Executive Briefings

E-Sourcing Crucial in Driving Financial Performance for Retailers, Grocers and Restaurants, Survey Finds

Investments into sourcing operations are paying off substantially for retailers, grocers and restaurants, according to an industry survey of procurement executives and practitioners, conducted by Intesource. Sixty-two percent of the procurement and sourcing professionals surveyed report their sourcing strategy has a direct and positive impact on company margins, profitability, working capital and cash flow.

"In industries with historically tight margins, achieving optimal sourcing performance is vital in creating a healthy balance sheet and offering quality products," said Brian Miller, vice president of services at Intesource.

For grocers, retailers and restaurants, the benefits of e-sourcing extend well beyond maintaining a healthy balance sheet. Of the procurement and sourcing executives surveyed by Intesource, 58 percent said that their sourcing strategy aids in the tracking and reduction of capital expenditures, and 46 percent reported that their sourcing programs help their organization find new money that can be invested into strategic company initiatives.

Additionally, e-sourcing continues to have a direct impact on the functional level. According to the survey:

• 77 percent of organizations experience lower costs and achieve better savings through e-sourcing

• 62 percent report that e-sourcing improves efficiency and enables the internal team to focus on more strategic initiatives

• 58 percent find that e-sourcing opens the door to new supplier relationships

Skill Gaps and Internal Resource Challenges Remain

Some organizations still aren't leveraging e-sourcing to its fullest capacity. When asked for the top internal challenge preventing their departments from running more events, 31 percent identified uncertainty around the categories they should take to auction and 27 percent reported a lack of organization-wide support for e-sourcing. Nearly 20 percent identified limited internal resources as the primary roadblock, and nearly 10 percent said the primary obstacle was a lack of qualified suppliers.

Concern over talent gaps and skill development have been top-of-mind for most procurement leaders in 2015. When asked to assess their procurement team to identify the biggest talent gaps, data analytical skills (50 percent) were in highest demand. Additional talent gaps include category expertise (identified by 35 percent of survey respondents), innovation and collaboration skills (35 percent) and negotiation skills (15 percent).

On the positive side, more procurement and sourcing teams are being viewed internally as a strategic business function.

Other survey findings include:

• 23 percent are viewed internally as a highly strategic entity, with the executive team very engaged and invested in the program

• 42 percent are viewed internally as strategic, with a solid level of executive support and enablement

• 12 percent are viewed internally as strategic, but lack executive support

• 19 percent are still viewed tactically, with a lack of internal champions outside of the procurement department

Source: Intesource

"In industries with historically tight margins, achieving optimal sourcing performance is vital in creating a healthy balance sheet and offering quality products," said Brian Miller, vice president of services at Intesource.

For grocers, retailers and restaurants, the benefits of e-sourcing extend well beyond maintaining a healthy balance sheet. Of the procurement and sourcing executives surveyed by Intesource, 58 percent said that their sourcing strategy aids in the tracking and reduction of capital expenditures, and 46 percent reported that their sourcing programs help their organization find new money that can be invested into strategic company initiatives.

Additionally, e-sourcing continues to have a direct impact on the functional level. According to the survey:

• 77 percent of organizations experience lower costs and achieve better savings through e-sourcing

• 62 percent report that e-sourcing improves efficiency and enables the internal team to focus on more strategic initiatives

• 58 percent find that e-sourcing opens the door to new supplier relationships

Skill Gaps and Internal Resource Challenges Remain

Some organizations still aren't leveraging e-sourcing to its fullest capacity. When asked for the top internal challenge preventing their departments from running more events, 31 percent identified uncertainty around the categories they should take to auction and 27 percent reported a lack of organization-wide support for e-sourcing. Nearly 20 percent identified limited internal resources as the primary roadblock, and nearly 10 percent said the primary obstacle was a lack of qualified suppliers.

Concern over talent gaps and skill development have been top-of-mind for most procurement leaders in 2015. When asked to assess their procurement team to identify the biggest talent gaps, data analytical skills (50 percent) were in highest demand. Additional talent gaps include category expertise (identified by 35 percent of survey respondents), innovation and collaboration skills (35 percent) and negotiation skills (15 percent).

On the positive side, more procurement and sourcing teams are being viewed internally as a strategic business function.

Other survey findings include:

• 23 percent are viewed internally as a highly strategic entity, with the executive team very engaged and invested in the program

• 42 percent are viewed internally as strategic, with a solid level of executive support and enablement

• 12 percent are viewed internally as strategic, but lack executive support

• 19 percent are still viewed tactically, with a lack of internal champions outside of the procurement department

Source: Intesource