February 06, 2024 | Procurement Software
Forecasting and responding promptly to consumer demand is critical to success in the fast-paced world of online as well as offline retail.
Underestimating demand can lead to stockouts, missed sales opportunities and disappointed customers.
Amid growing competition, especially in the online retail space, these customers may not think twice before changing loyalty and switching to another business.
On the other hand, overestimating demand estimates can result in surplus inventory and a warehouse full of unsold stock.
Clearly, procurement has a crucial role in the success of a retail business.
Its role is not just limited to negotiating favorable contract terms and ensuring sufficient stock levels but also maintaining consistent product quality standards and keeping costs in check at the same time.
Additionally, it must monitor supplier performance on an ongoing basis while also communicating regularly and building strong relationships with suppliers. It must also stay alert to spot potential supply shortages or disruption.
Economic uncertainty has added to the challenges of retail procurement. Like many other sectors, the retail industry has struggled to cope with rising input costs, inflation and labor shortages.
In this volatile business environment, retailers of all sizes need to adjust strategy and revisit their procurement and supply chain operations.
Advanced source-to-pay procurement software can help retail procurement in several ways. It can provide real-time and end-to-end visibility to help procurement understand where orders are stuck and when to expect them.
From supplier selection, sourcing and contract management to supplier relationship and inventory management, procurement technology can automate most of the routine, time-consuming tasks.
By automating these processes, it can save all the time retail procurement spends on tasks such as tracking purchase orders or determining available capacity and optimizing inventory.
It can also analyze data and provide actionable insights for retail procurement to act swiftly and make informed decisions. It collates data generated from different source systems in one single place to create a single source of truth for all stakeholders.
Procurement technology also offers a full set of supplier management tools that the team needs to manage supplier information and performance. It helps procurement evaluate supplier performance with the help of quantitative and qualitative supplier scorecards. It also allows procurement to mitigate performance issues with structured, collaborative and programmatic action plans.
With AI-based spend analytics, procurement can get comprehensive spend visibility and identify additional savings opportunities. It can also bring more spend under management and eliminate off-contract buying.
In this way, procurement can go beyond its usual responsibilities and contribute toward larger strategic objectives.
Procurement technology can thus fast-track retail procurement’s evolution from a back-office function to a strategic business unit that can deliver more value.
Along with the function’s core responsibilities, AI-powered technology can aid retail procurement in understanding as well as mitigating risks. It can stress-test the supply network with the help of risk and scenario modeling. What-if and worst-case scenario planning can help procurement prepare for demand surges, rising commodity prices or other unforeseen events.
Finally, technology can help to break down operational silos and enhance cross-functional collaboration. It can allow retail procurement to work closely with suppliers, distributors as well as internal teams. All internal and external stakeholders can access the same data at the same time and align supply with demand to effectively meet customer expectations.
Learn how GEP can accelerate your retail procurement transformation.