Executive Briefings

Got the Goods?

Eqos: An Intelligent Approach to Global Sourcing in Grocery Retailing

Picture the scene...

It's first thing Monday morning in the bustling offices of a national retailer. It's all hands on deck as the team comes out of its weekly planning meeting. There's a lot going on...

 

It's been several months now since the company decided to expand beyond its traditional grocery categories to offer a range of homeware products, including a mix of popular branded products such as microwaves, grills, kettles and toasters, as well as a collection of private label cookware, bedding and home furnishings, with three different product lines to suit every budget.

 

The new ranges are going down well with customers, a fact reflected in last quarter's revenue figures. But the expansion has been putting a lot of pressure on the merchandise and buying teams who are struggling with the complexity of managing a larger volume of quotes and orders in entirely new product areas. Costs here have been rising as more administrative staff have been taken on to cope with the workload.

 

The team has been busy creating and sending out RFQs to suppliers for the new range of soft furnishings. Most of the RFQs have been returned on deadline but some are missing. One of the assistants is sending out reminders to the suppliers who haven't responded yet. In the meantime the quotes are being entered into the central planning spreadsheet. Some of the more specialist suppliers are quite small - a lot of the quotes are being sent in by fax. There are hundreds of quotes to work through. Entering the details into the spreadsheet is proving to be really time-consuming. Some of the faxes aren't coming through clearly so the team is having to double check some of the numbers with suppliers to avoid errors.

 

The planning process for a brand new range of 'back to school' products, including uniforms, lunchboxes, sports equipment and stationery is underway. This theme will be complemented with a range of lunchbox food and drink options when the school semester actually begins. It's important that the items all arrive in store at the same time. The foray into apparel is a big gamble for the retailer, but with busy mothers a significant part of the retailer's customer base, there's a real opportunity to capture some additional revenue here. But keeping track of the progress of all the different items is proving quite a challenge. The apparel items are apparently now en route from China by ship, but there appears to be an information black-out as no-one is exactly sure when the shipment will dock in port.

 

One of the buyers has just returned from a buying trip to China where she visited a trade show focused on cookware - the next planned private-label line in the homeware section. She met a number of suppliers interested in working with them. Looking at the pile of business cards on her desk the excitement begins to fade somewhat. It's down to business as she works through the cards and contacts each supplier to kick-off the audit and product sample testing process. If things go well she'll need to make sure all the necessary information is set up in the supplier system so orders can be placed as soon as possible in time for the launch at Christmas. Time is of the essence.

 

Sound familiar?

Grocery retail trends


Grocery retail trends

 

The third largest spend item in the household budget after housing and transport, food and grocery accounts for nearly 50% of every dollar of retail spend. The market continues to grow, benefiting shareholders and customers alike as retailers strive to increase revenue and profit margin, opening up more stores and expanding and improving their product offerings and prices.

 

In the US the top 50 grocery retailers generated $454 billion... a 10% increase on 2006...

 

In the year up to March 2007 the top 50 US grocery retailers generated $454 billion (£218 billion), representing an almost 10% increase on the previous year[1]. The customer experience has never been better, with those retailers adding 8 million square feet of sales space in 2007 alone.

 

Even in the further developed UK market, the grocery sector saw a growth of 4% on 2006, with a market worth £128.2 billion ($266.7 billion)[2]. The more saturated European market grew relatively modestly to EUR846 billion ($1,235 billion) in 2006, a 2.2% increase on the previous year[3].

 

With so much at stake, it's no surprise that the grocery sector is such a fiercely competitive market. Over recent decades, competitive forces have dramatically changed the face of grocery retail as we know it, with the steady growth of the supermarket giants all but wiping out the smaller often family-owned 'corner shop' grocers. But not even these new market leaders can afford to rest on their laurels, with ambitious sparring partners and new market entrants competing for market share.

 

international expansion:

The continued expansion of supermarket juggernauts Tesco (UK) and Carrefour (France) pose not only a threat to the smaller grocer, but also to giants like Wal-Mart (US), who now faces stern competition in its home territory after many years of almost unchallenged operation.

 

Tesco has begun its US market onslaught... French retailer Carrefour has 345 stores in China...

 

Tesco's US onslaught began in November 2007 with the opening of six Fresh & Easy stores in California. The company already operates in 11 markets in Europe and Asia, where it is the leader in five countries.  Carrefour has retail outlets across Europe as well as in South America and Asia, including 345 stores in China.

 

discount retailers:

In Europe, German discount retailers such as Aldi and Lidl have established an impenetrable home market and have spread rapidly across the continent competing fiercely on price.

 

The discount model is set to bring further change and instability to the US market, where the charge is being led by Aldi's primary competitor Supervalu (with its Albertson's and Save-A-Lot brands), which is now the country's third largest grocery retailer.

 

new store formats:

With a wider range of larger 'out of town' and smaller 'local' convenience store formats customers have more choice - and less loyalty - than ever before. In the Asia-Pacific region, the convenience store format has enjoyed overwhelming popularity, with more than 93,000 new stores opening in the last few years. Japan leads the way, with in excess of 700 stores per million people[4].

 

online shopping:

Alternative channels such as online stores and home delivery networks offer armchair grocery shopping, often from new market entrants. In the US, Amazon.com stocks more than 22,000 non-perishable items for free home delivery, offering significant discounts on specialist products as well as everyday branded goods.

 

Amazon.com stocks more than 22,000 non-perishable items for free home delivery...

 

In August 2007 Amazon went a step further to challenge traditional grocery retailers, launching the AmazonFresh service which delivers fresh, frozen and non-perishable items to customers in the Seattle area.

The sourcing opportunity

In response to these competitive pressures and the proliferation of choice offered to consumers, today's grocery retailers are transforming their businesses by developing value-added products and services to attract and retain customers. To do this effectively and efficiently, these strategies rely on advanced sourcing capabilities.

 

private label initiatives:

With low-margin branded goods that are widely available offering retailers little room to differentiate, grocery retailers are taking control of their merchandising effectiveness and brand integrity by developing own-brand product ranges. Whilst in some cases the retailer owns the manufacturing operations, the majority of retailers work direct with third-party suppliers to produce branded goods on their behalf.

 

Popular examples of private-label products include tiered discount or 'value' ranges to high-end premium ranges, as well as category-specific lines such as popular organic or theme-related products.

 

 

41% of sales in fast-moving grocery stores in 2008 will be private label...

 

The ability to develop own-brand products also give retailers the opportunity to 'think outside of the box' and develop products in a format that otherwise might not have sold well, or in some cases been allowed to have sold at all. For one US retailer, a ban on the importation of Mexican avocados with seeds led them to develop their own range of fresh seedless avocado products and an entire range of similar SKUs, generating profitable revenue that otherwise would have been lost.

 

According to a survey of 60 US retailers conducted by AMR Research, 41% of sales in fast-moving grocery stores in 2008 will be private label[5] - compare this to 22% in 2002. In Europe this number is already far higher, with an average 45% of products sold via private label.

