed in collaboration with Hackett Associates, which revealed that "[i]mport cargo volume at the nation's major retail container ports is expected to decline year-over-year for the next few months but the first half of the year should still amount to a 4.5 percent increase compared with the same period last year."

In the statement, NRF Vice President for Supply Chain and Customs Policy Jonathan Gold explained that merchants are focusing on inventory management and making sure they are prepared for upcoming seasonal sales. He added that it is difficult to predict this year's industry activity based on the previous year because of the recent issues faced at port terminals on the West Coast. Ben Hackett, founder of Hackett Associates, explained that the government will play a crucial role in how sales pan out in 2016.

"Governments around the globe need to support economic policy that is pro-growth and avoid actions that get in the way of the business community," Hackett stated. "This is not the time, for example, for the U.S. Federal Reserve or other central banks to increase interest rates."

Stronger economy and less unemployment
This week, the NRF also released its 2016 economic forecast report, which revealed that retail sales are expected to see a 3.1 percent increase throughout the year. Although this growth is higher than the 2.7 percent 10-year average, it is lower than what the NRF's original 2015 forecast. In addition, the organization also said non-store sales are expected to rise by somewhere between 6 and 9 percent.

Furthermore, the economy is getting stronger and unemployment rates are remaining relatively low.

"Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments - particularly in China - we think 2016 will be favorable for growth in the retail industry," NRF President and CEO Matthew Shay said. "All of the experts agree that the consumer is in the driver's seat and steering our economic recovery."

Shay also agreed with Hackett's statement pertaining to the crucial role of government agencies, indicating that they need to avoid enforcing regulations that "create hurdles toward greater capital investment." Instead, Shay proposed that the priority should be on developing policies that enable merchants to better compensate employees.

In the statement, NRF Chief Economist Jack Kleinhenz noted that as unemployment rates decrease and consumers have more discretionary income, the retail industry will continue to grow and benefit.

Cheaper gasoline
The NRF tracker report does not include automotive, gas or restaurant purchases. However, fuel prices may be a major contributing factor in consumer spending.

According to the Associated Press, this NRF retail sales report is indicative of consumer spending, "which drives 70 percent of the economy. Yet retail sales account for only about one-third of all spending, with services such as haircuts and Internet access making up the other two-thirds."

The AP revealed that AAA found the recent national average of gas prices was $1.70 a gallon, a 27-cent drop from January. This decrease in gas costs, the source argued, is "dragging down the overall retail sales figures, which include gas but don't account for price changes."

In 2015, Americans put more money away in savings than economists assumed they would, the AP revealed. Therefore, consumer spending and the 2016 economy will be largely influenced by two factors: How much people decide to put in savings and what they do with extra money that results from higher income and lower fuel costs.

Last month, consumers increased spending on vehicles, groceries and e-commerce products. And while they didn't seem to spend much on going out for dinner or drinks, the source indicated this could be attributed to the harsh weather conditions that hit the East Coast.

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Programmatic Options with Media Buying

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According to the recently published Webinar presented by Adobe entitled “The Future of Programmatic Ad Buying” $21B was spent on Programmatic Media purchases worldwide in 2015 with $11B alone occurring in the US.  Adobe is predicting that by 2018, $53B of media acquisition will be through Programmatic transactions.  Therefore, as media buying continues to evolve including more and more programmatic buying, advertisers need to be more aware of how to capture transparency around how the money is spent and what is actually being purchased.   

Let’s look at three different ways in which Programmatic transactions are currently being performed: Open Auction, Private Exchange, and Guaranteed Direct.  Each of these options have positives and negatives that we will explore and become more informed on this accelerating media purchasing option.

Open Auction
Open Auction or Open Exchange is the traditional programmatic option.   Open Auction is a Real Time Bidding (RTB) public auction in which any buyer or seller can participate.  The biggest advantage for buyers is efficiency and the elimination of the need to work directly with publishers or ad networks to negotiate the pricing and buy inventory.  

However, within RTB auctions, there are different levels of transparency that are available for inventory; fully transparent, semi-blind and blind inventory.  Fully transparent is true to its name and allows for the buyer to have full view to the publishers inventory including domain names and allows for full-scale domain optimization.  In a semi-blind auction the domains are masked with a single URL and do not allow for the buyer to optimize on a single domain.  Though, the semi-blind auction will allow for the ability to optimize the networks URL’s.  Finally, a blind inventory auction is where publishers will remain anonymous to the market.  Here domain optimization is not possible and as a buyer you are unable to determine where you are buying from.

Private Exchange
Private Exchange or Private Auction is an invitation-only RTB auction.  During this Private Auction a publisher must invite a specific number of buyers to bid on the inventory.  Inventory purchased through a private exchange tends to have a high level of transparency and visibility.  This will successfully allow for a more advanced audience targeting model.  However, the ability to scale may be limited and competitors may be participating in the same auction.

Guaranteed Direct
A guaranteed direct programmatic buy is a non-auction based approach.  Here publishers will grant access to premium inventory with fixed prices.  Through guaranteed direct programmatic purchases, a buyer may also receive guaranteed impressions from the publisher.  Additionally, with a direct purchase buyers may receive full transparency, precise audience targeting with high visibility.  This, in turn, allows for exclusive participation.  On the flip side, the purchase price for a guaranteed direct buy is the most expensive and has the least amount of scalability.


As the trend continues and programmatic media buying continues to grow significantly over the next few years, it is imperative that buyers and advertisers understand the different channels in which inventory is now able to be purchased.  By learning about and understanding how each Media Agency is playing in the programmatic space, your ability to choose the best Media partner become less of challenge and allows for a more aligned partnership with your chosen agency.  Just keep in mind what the intended outcome of the purchase is and how much transparency you need to have and you will make the right purchasing decision for your media.  
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MRA Global Industry Overview - February 2016

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Today’s guest contribution is brought to us courtesy of MRA Global Sourcing, a premier provider of recruiting solutions placing top talent in the area of supply management and procurement. 

With access to more resources than ever before, today’s highly qualified candidates are more discerning about the companies to which they apply and the job offers they accept. These sought after candidates prioritize a company’s values and culture and when it comes to selecting a future employer, are looking for an organization that fosters a culture that is aligned with their own values.

"Positive work environments and inspiring company culture are outweighing pay or benefits to highly qualified applicants. They’re looking for the opportunity to grow not only professionally but personally within their organization they chose to work.”– explains Naseem Malik, Managing Partner of MRA Global Sourcing.

The recruiting guru recommends answering these three questions about your organization as tools for revealing key traits job seekers value most:

1. What does our organization value? Beyond strategic objectives and financial goals, reflect on the impact your company has on its community. Today’s candidates are also concerned about their potential employer’s commitment to social responsibilities and look for opportunities to contribute a greater cause that goes bey

ond making money. Consider your organization’s values and mission - how you can convey these attributes during your next candidate interview? An interviewer with the ability to share the company’s higher purpose and its contributions to the common good make for a more appealing job offer for today’s modern applicants.

2.
How are employees prioritized? Top candidates value company culture and gain insight into how it’s created by getting an idea of their potential coworkers. Effectively discussing your organization’s culture with applicants begins by analyzing the positive qualities that employees across your company have in common. For example, take a look at the specific characteristics of your high performers. What traits do they all seem to share that has an impact on your company?

Try spending some time talking with your employees to get a better understanding of both their personal qualities and attitudes that they bring to the workplace. While having these conversations, also pay attention to the overall office atmosphere. Do bonding or socialization activities occur in and outside of work? Are the activities encouraged? Or is the atmosphere negative or stressed? If the latter, improving your organization’s culture should be prioritized.

3. What is our organizational structure? How is work across your organization accomplished? Job seekers in today’s highly competitive landscape are searching for alternatives to the traditional top-down organization structures. They prefer to work at companies that promote collaboration within their organizational structure that not only encourages ideas from employees at all levels, but also turns ideas into actions.

Workplace ethics and sound business practices are also a top priority of today’s candidates. They want to work at a company that holds everyone accountable for their actions, including leadership. Take into consideration your company’s organization structure. Assess the accountability measures currently in place and the ways they can be improved.

"Ensure your organization is addressing the unique needs and concerns of modern job seekers by reflecting on these components of your organization and make them a priority during pivotal conversations with candidates. Acting with self-awareness and incorporating these exercises into your organization’s hiring practices will make you all the more attractive to top performers.” adds Malik.