 

 

 

 

more than grocery:

In an attempt to capture a larger share of the consumer dollar and tap into higher profit margin opportunities, grocery retailers are expanding their offerings to include apparel and other non-food related merchandise, stocking everything from toys, electrical goods, furniture and stationery to sports equipment.

A model pioneered by US grocer Wal-Mart, other grocery retailers have followed the trend, attracted by the higher margins offered by other non-food categories, as well as an opportunity to appeal to customers as a 'one stop shop' destination. Tesco now sources over £1 billion of non-food and clothing items per year and already has an estimated 7% share of the UK's non-food retail market.

multi-channel retail:

The trend towards customer-segmented store formats is increasing in popularity, with retailers operating multiple retail brands and store formats to appeal to different market segments and customer demographics. In the US for example, H.E. Butt's Central Market stores appeal to the high-end of the market, whilst its H-E-B plus! superstores offer destination shopping based on a more typical mass market appeal grocery store format. 

 

sourcing strategies:

The effective use of sourcing strategies is becoming a business differentiator in its own right, helping retailers to stay ahead of their competitors. 

 

·         agile sourcing - Retailers who are able to respond quickly to changes in market demand stand to profit by sourcing and adapting products ahead of the competition. By reacting to the latest consumer trends for low-carbohydrate, trans fat-free, organic and other health-driven fads, or the hottest children's toy or latest line in home furnishing fashions, retailers seek not only to satisfy consumer demand, but also to claim valuable PR points in the race to be seen as ahead of the game.

 

Managing changes in supply effectively, whether planned or unplanned, can also be a major source of competitive advantage. Whether due to unforeseen natural disasters or political unrest, dramatic increases in government tariffs or limitations to import quotas, or simply changing to a more local supplier to meet deadlines, retailers must be able to act nimbly and seamlessly when changing between sources of supply.

 

·         responsible sourcing - Although the 'pile 'em high and sell 'em cheap' strategies of the 1990's continue to have major appeal in some markets, in others, discount strategies sit alongside products that satisfy more recently popular green, ethical and even politically-focused sourcing philosophies, where products are often sold at a premium.

 

With today's consumer more aware of where their products come from and the impact they have on the environment, communities and economies, grocery retailers need a tighter grasp of product origins. In the UK, Sainsbury's anticipates sales of Fairtrade products to double in 2007. Equally, the retailer is moving away from sourcing products internationally in preference for British-produced vegetables and dairy products and is making a conscious decision to source sustainable products such as line-caught fish.

 

improving sourcing effectiveness

Retailers can achieve significant cost reductions by integrating and improving siloed systems and processes. By ensuring more effective collaboration, more accurate data integrity and improved inventory planning, retailers can benefit from faster time to market and improved product margins.

 

Grocery retailers need the ability to respond to changes in the supply chain quickly and responsively in order to ensure on-shelf availability. According to a report from ECR Europe[6], when consumers are faced with out-of-stocks, 37% will, on average, buy a different brand, whilst 21% are likely to go to a different store. Another 9% will decide not to buy the product at all. To prevent this, close integration between the demand signal and suppliers is critical.

 

are you ready?

How retailers respond to changing market dynamics varies tremendously. Global sourcing has changed the face of grocery retail worldwide. By consolidating spend across retail brands and locations, retailers can leverage pricing advantages and product quality and consistency. By sourcing globally, grocery retailers have the ability to source from a broader range of suppliers, taking advantage of cheaper products and seasonal goods from across the world. Options for private label ranges are putting more control into the hands of retailers.

 

But capitalizing on these opportunities isn't always easy. Without the appropriate infrastructure, processes and systems in place, taking advantage of supplier consolidation and other sourcing opportunities can result in a lot of pressure on the business. With growth top of the agenda for most retailers, the problem can only get worse. Spreadsheets can only take you so far.

 

Whilst the administrative costs and delays related to cumbersome manual processes are obvious, they are small in comparison to the revenue opportunities lost and costs incurred through poor on-shelf availability, lack of supply chain visibility, and poor supplier performance. Lack of insight into supplier practices can have a devastating effect on the reputation and brand power of the retailer, who risks brand damage and the potential loss of future revenue from ever-demanding and discerning customers. In such a competitive market environment, grocery retailers can't afford to make such costly mistakes.

Intelligent sourcing

Designing, sourcing and buying goods can be a complex process that is typically hampered by the extensive use of spreadsheets, emails and phone calls. The need to key and re-key data from paper to system or between unconnected systems is not only inefficient but can lead to unnecessary errors. Errors in processing or having to make simple changes to product components or information on packaging can incur precious time delays and unnecessary costs. Updating and sending out multiple versions of documents to suppliers - even by email - requires a significant amount of human resource. Duplications and misunderstandings are always a risk. Lack of visibility into the status of an RFQ for new products, or the progress of a re-order shipment from factory or distribution centre to store prevents retailers from having an up-to-date view of their business, making fire-fighting the norm and effective decision-making difficult at best.

 

Throwing more resources at the problem might help, but it's not the long term answer.

 

Until now, the ability to help grocery retailers manage critical sourcing functions effectively has been an issue largely unaddressed by IT vendors. But today an increasing number of retailers are moving away from home-grown and bespoke systems in favour of innovative software that helps formalize best practices and helps under-pressure grocery retailers manage and scale their businesses.

 

According to a survey carried out by AMR Research and the National Retail Federation's (NRF) CIO Council, retailers planned to focus 60% of overall IT spending on implementing and supporting packaged software, reflecting a massive change in how retailers typically develop systems[7].

Already in place with multi-category grocery retailers such as Tesco, Sainsbury's, and H.E. Butt, Eqos PLM, Sourcing and Supplier Management solutions are helping sourcing professionals establish best practices and automate processes to achieve greater effectiveness and efficiency in their sourcing programs. Whether you are a retailer of grocery, general merchandise, apparel or hard lines, the Eqos solution provides made-to-measure support based on established templates for best practice processes.

 

sourcing for grocery

The Eqos solution supports the entire grocery sourcing process - from sending out RFQs to known suppliers or establishing connections with new ones at trade shows, to working with suppliers on private label product development and packaging, right through to delivery in store. The system enables every person or organization involved in the process to use the system to manage their day to day tasks, handing off tasks smoothly along the process between internal project participants as well as external organizations such as auditors, agents, brokers and suppliers.

 

Managing the sourcing lifecycle

Mentioning the words sourcing and grocery in the same breath may conjure up negative images of highly charged reverse auctions where powerful retailers beat up their suppliers on price. Whilst reverse auction events can be appropriate in business scenarios such as the procurement of low-margin commoditized goods, the Eqos system focuses on strengthening a retailer's ability to support more strategic and value-added sourcing initiatives such as new product development and private label sourcing, at the same time as managing the critical path for everyday replenishment items.

 

 

 

Accessed via a web browser interface, the solution allows retailers to formalize best practices across the entire sourcing process - and where it integrates with other merchandising, financial and fulfilment systems and processes - in order to provide its internal and external users with a consistent approach to sourcing. As retailers expand further into private label products this becomes of increasing importance.