Supply chain and procurement recruiting remains a challenge for organizations looking to fill positions with high caliber talent and will be a topic of discussion at ISM2016. Look for experts from both MRA Global and Source One Management Services (exclusive of the Exec IN forum) at the Annual Conference taking place May 15-18 in Indianapolis.     
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XPO Logistics denies bids for Con-way truckload operations

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XPO Logistics denies bids for Con-way truckload operations
A few months ago, XPO Logistics Inc. announced that it was acquiring Con-way Inc., making it the second-largest less-than-truckload service company in the country. Through this purchase, the LTL provider obtained a handful of individual components, including Menlo Logistics, Con-way Freight, Con-way Multimodal and Con-way Truckload, all of which have helped accelerate the global business opportunities available to XPO, specifically within the transportation brokerage and contract logistics market.
At the time, XPO CEO Bradley Jacobs stated that this deal provided the company with "an unprecedented opportunity to create value for [its] customers and investors."
Freight and transportation expansion
The organization has recently decided to reject the final bids made last week by three trucking businesses to buy Con-way's truckload division, which went on sale in the middle of last year, The Wall Street Journal reported.
Jacobs explained to the source that the truckload operations of Con-way are different than what XPO usually deals with. The two companies have varying processes for distribution, since LTL transporters, which is what Con-way has primarily used, carry a combination of shipments to and from multiple locations, whereas XPO has mainly operated with a one-truck-per-customer model.
"We went through the process, we compared the offers we got with what we think we could do with it and I think we can improve it by integrating it and bringing it lots of new customers from our other service lines," Jacobs explained to The Wall Street Journal.
Over the past year, the business' shares dropped 41 percent. After the deal was finalized, approximately 200 Con-way employees were let go and seven terminals were shut down, the news source revealed. A month after the acquisition announcement, Tony Brooks was appointed to head the Con-way LTL division. This truckload sector accounted for about 14 percent of the organization's total revenue, which was $2.7 billion in the first half of 2015.
Logistics investments
"Now we're going to go full force on decreasing our empty miles and building on those 10,000 customer relationships we already have," said Jacobs.
The Con-way acquisition was one of many investments XPO has made over the past few years that have fueled its rapid expansion and enabled it to become one of the biggest providers of logistics services today. The news source also noted that cross-selling is one of the strategic tactics XPO is using to drive revenue.
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Source One Round Up: February 12, 2016

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Source One Round Up: February 12, 2016

Here's a look at where Source One experts have been featured this week!





NEW PODCAST:

Supply Management Recruiting Series Part IV
Bringing the Supply Management Recruiting series to a close, Source One sits down with Nick Lazzara and Kaitlyn Krigbaum of MRA Global Sourcing to discuss the nitty-gritty of the hiring process process for procurement and supply management professionals. The supply chain recruiting gurus share their insight into how both candidates and companies can better position themselves to fill open positions and provide long-term value.

NEW BLOGS:

MRO - Controlling the Uncontrollable: Navigating "Spot Buys"
Consisting of thousands of unique SKUs, MRO can be difficult spend category to manage.Even more challenging to control are "spot buys"- those pesky unplanned purchases that occur at random, such as replacing a roller bearing when a line breaks down. How does procurement address these needs while remaining cost effective? This week, Source One's Senior Project Manager and MRO subject matter expert explains how to approach these purchases.




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The Future of Procurement: 2016 Edition Part II

on Thursday, February 11, 2016

In this three part blog series, our experts share their supply management and procurement predictions for the upcoming year. In Part I, we took a look at how procurement is growing as a trusted resource in the organizations they serve, the ongoing challenge of lacking spend visibility, and how organizations are no longer measuring procurement groups on savings alone. 

In our follow up article, our executives weigh in on the industry's renewed interest in consultant support, how the talent pool is affecting operations, and how companies are looking at building long-term strategic relationships with vendors and suppliers. 
 