 

range fulfilment: Linking individual products into product ranges means that merchandisers and planners can manage groups of products against defined critical paths in order to meet seasonal launch dates for events such as Halloween, Mother's Day or Christmas. The range fulfilment facility enables retailers to manage the lifecycle and critical paths of entire ranges, calculating the impact on the range of any out-of-tolerance metrics including delays to individual items.

 

sample tracking and product testing: A retailer's quality control groups are typically involved throughout the sourcing process, whether it be testing samples from branded suppliers or more in-depth testing for private label products. Depending on the type of product, there may be several iterations of tests throughout the lifecycle of the product. The testing process can be monitored against predefined critical paths, ensuring that any delays in the testing process are highlighted and the relevant users notified so that the sourcing process isn't held up. Test results can be stored with other product information in the Eqos system for future reference.

 

product and packaging design: The Eqos solution allows designers to capture information about a product, its design and properties (such as size variations, or the origin or specification of product components) as well as information that is legally required on packaging. Product design graphics generated in external CAD systems can be uploaded as files into a central information repository, or simply stored in photo format along with any related product information, making it easily accessible and ready for re-use when needed.

 

product sourcing: When product specifications are complete and product merchandisers have decided on the order quantities required, Request for Quotes (RFQs) are then made available to the retailer's sourcing offices and agents via the web-based Eqos system. Once received, the sourcing offices distribute the RFQs to the appropriate suppliers, who submit their bids via the Eqos solution. Any changes to the RFQ are made within the system and notifications are sent to suppliers who can then go online and amend their bids appropriately.

 

The ability to make changes once and manage the update process centrally can save buyers and suppliers, hours of time and reduces the complexity and risk of error involved in managing numerous versions of a spreadsheet. Reducing this risk in the bidding phase saves retailers both time and money and creates a level playing field on which suppliers can compete fairly. By using the same consistent process, retailers can easily replicate and extend best practices across sourcing initiatives and out into new sourcing locations.

 

quote management: Quotes are compared automatically, presenting the retailer with the best options available based on detailed quote information and comparative criteria. Information about logistics options and various pricing implications for import and duty rates (where appropriate) gives the retailer an instant view of the total landed cost for each order, improving the retailer's ability to analyze and compare quotes in order to conduct better informed negotiations with suppliers. What is often managed in complex spreadsheets requiring the manual input of large amounts of data is available via Eqos in a simple report.

 

order management: Once orders are placed, buying departments need to maintain control over purchase order amendments - regardless of whether their chosen suppliers are large, small, IT savvy or with minimal access to technology. They also need assurances that correct information is transmitted throughout the company and its trading partners and that advanced shipping notices (ASNs) trigger the relevant sequence of events. Eqos Order Management proactively manages purchasing-related information flows, automatically alerting suppliers about new and updated order information, encouraging on-time shipments and deliveries.

 

logistics visibility: The ability to track orders between manufacturers and distribution centerss helps retailers manage their supply chains more effectively by proactively monitoring an item's critical path. Eqos's Logistics Visibility functionality enables retailers to link to supply chain and logistics systems either internally, or at suppliers and third-party logistics service providers. The system tracks SKU-level details of products in transit at each point in the process, alerting retailers to any delays or mismatches in anticipated order quantities.

 

Eqos worked closely with UK retailer Debenhams to enable their Eqos system to track the physical and information flow of goods between the retailer, its suppliers and third parties, allowing it to see exactly what orders have been acknowledged and accepted, any changes that have been made, and what products are in the logistics pipeline.

Supplier management

Working more closely with suppliers in a structured and thorough manner is both a necessity and an opportunity. The risk of negative headlines and blows to consumer confidence regarding product issues - such as the safety problems inherent in food and drink production, or poor overseas labour practices - the continual threat of supply disruption, and other risks loom as daily concerns.

 

The Eqos solution assists in all aspects of supplier management. By giving suppliers access to the system via a web-based interface, retailers can communicate easily with suppliers to get relationships up and running quickly, assess and maintain audit and compliance standards, and drive continuous improvement through performance monitoring and scorecarding.

 

This provides a platform for retailers and suppliers to not only work together more easily and improve the effectiveness of relationships, but also to improve the quality of relationships to facilitate closer collaboration.

 

supplier on-boarding and registration:

Suppliers must be registered and approved prior to gaining full access to the Eqos solution. Based on a decade of managing global supplier networks for some of the world's largest retailers, Eqos Supplier Hub Management provides a single source supplier directory supported by self-registration, administration and security features.

 

Retailers can enter supplier detail themselves or can invite suppliers to enter their own details about their organizations, manufacturing facilities, and products. This information can be audited formally at a later date by internal or third-party audit companies.

 

Supplier performance management: Eqos Supplier Performance enables retailers to capture on-going supplier performance metrics to draw suppliers into a continuous improvement process. Using scorecards based on formalized objectives and targets agreed in advance with suppliers, retailers can monitor performance over time. This provides a foundation for retailers to work collaboratively with suppliers to improve performance areas such as on-time delivery, product quality and compliance variables.

 

The system determines non-compliant events and uses critical path management to manage corrective actions and resolutions. Its KPI management capabilities allow retailers to manage and benchmark both the performance of suppliers and individual products, providing a feedback loop to future merchandise planning and sourcing initiatives.

 

Supplier Product Introduction For retailers wanting to take speedy advantage of new supplier connections made at trade shows, the Eqos system makes it possible for suppliers to insert themselves into the retailer's buying process quickly and easily. When a buyer meets a new supplier he is interested in, he hands over a business card. The card carries details of how to log onto the retailer's Eqos system to register their details. The supplier can also provide descriptions of products, along with photos, production and pricing information. Back in the office, the buyer is alerted to the information submitted by the new supplier. Using the system to procure samples if needed - making sure that all necessary documentation is completed - and log the results, the buyer can then approve the supplier and begin the usual ordering process. This functionality can save buyers what would typically take hours of paperwork and email/telephone communication to start trading with the new supplier. The system enables retailers to speed up the time it takes to get new products into stores, and at a much lower cost.

KPI management: The Eqos KPI Management module is a network-wide performance system that collects and analyzes key performance data across a retailer's global supplier base and delivers the results to the relevant decision makers via dashboards.

 

Tracking key performance indicators - such as in-store availability, service levels, on-time delivery and returns - enables retailers to target and act on areas of poor performance, driving product and supplier performance improvements. Using this important data, retailers can make informed decisions about which products and suppliers they should work with, thereby rationalizing their supplier base for optimal performance.

Improved visibility means faster response times and better business decisions

Once a project is underway, visibility into what's happening in the sourcing process is crucial. But visibility is often only achievable with time-consuming investigations that deliver limited information, either restricted to a view of part of the process or a snapshot of data frozen in time. Retailers are spending huge amounts of time consolidating information from multiple systems or departments to deliver reports that often contain obsolete or stale data. This can have a significant impact on the decision-making process.