Renewed Interest in Outside Help 
There’s no doubt that strides in supply management software solutions have provided relief for procurement professionals, however based on Source One’s experience supporting hundreds of clients achieve their procurement goals, we know that software isn’t the sole answer to all the varying category-specific challenges. While e-Sourcing solutions provide organizations significant value in their own regard (e.g., streamlining processes), it doesn’t eliminate the need for man power in the form of procurement and strategic sourcing subject matter experts and analysts. In fact, over the next year, our executives foresee a growing necessity of capable, adaptable, and flexible resources to boost procurement operations and procedures – particularly for managed services. The challenge, however, is understanding the right type of provider for your organization. As we’ve seen over the last year, gone are the days of strictly outsourcing tactical procurement tasks. The future of procurement begins with understanding the maturity of your current operations and selecting a managed services provider that suits your needs and can help you get your operations to next level.

Turbidity in the Talent Pool
As Procurement gains its footing as a strategic advisor, the demands on the function as well as the quality and capability of the professionals staffing the organization are only anticipated to increase. However, as we’ve learned throughout this past year, finding and retaining top talent is a major challenge for organizations. High performers are tough to find, and in many cases even harder to attract. These top procurement talents are in high demand and are aware of their plethora of options when it comes to selecting an employer. What does this mean for companies looking for this top talent? It means facing the challenge head on with internal stakeholders to gain the buy-in to offer competitive salaries to better attract procurement talent. Our experts predict a growing need for procurement leaders to turn to their HR managers to do some convincing on the necessary salaries to attract and retain much needed talent. 

Creating Strategic Relationships
On that same note, cost will also lose some (but, not all) of its grip as the primary consideration for purchasers when selecting a new provider or supplier. Gaining steam are the value-ads suppliers or agencies offer, such as unique tools, subject matter experts, technologies, etc. Guiding this trend is the demand for strategic partnerships with suppliers companies. 2016 will be the year of fostering the evolution happening within procurement leading companies to select partners that will simplify category management and unlock innovation. 

Taking a Holistic Look
Also on the outs this year: segmented investments. While segmented purchasers never really were ideal, organizations have commonly found themselves plugging holes with different technologies and tools as different needs or challenges arise. Instead, based on our experience supporting sourcing engagements for the Fortune 1000, Source One’s executives anticipate procurement departments and company leaders pausing to ask “What are we trying to achieve as a business?” as a guide for making major purchasing decisions. Keeping this question in mind will allow companies to select solutions aligned to their overarching needs, promoting consistency and enabling long-term growth.

What else lies ahead for procurement and supply management professionals? More to come in our final installment of The Future of Procurement Prediction series.
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13 Tips for Maximing Your RFP Results

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Whether you're looking to drive down costs in an existing category of spend or source an entirely new category, administering an RFP (request for proposal) is often the preferred method for engaging vendors and suppliers. While we'd like to think suppliers will be jumping at the opportunity to compete for our business, responding to RFPs can be a complex undertaking - requiring both dedicated resources and time. As a result, suppliers are often hesitant to participate in an overly lengthy RFP process, especially if the chances of winning the business appear slim. If you're looking to maximize your RFP results, improving both the quantity of respondents and quality of responses, the first step is taking the contending vendors into consideration and working to keep them engaged through the entire process. 


Here are 13 tips for minimizing the costs and increasing the value of your RFP: 


Need additional support composing and responding to RFPs? Look no further than Source One. Sourcing is our bread and butter. Leverage our decades of experience to learn what it takes to craft business winning proposals or effective RFI / RFP responses.   

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Musings from MRA Global Sourcing: Premier Post

on Wednesday, February 10, 2016

In this recurring series, the partners and consultants of MRA Global Sourcing share their learnings, observations, and the occasional rant cultivated from years of experience in recruiting and placement for supply management functions.

At MRA Global, our mission is to help companies secure the right Procurement and Supply Management talent, and help qualified candidates find the right opportunities. We work with individuals of all generations, but for this discussion, we’ll focus on one subset: the Millennials. Defined loosely as people born between the years 1980 and 2000, this group of the population is said to have common traits that set them apart from older generations. They tend to be more bold, outgoing, and confident – as well as very tolerant and open-minded. But in our line of work, “Millennial” can have a pretty negative connotation – describing someone who is self-centered, entitled, and lacking the sensibilities that have historically effected success in the workplace. Now, of course this is not a blanket rule, and every person born between 1980 and 2000 is going to have different qualities, and may or may not exhibit those traits we associate with Millennials, positive or negative.

Generation Unrest
The Economist recently did a special feature on the youth of today.  It’s a global perspective covering everything from education to careers to family and mobility.  It’s quite telling that there continues to be extensive coverage on the Millennials as the debate rages on about what is perception versus reality when it comes to their place in the world.  It’s interesting how these themes are framed up simply as what’s important to the older generation and how those notions are holding back the youngsters. 

Almost 1.8 billion people in the world today are between the age 15 and 30 and live in a world that offers more freedom and education and recreation than it ever has in the past.  And don’t even get us started on how the technological advances are unparalleled and only increasing by the day in terms of what they offer from disruption to revolution.  What is common with hitherto generations is also not uncommon, i.e., unemployment, housing, and global volatility to name a few.  However, the changing demographics as the population continues to grow and live longer have shifted the balance in many countries to the older benefiting at the expense of the youth.  While it’s true that the former have subsidized living conditions and social programs for the latter, it can also be said that the pendulum has shifted to the point where it’s not fair and equitable anymore. The bulk of public spending is going into retirement and medical care costs – which implies that more resources are flowing from young to old when the old have more money.  

Maybe it’s iniquities like this that are causing the youth to flock toward ‘Feel the Bern’ political machinations as they feel that only a Socialistic set up would ensure parity. That obviously would be a mistake but so is the laissez-fare approach the youth take in terms of impacting this reality. They can take an easy first step in this regard.  In countries like the US to Indonesia to Japan, only 20% of the Millennials come out to vote whereas over 60% of the seniors partake of their civic duty and that plays a part in ensuring they can keep their favorable policies intact.  Where the youth are fortunate enough to be living in democracies that allow them to vote, they need to exercise that right to force their governments to pay heed to what’s important to them.

More on this unusually oppressed minority in subsequent musings as there’s plenty more to dissect. 

‘Til then - Save Big and Prosper…

MRAGS



MRA Global Sourcing is the preeminent firm specializing in recruitment for procurement and strategic sourcing, connecting the best talent with the best opportunities. Visit them on the web to learn more.
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As online sales increase, logistics jobs decrease

on Monday, February 8, 2016


As online sales increase, logistics jobs decrease
**This article was originally published with erroneous information that has since been corrected. The Strategic Sourceror sincerely thanks The Wall Street Journal for bringing the error to our attention.**

Following the holiday season, many companies saw a significant hike in online sales, which has seemingly impacted a wide range of supply chain functions, including transportation, storage, manufacturing and distribution operations.

But we should look at the overall trends for the industry, not just the post-holiday blues. Loretta Chao, a reporter for The Wall Street Journal, recently revealed that while the logistics and transportation market cut thousands of jobs last month, transportation and warehousing are still hiring more, with logistics employment ranking 6% higher since 2011 than total jobs in the same period.

Growing job markets
Chao explained that a rapidly growing e-commerce market is forcing retail supply chains to transport smaller shipments in quicker times, all while struggling to deal with higher fulfillment prices and lower profit margins. The need to support the increase in delivery and distribution jobs resulted in 1,500 jobs being added by trucking corporations, the source said.

Another industry this trend is affecting is industrial real estate, as more businesses invest in warehouse and distribution facilities throughout the country. Chao noted that warehousing and storage companies have added nearly 60,000 jobs since last month. Furthermore, the source revealed that "[t]ransportation and warehousing jobs are still hiring at a faster pace than the overall U.S. job market. The number of people employed in the industry is up 15 percent since January 2011, compared to 9 percent for total jobs in the same period."

According to the BLS, some of the top markets for job growth are retail trade and manufacturing. Since last month, manufacturers have added an accumulative 29,000 jobs to the industry. And while there have been fluctuations in these distinct areas of the economy, the report also found that the overall rate of unemployment in the U.S. has remained relatively steady at almost 5 percent.
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Source One Round Up: February 5, 2016

on Friday, February 5, 2016

Source One Round Up: February 5, 2016

Here's a look at where Source One experts have been featured this week!




NEW PODCAST: 
Listen in to Source One's Jennifer Engel and Kelly Barner of Buyers Meeting Point discuss the ins and outs of Supplier Diversity Programs as they relate to driving resiliency, sustainability, and adaptability in the supply chain. Engel shares her advice for incorporating these factors in the supplier rationalization process to help ensure your company fully benefits from having a supply base. 
NEW BLOGS:
Cyber Security and Selecting a Provider

Cyber security in today's world of hacks and data breaches it an utmost concern for companies of all sizes. As a result, many companies turn to a managed security service providers for support and expertise. So, what should you be looking for when sourcing a provider? This week, Source One's IT Analyst Iyana Lester shares 5 core considerations for selecting a provider that is best-fit for your organization's security needs. 