 

The ability to know what's going on at every level of detail in your product design, sourcing and order management cycle avoids uncertainty and reduces risk, enabling retailers to anticipate and act on quality, supply and demand problems before they cause major damage and impact on the bottom line.

 

 

 

dashboards: Real-time information is presented via dashboards which enable users to understand key items that require their immediate attention, or to selectively monitor a specific process from design right through to delivery. The Eqos Dashboard uses graphics and alert notifications, allowing users to assign 'Favourite' items that they might want to refer to quickly and easily on a regular basis.

 

critical path management: Eqos' critical path management tracks the lifecycle of a product during each phase of the sourcing lifecycle, providing alerts for out-of-tolerance conditions. When a planned date is at risk or late, alerts are sent either by email or via the Eqos dashboard (depending on the user's preference) to the people who are required to take action or who requested notification.

 

 

 

South African retailer Edcon is using the Eqos global sourcing solution to proactively manage critical path activities from initial product design through supplier collaboration to purchase order processes. This capability is helping to improve the efficiency of the company's buying teams across various brands and product categories, resulting in faster product lifecycles, and ultimately, improved margins.

 

reports: Reports can be scheduled to run automatically at a specific date and time - for example, in time for regular project meetings and updates - or may be generated on demand when needed. Reports can be colour-coded to highlight all tasks that are running late or out-of-tolerance, making it easier for retailers to identify areas that need attention.

 

 

 


Let's get technical for a minute... A modular approach to deployment and ROI The Eqos solution is built on a single platform designed to manage complex business processes involving many people and functions across multiple organizations, whether internal or external. The entire system is accessed via a simple web browser, with no need to install software on users' PCs. The system includes a number of modules focused on the key processes a retailer might want to use. Each module within the Eqos system uses a common database to ensure consistency and avoid integration and duplication issues. Built on a Services Oriented Architecture (SOA), the system has been designed to integrate with existing external systems such as merchandise planning, forecasting, design, finance, ERP, EDI and logistics. Eqos' modular approach and project methodology is designed to deliver a return on investment within one year. This enables you to take the benefits from each project to drive the next, meaning you can develop your capability and budget for your investments in prudent steps aligned with your business strategy. Crucially, Eqos solutions can be implemented between peak trading periods, minimizing risk and business disruption. Global sourcing on-demand & enterprise solutions The Eqos solution for Grocery is available on-demand or as an enterprise-based solution. Both are accessed via a Web-based interface. The Eqos on-demand solution is hosted by a third-party, reducing the costs and risks associated with purchasing and maintaining hardware and software. Enabling rapid implementation and ROI, the on-demand model enables retailers to get up and running quickly. Upgrades are easier to manage, reducing the load on internal resources. The Eqos enterprise solution provides the infrastructure necessary to support complex and dynamic trading applications used by many people across internal and corporate boundaries. The Eqos platform provides a toolset which enables our consultants and/or your business analysts to configure the solution to reflect your business processes, rules, logic, exceptions and unique nuances. The Eqos platform further enables you to make changes without the need for Eqos to create, change, update or build your system. The Eqos enterprise solution provides interfaces to other systems such as SAP, Oracle/Retek, JDA and others, via a range of methods including XML, EDI, SQL, flat files via FTP, and various standards supported by Enterprise Application Servers such as BizTalk, BEA, Cyclone, MQ Series, WebMethods, and others.


Put yourself in the picture

Today's grocery retailers are under enormous pressure to make sure that the right products are available to customers at the right price, balancing the need to offer well-known branded products (at increasingly lower prices) with the necessity to differentiate themselves via private label ranges and an expanded set of product offerings that are taking retailers beyond the traditional range of grocery categories. Retailers must develop the skills and tools required to work more effectively with suppliers to drive sourcing excellence and take advantage of private label opportunities.

 

Software tools can empower people to work more efficiently and make better decisions. Leading retailers are already benefiting from using packaged software to automate key sourcing functions, streamline business processes and put in place best practices across multiple product lines and disparate working groups.

 

Using a single system to support the day to day operations of everyone in the product development, testing, sourcing and procurement processes - from designers, to product technologists, packaging experts, merchandisers, buyers, sourcing offices, agents and brokers, auditors and supply chain professionals - can help retailers respond faster to market trends, reduce costs, speed time to market, and scale for growth, freeing up staff from the mundane and burdensome administrative tasks associated with manual processes and instead deploying them to where they can be most effective.

 

Eqos - your secret sourcing advantage

Eqos has over a decade of experience working exclusively with leading retailers, bringing a best practice approach to global sourcing and supplier management. Our breadth of experience covers the entire process from range planning right through to logistics and the hand-off to finance. Eqos helps retailers to standardize best practices to better manage one or a combination of sourcing processes and critical paths across the many different types of retail lines, from general merchandise, to food, to hard lines and apparel.

 

Supporting both private label initiatives and branded product strategies, Eqos solutions streamline the sourcing processes associated with own-brand product development, from product concept through production, to final delivery in store. We build forward-thinking, cross-enterprise processes that promote collaboration between retailers, their suppliers, buying offices and other trading partners.

 

Being different is what gives each retailer its competitive edge. Eqos understands that every retailer has its own specific business model, rules, and critical paths. We will work with you to make sure that we provide you with the best fit for your business, whether you sell any combination of branded or private-label goods, food or hardlines, fast-fashion apparel or continuity lines, or whether you source through agents or direct from the manufacturer. Professional services industry experts will help you configure the template solutions to fit your exact requirements, allowing you to scale and grow, enabling the flexibility and opportunity to expand into new areas of retail, leveraging historical data and analytics to improve future product development and drive continuous process improvement.

 

Whether wanting to work more efficiently with known and trusted suppliers or expanding into new product categories involving new supply relationships, Eqos solutions provide the infrastructure and the know-how to help retailers succeed.



Now picture the scene...

It's first thing Monday morning in the bustling offices of a national retailer. It's been several months now since the company decided to expand beyond its traditional grocery categories. Sales of the new homeware products have been better than expected. Expansion into more categories is on the cards.

 

As the team comes out of its weekly planning meeting they log on to the Eqos system to check their individual alerts to see if there's anything that requires their immediate attention.

 

The buyer responsible for the new 'back to school' product range sees an alert telling him that there's a delay in the product development process for the themed plastic lunchboxes. The quality control team has identified a problem with the plastic their favoured supplier wants to use - it's just not durable enough. To meet the range launch deadline he will have to either work with the supplier on the quality of the raw materials or look for an alternative supplier. The buyer also checks that the shipment of apparel en route from China is on time. The shipment left Shanghai a week ago and is on track to arrive in port in four weeks. When the containers arrive at the main distribution center (DC) the items will be immediately cross-docked to ensure delivery to the local distribution centres.

 

The system alerts the audit team to the schedule of corrective actions that came up during the latest round of supplier audits. If the poultry supplier in Holland doesn't make the necessary updates to its facilities within the next week they will have to alert the buyers to permanently select an alternative source of supply.

 

The deadline for submitting quotes for the new range of soft furnishings has passed. The suppliers entered their quotes straight into the Eqos system using a web browser - so much easier than filling in spreadsheets and emailing them back. The online system is saving time for the retailer too - there's no need to transfer data from multiple spreadsheets and faxes and the risks inherent with the manual re-keying of data have dropped dramatically. The buyers can now review the quotes easily using the quote comparison functionality in the Eqos system.

 

This is particularly important as the team considers the impact of using European suppliers to fill in the immediate demand for the bed linen ranges. Transporting goods by road and air from a more local supply may well be quicker than shipping them from India, but the total landed cost will be very different. The system easily generates a full cost comparison report so the head of merchandising can make a decision on the best supply strategy.

 

There's been a change to the anticipated order quantity for the bed linen products. Sales last quarter were far better than imagined. The buyer makes the change to the RFQ once in the Eqos system and an alert is sent out automatically to suppliers. Once they've logged on and submitted their new quotes they'll be able to see the impact on lead time and costs.

 

One of the buyers is fresh back from her trip to China where she met with potential suppliers of the new private-label cookware products. On meeting them at the trade show she had given each supplier log-on instructions for the Eqos system. Glancing at the dashboard, she can see that most of the suppliers have already begun to enter information about their organizations and manufacturing facilities into the Eqos system. Following this initial information review she'll soon be able to select the suppliers which she would like to invite to quote.

 

Managing a series of complex sourcing processes is never easy. The picture we've painted here serves to show a very small number of ways in which the Eqos PLM, Global Sourcing and Supplier Management solution can help support your team to make your life simpler, clearer, more efficient, and ultimately more effective. To join the leading global retailers already taking advantage of Eqos, please contact us and find out how Eqos can help you.

 

 

Eqos - your secret sourcing advantage



[1] The Super 50, Progressive Grocer, May 2007

[2] UK Grocery Retailing Factsheet, IDG, May 2007

[3] European Grocery Retailing 2007, Verdict, Feb 2007

[4] Retail Asia, July 2007

[5] AMR Alert: Consumer Goods Private Label: Advice on Climbing a Slippery Slope, by Lora Cecere, Mike Griswold; May 17, 2007

[6] ECR Optimal Shelf Availability: Increasing shopper satisfaction at the moment of truth by ECR Europe and Roland Berger Consultants, 2003

[7] Retail IT Benchmarking Study, 2006-2007, AMR Research, September 2007

Picture the scene...

It's first thing Monday morning in the bustling offices of a national retailer. It's all hands on deck as the team comes out of its weekly planning meeting. There's a lot going on...

 

It's been several months now since the company decided to expand beyond its traditional grocery categories to offer a range of homeware products, including a mix of popular branded products such as microwaves, grills, kettles and toasters, as well as a collection of private label cookware, bedding and home furnishings, with three different product lines to suit every budget.

 

The new ranges are going down well with customers, a fact reflected in last quarter's revenue figures. But the expansion has been putting a lot of pressure on the merchandise and buying teams who are struggling with the complexity of managing a larger volume of quotes and orders in entirely new product areas. Costs here have been rising as more administrative staff have been taken on to cope with the workload.

 

The team has been busy creating and sending out RFQs to suppliers for the new range of soft furnishings. Most of the RFQs have been returned on deadline but some are missing. One of the assistants is sending out reminders to the suppliers who haven't responded yet. In the meantime the quotes are being entered into the central planning spreadsheet. Some of the more specialist suppliers are quite small - a lot of the quotes are being sent in by fax. There are hundreds of quotes to work through. Entering the details into the spreadsheet is proving to be really time-consuming. Some of the faxes aren't coming through clearly so the team is having to double check some of the numbers with suppliers to avoid errors.

 

The planning process for a brand new range of 'back to school' products, including uniforms, lunchboxes, sports equipment and stationery is underway. This theme will be complemented with a range of lunchbox food and drink options when the school semester actually begins. It's important that the items all arrive in store at the same time. The foray into apparel is a big gamble for the retailer, but with busy mothers a significant part of the retailer's customer base, there's a real opportunity to capture some additional revenue here. But keeping track of the progress of all the different items is proving quite a challenge. The apparel items are apparently now en route from China by ship, but there appears to be an information black-out as no-one is exactly sure when the shipment will dock in port.

 

One of the buyers has just returned from a buying trip to China where she visited a trade show focused on cookware - the next planned private-label line in the homeware section. She met a number of suppliers interested in working with them. Looking at the pile of business cards on her desk the excitement begins to fade somewhat. It's down to business as she works through the cards and contacts each supplier to kick-off the audit and product sample testing process. If things go well she'll need to make sure all the necessary information is set up in the supplier system so orders can be placed as soon as possible in time for the launch at Christmas. Time is of the essence.

 

Sound familiar?

Grocery retail trends


Grocery retail trends

 

The third largest spend item in the household budget after housing and transport, food and grocery accounts for nearly 50% of every dollar of retail spend. The market continues to grow, benefiting shareholders and customers alike as retailers strive to increase revenue and profit margin, opening up more stores and expanding and improving their product offerings and prices.

 

In the US the top 50 grocery retailers generated $454 billion... a 10% increase on 2006...

 

In the year up to March 2007 the top 50 US grocery retailers generated $454 billion (£218 billion), representing an almost 10% increase on the previous year[1]. The customer experience has never been better, with those retailers adding 8 million square feet of sales space in 2007 alone.

 

Even in the further developed UK market, the grocery sector saw a growth of 4% on 2006, with a market worth £128.2 billion ($266.7 billion)[2]. The more saturated European market grew relatively modestly to EUR846 billion ($1,235 billion) in 2006, a 2.2% increase on the previous year[3].

 

With so much at stake, it's no surprise that the grocery sector is such a fiercely competitive market. Over recent decades, competitive forces have dramatically changed the face of grocery retail as we know it, with the steady growth of the supermarket giants all but wiping out the smaller often family-owned 'corner shop' grocers. But not even these new market leaders can afford to rest on their laurels, with ambitious sparring partners and new market entrants competing for market share.

 

international expansion:

The continued expansion of supermarket juggernauts Tesco (UK) and Carrefour (France) pose not only a threat to the smaller grocer, but also to giants like Wal-Mart (US), who now faces stern competition in its home territory after many years of almost unchallenged operation.

 

Tesco has begun its US market onslaught... French retailer Carrefour has 345 stores in China...

 

Tesco's US onslaught began in November 2007 with the opening of six Fresh & Easy stores in California. The company already operates in 11 markets in Europe and Asia, where it is the leader in five countries.  Carrefour has retail outlets across Europe as well as in South America and Asia, including 345 stores in China.

 

discount retailers:

In Europe, German discount retailers such as Aldi and Lidl have established an impenetrable home market and have spread rapidly across the continent competing fiercely on price.