Selecting an Agency for Impactful Marketing
According the the Wall Street Journal, we spend about 2 years watching commercials. With all of that time exposed to marketing campaigns of hundreds of companies, it comes as no surprise that most of those messages we ignore. It takes something extraordinary to make an impact on a consumer - that something for Proctor and Gamble was an inspirational message to their consumers in their "Like a Girl". Source One's Marketing Analyst Nicole Mahaffey explains the components of the agency relationship necessary for an impactful marketing campaign. 


Data Breach Response Planning Part II
Data breaches are a nightmare for any organization and while in the ideal scenario all of our preventative measures would fend off any potential hacks, having a response plan in place is necessary. In her follow up article, Source One Project Manager Torey Guingrich explains the necessary components and departments for a data breach response plan,and procurement's role in ensuring your organization is proactively prepared for the worst case scenario. 


FEATURED CONTENT:
The Future of Procurement - 2016 Edition 
With 2015 behind us, there are a number of supply chain trends to reflect on, learn from, and anticipate in the coming year. Shifts in the market has challenged businesses to focus on sustainability, product transparency, and assess all aspects of the supplier and agency relationships. In our Future of Procurement blog series, Source One's executives reflect on the challenges and trends of the past year, as well as share their predictions for what lies ahead for procurement professionals in the upcoming year. 

Get Ready for ISM2016 and the Exec IN Forum
Bringing the Future of Procurement to ISM2016, Source One has announced its partnership with the Institute for Supply Management as the exclusive sponsor the Exec IN forum. The private conference is an extension of ISM2016's Corporate Team Experience, bringing together senior-level supply management professionals of top organizations ($1.5 billion+ revenue) to discuss the challenges and opportunities related to large supply chain operations.

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Supply chain struggles and strategies for eCommerce fulfillment

on Thursday, February 4, 2016

Supply chain struggles and strategies for eCommerce fulfillment

As people have become heavily reliant on technology and increasingly connected, there has been a surge in online sales. This is good for the eCommerce market; however, it presents retail supply chains with a wide range of challenges. In their efforts to meet the rising expectations of consumers, satisfy the need for instant gratification and improve customer service, many companies are having issues with inventory management, order fulfillment and distribution operations.

Today, people can easily find a product they are looking for online and place an order. And, in addition to shopping quickly, they also expect swift shipments. Research conducted by Peerless Research Group, in collaboration with Supply Chain Management Review and Ryder Systems, Inc., recently revealed that 31 percent of buyers expect same- or next-day delivery on locally made orders.

Obstacles in distribution operations
Supply chain leaders are tasked with managing higher volumes of inventory and making faster deliveries, all while trying to offer cheaper shipping fees. This is tough to achieve, considering the cost of order fulfillment is on the rise and can largely be attributed to expenses related to transportation and labor, the study indicated.

The research report also found that dealing with growing shopper expectations, completing orders on time, having high levels of supply chain visibility and managing increasing order fulfillment costs are the main operational challenges companies struggle with. Only 34 percent of those surveyed said that they believe their distribution processes are sufficient.

In an omnichannel environment, resolving such issues is problematic. Multiple platforms translate to different processes and complex data, ultimately expanding the potential complications and risks supply chain managers face.

More retailers are offering consumers the option of ordering online, then picking the products up in-store. This, too, is difficult for companies to manage. According to Neal Leavitt, a contributor to iMedia Connection, research conducted by the JDA Software Group last year found that about 35 percent of people who placed eCommerce orders chose to pick their items up at the physical store location, and approximately half of these consumers ran into an issue while trying to obtain their packages.

"Retailers might experience service failures because picking products from storage and packing them into unique combinations for customers is easier in a streamlined warehouse than in a chaotic store, where other customers need to be helped and orders can be misplaced," JDA Software Group Senior Vice President Wayne Usie told Leavitt.