 

The discount model is set to bring further change and instability to the US market, where the charge is being led by Aldi's primary competitor Supervalu (with its Albertson's and Save-A-Lot brands), which is now the country's third largest grocery retailer.

 

new store formats:

With a wider range of larger 'out of town' and smaller 'local' convenience store formats customers have more choice - and less loyalty - than ever before. In the Asia-Pacific region, the convenience store format has enjoyed overwhelming popularity, with more than 93,000 new stores opening in the last few years. Japan leads the way, with in excess of 700 stores per million people[4].

 

online shopping:

Alternative channels such as online stores and home delivery networks offer armchair grocery shopping, often from new market entrants. In the US, Amazon.com stocks more than 22,000 non-perishable items for free home delivery, offering significant discounts on specialist products as well as everyday branded goods.

 

Amazon.com stocks more than 22,000 non-perishable items for free home delivery...

 

In August 2007 Amazon went a step further to challenge traditional grocery retailers, launching the AmazonFresh service which delivers fresh, frozen and non-perishable items to customers in the Seattle area.

The sourcing opportunity

In response to these competitive pressures and the proliferation of choice offered to consumers, today's grocery retailers are transforming their businesses by developing value-added products and services to attract and retain customers. To do this effectively and efficiently, these strategies rely on advanced sourcing capabilities.

 

private label initiatives:

With low-margin branded goods that are widely available offering retailers little room to differentiate, grocery retailers are taking control of their merchandising effectiveness and brand integrity by developing own-brand product ranges. Whilst in some cases the retailer owns the manufacturing operations, the majority of retailers work direct with third-party suppliers to produce branded goods on their behalf.

 

Popular examples of private-label products include tiered discount or 'value' ranges to high-end premium ranges, as well as category-specific lines such as popular organic or theme-related products.

 

 

41% of sales in fast-moving grocery stores in 2008 will be private label...

 

The ability to develop own-brand products also give retailers the opportunity to 'think outside of the box' and develop products in a format that otherwise might not have sold well, or in some cases been allowed to have sold at all. For one US retailer, a ban on the importation of Mexican avocados with seeds led them to develop their own range of fresh seedless avocado products and an entire range of similar SKUs, generating profitable revenue that otherwise would have been lost.

 

According to a survey of 60 US retailers conducted by AMR Research, 41% of sales in fast-moving grocery stores in 2008 will be private label[5] - compare this to 22% in 2002. In Europe this number is already far higher, with an average 45% of products sold via private label.

 

 

 

 

more than grocery:

In an attempt to capture a larger share of the consumer dollar and tap into higher profit margin opportunities, grocery retailers are expanding their offerings to include apparel and other non-food related merchandise, stocking everything from toys, electrical goods, furniture and stationery to sports equipment.

A model pioneered by US grocer Wal-Mart, other grocery retailers have followed the trend, attracted by the higher margins offered by other non-food categories, as well as an opportunity to appeal to customers as a 'one stop shop' destination. Tesco now sources over £1 billion of non-food and clothing items per year and already has an estimated 7% share of the UK's non-food retail market.

multi-channel retail:

The trend towards customer-segmented store formats is increasing in popularity, with retailers operating multiple retail brands and store formats to appeal to different market segments and customer demographics. In the US for example, H.E. Butt's Central Market stores appeal to the high-end of the market, whilst its H-E-B plus! superstores offer destination shopping based on a more typical mass market appeal grocery store format. 

 

sourcing strategies:

The effective use of sourcing strategies is becoming a business differentiator in its own right, helping retailers to stay ahead of their competitors. 

 

·         agile sourcing - Retailers who are able to respond quickly to changes in market demand stand to profit by sourcing and adapting products ahead of the competition. By reacting to the latest consumer trends for low-carbohydrate, trans fat-free, organic and other health-driven fads, or the hottest children's toy or latest line in home furnishing fashions, retailers seek not only to satisfy consumer demand, but also to claim valuable PR points in the race to be seen as ahead of the game.

 

Managing changes in supply effectively, whether planned or unplanned, can also be a major source of competitive advantage. Whether due to unforeseen natural disasters or political unrest, dramatic increases in government tariffs or limitations to import quotas, or simply changing to a more local supplier to meet deadlines, retailers must be able to act nimbly and seamlessly when changing between sources of supply.

 

·         responsible sourcing - Although the 'pile 'em high and sell 'em cheap' strategies of the 1990's continue to have major appeal in some markets, in others, discount strategies sit alongside products that satisfy more recently popular green, ethical and even politically-focused sourcing philosophies, where products are often sold at a premium.

 

With today's consumer more aware of where their products come from and the impact they have on the environment, communities and economies, grocery retailers need a tighter grasp of product origins. In the UK, Sainsbury's anticipates sales of Fairtrade products to double in 2007. Equally, the retailer is moving away from sourcing products internationally in preference for British-produced vegetables and dairy products and is making a conscious decision to source sustainable products such as line-caught fish.

 

improving sourcing effectiveness

Retailers can achieve significant cost reductions by integrating and improving siloed systems and processes. By ensuring more effective collaboration, more accurate data integrity and improved inventory planning, retailers can benefit from faster time to market and improved product margins.

 

Grocery retailers need the ability to respond to changes in the supply chain quickly and responsively in order to ensure on-shelf availability. According to a report from ECR Europe[6], when consumers are faced with out-of-stocks, 37% will, on average, buy a different brand, whilst 21% are likely to go to a different store. Another 9% will decide not to buy the product at all. To prevent this, close integration between the demand signal and suppliers is critical.

 

are you ready?

How retailers respond to changing market dynamics varies tremendously. Global sourcing has changed the face of grocery retail worldwide. By consolidating spend across retail brands and locations, retailers can leverage pricing advantages and product quality and consistency. By sourcing globally, grocery retailers have the ability to source from a broader range of suppliers, taking advantage of cheaper products and seasonal goods from across the world. Options for private label ranges are putting more control into the hands of retailers.

 

But capitalizing on these opportunities isn't always easy. Without the appropriate infrastructure, processes and systems in place, taking advantage of supplier consolidation and other sourcing opportunities can result in a lot of pressure on the business. With growth top of the agenda for most retailers, the problem can only get worse. Spreadsheets can only take you so far.

 

Whilst the administrative costs and delays related to cumbersome manual processes are obvious, they are small in comparison to the revenue opportunities lost and costs incurred through poor on-shelf availability, lack of supply chain visibility, and poor supplier performance. Lack of insight into supplier practices can have a devastating effect on the reputation and brand power of the retailer, who risks brand damage and the potential loss of future revenue from ever-demanding and discerning customers. In such a competitive market environment, grocery retailers can't afford to make such costly mistakes.

Intelligent sourcing

Designing, sourcing and buying goods can be a complex process that is typically hampered by the extensive use of spreadsheets, emails and phone calls. The need to key and re-key data from paper to system or between unconnected systems is not only inefficient but can lead to unnecessary errors. Errors in processing or having to make simple changes to product components or information on packaging can incur precious time delays and unnecessary costs. Updating and sending out multiple versions of documents to suppliers - even by email - requires a significant amount of human resource. Duplications and misunderstandings are always a risk. Lack of visibility into the status of an RFQ for new products, or the progress of a re-order shipment from factory or distribution centre to store prevents retailers from having an up-to-date view of their business, making fire-fighting the norm and effective decision-making difficult at best.

 

Throwing more resources at the problem might help, but it's not the long term answer.

 

Until now, the ability to help grocery retailers manage critical sourcing functions effectively has been an issue largely unaddressed by IT vendors. But today an increasing number of retailers are moving away from home-grown and bespoke systems in favour of innovative software that helps formalize best practices and helps under-pressure grocery retailers manage and scale their businesses.

 

According to a survey carried out by AMR Research and the National Retail Federation's (NRF) CIO Council, retailers planned to focus 60% of overall IT spending on implementing and supporting packaged software, reflecting a massive change in how retailers typically develop systems[7].

Already in place with multi-category grocery retailers such as Tesco, Sainsbury's, and H.E. Butt, Eqos PLM, Sourcing and Supplier Management solutions are helping sourcing professionals establish best practices and automate processes to achieve greater effectiveness and efficiency in their sourcing programs. Whether you are a retailer of grocery, general merchandise, apparel or hard lines, the Eqos solution provides made-to-measure support based on established templates for best practice processes.

 

sourcing for grocery

The Eqos solution supports the entire grocery sourcing process - from sending out RFQs to known suppliers or establishing connections with new ones at trade shows, to working with suppliers on private label product development and packaging, right through to delivery in store. The system enables every person or organization involved in the process to use the system to manage their day to day tasks, handing off tasks smoothly along the process between internal project participants as well as external organizations such as auditors, agents, brokers and suppliers.

 

Managing the sourcing lifecycle

Mentioning the words sourcing and grocery in the same breath may conjure up negative images of highly charged reverse auctions where powerful retailers beat up their suppliers on price. Whilst reverse auction events can be appropriate in business scenarios such as the procurement of low-margin commoditized goods, the Eqos system focuses on strengthening a retailer's ability to support more strategic and value-added sourcing initiatives such as new product development and private label sourcing, at the same time as managing the critical path for everyday replenishment items.

 

 

 

Accessed via a web browser interface, the solution allows retailers to formalize best practices across the entire sourcing process - and where it integrates with other merchandising, financial and fulfilment systems and processes - in order to provide its internal and external users with a consistent approach to sourcing. As retailers expand further into private label products this becomes of increasing importance.

 

range fulfilment: Linking individual products into product ranges means that merchandisers and planners can manage groups of products against defined critical paths in order to meet seasonal launch dates for events such as Halloween, Mother's Day or Christmas. The range fulfilment facility enables retailers to manage the lifecycle and critical paths of entire ranges, calculating the impact on the range of any out-of-tolerance metrics including delays to individual items.

 

sample tracking and product testing: A retailer's quality control groups are typically involved throughout the sourcing process, whether it be testing samples from branded suppliers or more in-depth testing for private label products. Depending on the type of product, there may be several iterations of tests throughout the lifecycle of the product. The testing process can be monitored against predefined critical paths, ensuring that any delays in the testing process are highlighted and the relevant users notified so that the sourcing process isn't held up. Test results can be stored with other product information in the Eqos system for future reference.

 

product and packaging design: The Eqos solution allows designers to capture information about a product, its design and properties (such as size variations, or the origin or specification of product components) as well as information that is legally required on packaging. Product design graphics generated in external CAD systems can be uploaded as files into a central information repository, or simply stored in photo format along with any related product information, making it easily accessible and ready for re-use when needed.

 

product sourcing: When product specifications are complete and product merchandisers have decided on the order quantities required, Request for Quotes (RFQs) are then made available to the retailer's sourcing offices and agents via the web-based Eqos system. Once received, the sourcing offices distribute the RFQs to the appropriate suppliers, who submit their bids via the Eqos solution. Any changes to the RFQ are made within the system and notifications are sent to suppliers who can then go online and amend their bids appropriately.

 

The ability to make changes once and manage the update process centrally can save buyers and suppliers, hours of time and reduces the complexity and risk of error involved in managing numerous versions of a spreadsheet. Reducing this risk in the bidding phase saves retailers both time and money and creates a level playing field on which suppliers can compete fairly. By using the same consistent process, retailers can easily replicate and extend best practices across sourcing initiatives and out into new sourcing locations.

 

quote management: Quotes are compared automatically, presenting the retailer with the best options available based on detailed quote information and comparative criteria. Information about logistics options and various pricing implications for import and duty rates (where appropriate) gives the retailer an instant view of the total landed cost for each order, improving the retailer's ability to analyze and compare quotes in order to conduct better informed negotiations with suppliers. What is often managed in complex spreadsheets requiring the manual input of large amounts of data is available via Eqos in a simple report.

 

order management: Once orders are placed, buying departments need to maintain control over purchase order amendments - regardless of whether their chosen suppliers are large, small, IT savvy or with minimal access to technology. They also need assurances that correct information is transmitted throughout the company and its trading partners and that advanced shipping notices (ASNs) trigger the relevant sequence of events. Eqos Order Management proactively manages purchasing-related information flows, automatically alerting suppliers about new and updated order information, encouraging on-time shipments and deliveries.

 

logistics visibility: The ability to track orders between manufacturers and distribution centerss helps retailers manage their supply chains more effectively by proactively monitoring an item's critical path. Eqos's Logistics Visibility functionality enables retailers to link to supply chain and logistics systems either internally, or at suppliers and third-party logistics service providers. The system tracks SKU-level details of products in transit at each point in the process, alerting retailers to any delays or mismatches in anticipated order quantities.

 

Eqos worked closely with UK retailer Debenhams to enable their Eqos system to track the physical and information flow of goods between the retailer, its suppliers and third parties, allowing it to see exactly what orders have been acknowledged and accepted, any changes that have been made, and what products are in the logistics pipeline.

Supplier management

Working more closely with suppliers in a structured and thorough manner is both a necessity and an opportunity. The risk of negative headlines and blows to consumer confidence regarding product issues - such as the safety problems inherent in food and drink production, or poor overseas labour practices - the continual threat of supply disruption, and other risks loom as daily concerns.

 

The Eqos solution assists in all aspects of supplier management. By giving suppliers access to the system via a web-based interface, retailers can communicate easily with suppliers to get relationships up and running quickly, assess and maintain audit and compliance standards, and drive continuous improvement through performance monitoring and scorecarding.

 

This provides a platform for retailers and suppliers to not only work together more easily and improve the effectiveness of relationships, but also to improve the quality of relationships to facilitate closer collaboration.

 

supplier on-boarding and registration:

Suppliers must be registered and approved prior to gaining full access to the Eqos solution. Based on a decade of managing global supplier networks for some of the world's largest retailers, Eqos Supplier Hub Management provides a single source supplier directory supported by self-registration, administration and security features.