Strategic sourcing solutions
And it is not just fulfilling online orders that sellers are struggling with. They also have to deal with returned merchandise. Multichannel Merchant recently explained that, "Every year, 15 percent of goods sold are returned or deemed excess, and many retailers do not have adequate systems in place to manage this flood of items. The traditional reverse supply chain is long and complicated, with goods traveling from consumer to retailer to vendor to liquidator to wholesaler to reseller and finally, to a secondary buyer."

However, the source also added that companies can save time and streamline operations by leveraging reverse logistics technology.

Over the next year, many businesses plan to focus on increasing profit margins, improving customer service and satisfaction, making faster deliveries and lowering costs, the PRG study revealed. One strategy the survey participants said has helped with reducing costs and increasing operational efficiency is outsourcing some supply chain functions, such as transportation and distribution.

Another approach that retailers can take to achieve these goals, and which 43 percent of companies have already begun to do, is to invest in supply chain software and applications that provide executives with enhanced access to essential metrics and analytics, as well as real-time visibility.

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Sourcing Raw Materials - Looking Beyond Price

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There’s no doubt, sourcing raw materials, like many categories of spend, is nuanced. Impacted by a number of factors, it comes as no surprise that costs of raw materials are subject to fluctuation in the market place. So, when it comes to purchasing raw or direct materials, an organization cannot just take a look at pricing trends, conduct a three-bid-and-buy, and call it day on their sourcing initiative. Smart purchasing only begins with pricing trends, but also includes other factors such as assessing the various economic and environmental drivers impacting supply and demand, and additional contending supplier operations. Before signing your company’s name to the dotted line with a seemingly competitively priced supplier, there are a number of considerations to keep in mind to assess a best-fit provider beyond their proposed pricing:

Climate Condition and Risks to the Supply Base
Companies are quickly realizing the impact climate challenges have on their business models and operations, including the shortage of key resources. Storms and other natural disasters are major disruptions for supply chains resulting in damaged facilities, reduced product demand, and lost productivity. As a result, organizations must take a look at not only the geographical regions of their supply base and understand the potential threats of natural disasters, but also the supplier’s ability to prepare and respond to minimize the cost of a supply chain disruption, should the worst case scenario occur. 

Political Environment
Global sourcing is often an enticing and in some cases a necessary option for organizations sourcing raw materials, offering lower costs, new opportunities, and access to unique resources. Along with these benefits, so comes the political risk of sourcing in these new territories. Companies looking to globally sourcing raw materials must be strategic and systematically assess the political risks associated with the region or country. While pricing may be lower in other countries, procurement departments must also take a look at the regulations in place that impact other areas of operations, and as a result, costs such as insurance, logistics, customs, and international banking fees. 

Quality Assurance
While reducing costs for many procurement organizations sounds like an immediate win, in some cases it may come at the expense of quality, compliance, and sustainability. Comprehensively assessing your suppliers and verifying product quality and conditions is critical. This may include obtaining references and conducting facility tours.

Distribution and Logistics:
Understanding the network used by your contending providers to supply a facility is crucial to determine the ideal structure to support your organization’s needs. For example, a low cost supplier may not be equipped enough with the necessary tanks to store the material to be delivered on a timely basis. As a result, in addition to proposed pricing companies must also look at a supplier’s delivery method and lead time, and the availability and capacity of storage facilities.

Companies need to not only look at the past changes in the costs of these raw materials, but also anticipate how these considerations impact future changes in costs. These drivers impact the costs of a raw materials regularly, and must be monitored proactively to ensure a company is making smart purchasing decisions.  However, many organizations lack the time and resources to manually track all the constant market changes relative to a particular commodity. This is where predictive analytics can help. Predictive Analytics provides increased visibility when managing costs and suppliers – working to streamline the strategic sourcing process by taking into consideration market changes, data, indices’ commodity pricing, and other factors. With clear insight into these market changes, organizations can make smarter and faster business decisions in regards to validating pricing and sourcing the best-fit supplier. 

This is just one of the many benefits of implementing Predictive Analytics in strategic sourcing and procurement.  To learn more about the advantages and new opportunities of Advanced Analytics, check out Source One’s latest whitepaper: The Future of Spend Management: Predictive Analytics.” The new white paper explores the gaps that lie between traditional and advanced analytics and how utilizing these tools is shaping the future of procurement. 
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