 

Retailers can enter supplier detail themselves or can invite suppliers to enter their own details about their organizations, manufacturing facilities, and products. This information can be audited formally at a later date by internal or third-party audit companies.

 

Supplier performance management: Eqos Supplier Performance enables retailers to capture on-going supplier performance metrics to draw suppliers into a continuous improvement process. Using scorecards based on formalized objectives and targets agreed in advance with suppliers, retailers can monitor performance over time. This provides a foundation for retailers to work collaboratively with suppliers to improve performance areas such as on-time delivery, product quality and compliance variables.

 

The system determines non-compliant events and uses critical path management to manage corrective actions and resolutions. Its KPI management capabilities allow retailers to manage and benchmark both the performance of suppliers and individual products, providing a feedback loop to future merchandise planning and sourcing initiatives.

 

Supplier Product Introduction For retailers wanting to take speedy advantage of new supplier connections made at trade shows, the Eqos system makes it possible for suppliers to insert themselves into the retailer's buying process quickly and easily. When a buyer meets a new supplier he is interested in, he hands over a business card. The card carries details of how to log onto the retailer's Eqos system to register their details. The supplier can also provide descriptions of products, along with photos, production and pricing information. Back in the office, the buyer is alerted to the information submitted by the new supplier. Using the system to procure samples if needed - making sure that all necessary documentation is completed - and log the results, the buyer can then approve the supplier and begin the usual ordering process. This functionality can save buyers what would typically take hours of paperwork and email/telephone communication to start trading with the new supplier. The system enables retailers to speed up the time it takes to get new products into stores, and at a much lower cost.

KPI management: The Eqos KPI Management module is a network-wide performance system that collects and analyzes key performance data across a retailer's global supplier base and delivers the results to the relevant decision makers via dashboards.

 

Tracking key performance indicators - such as in-store availability, service levels, on-time delivery and returns - enables retailers to target and act on areas of poor performance, driving product and supplier performance improvements. Using this important data, retailers can make informed decisions about which products and suppliers they should work with, thereby rationalizing their supplier base for optimal performance.

Improved visibility means faster response times and better business decisions

Once a project is underway, visibility into what's happening in the sourcing process is crucial. But visibility is often only achievable with time-consuming investigations that deliver limited information, either restricted to a view of part of the process or a snapshot of data frozen in time. Retailers are spending huge amounts of time consolidating information from multiple systems or departments to deliver reports that often contain obsolete or stale data. This can have a significant impact on the decision-making process.

 

The ability to know what's going on at every level of detail in your product design, sourcing and order management cycle avoids uncertainty and reduces risk, enabling retailers to anticipate and act on quality, supply and demand problems before they cause major damage and impact on the bottom line.

 

 

 

dashboards: Real-time information is presented via dashboards which enable users to understand key items that require their immediate attention, or to selectively monitor a specific process from design right through to delivery. The Eqos Dashboard uses graphics and alert notifications, allowing users to assign 'Favourite' items that they might want to refer to quickly and easily on a regular basis.

 

critical path management: Eqos' critical path management tracks the lifecycle of a product during each phase of the sourcing lifecycle, providing alerts for out-of-tolerance conditions. When a planned date is at risk or late, alerts are sent either by email or via the Eqos dashboard (depending on the user's preference) to the people who are required to take action or who requested notification.

 

 

 

South African retailer Edcon is using the Eqos global sourcing solution to proactively manage critical path activities from initial product design through supplier collaboration to purchase order processes. This capability is helping to improve the efficiency of the company's buying teams across various brands and product categories, resulting in faster product lifecycles, and ultimately, improved margins.

 

reports: Reports can be scheduled to run automatically at a specific date and time - for example, in time for regular project meetings and updates - or may be generated on demand when needed. Reports can be colour-coded to highlight all tasks that are running late or out-of-tolerance, making it easier for retailers to identify areas that need attention.

 

 

 


Let's get technical for a minute... A modular approach to deployment and ROI The Eqos solution is built on a single platform designed to manage complex business processes involving many people and functions across multiple organizations, whether internal or external. The entire system is accessed via a simple web browser, with no need to install software on users' PCs. The system includes a number of modules focused on the key processes a retailer might want to use. Each module within the Eqos system uses a common database to ensure consistency and avoid integration and duplication issues. Built on a Services Oriented Architecture (SOA), the system has been designed to integrate with existing external systems such as merchandise planning, forecasting, design, finance, ERP, EDI and logistics. Eqos' modular approach and project methodology is designed to deliver a return on investment within one year. This enables you to take the benefits from each project to drive the next, meaning you can develop your capability and budget for your investments in prudent steps aligned with your business strategy. Crucially, Eqos solutions can be implemented between peak trading periods, minimizing risk and business disruption. Global sourcing on-demand & enterprise solutions The Eqos solution for Grocery is available on-demand or as an enterprise-based solution. Both are accessed via a Web-based interface. The Eqos on-demand solution is hosted by a third-party, reducing the costs and risks associated with purchasing and maintaining hardware and software. Enabling rapid implementation and ROI, the on-demand model enables retailers to get up and running quickly. Upgrades are easier to manage, reducing the load on internal resources. The Eqos enterprise solution provides the infrastructure necessary to support complex and dynamic trading applications used by many people across internal and corporate boundaries. The Eqos platform provides a toolset which enables our consultants and/or your business analysts to configure the solution to reflect your business processes, rules, logic, exceptions and unique nuances. The Eqos platform further enables you to make changes without the need for Eqos to create, change, update or build your system. The Eqos enterprise solution provides interfaces to other systems such as SAP, Oracle/Retek, JDA and others, via a range of methods including XML, EDI, SQL, flat files via FTP, and various standards supported by Enterprise Application Servers such as BizTalk, BEA, Cyclone, MQ Series, WebMethods, and others.


Put yourself in the picture

Today's grocery retailers are under enormous pressure to make sure that the right products are available to customers at the right price, balancing the need to offer well-known branded products (at increasingly lower prices) with the necessity to differentiate themselves via private label ranges and an expanded set of product offerings that are taking retailers beyond the traditional range of grocery categories. Retailers must develop the skills and tools required to work more effectively with suppliers to drive sourcing excellence and take advantage of private label opportunities.

 

Software tools can empower people to work more efficiently and make better decisions. Leading retailers are already benefiting from using packaged software to automate key sourcing functions, streamline business processes and put in place best practices across multiple product lines and disparate working groups.

 

Using a single system to support the day to day operations of everyone in the product development, testing, sourcing and procurement processes - from designers, to product technologists, packaging experts, merchandisers, buyers, sourcing offices, agents and brokers, auditors and supply chain professionals - can help retailers respond faster to market trends, reduce costs, speed time to market, and scale for growth, freeing up staff from the mundane and burdensome administrative tasks associated with manual processes and instead deploying them to where they can be most effective.

 

Eqos - your secret sourcing advantage

Eqos has over a decade of experience working exclusively with leading retailers, bringing a best practice approach to global sourcing and supplier management. Our breadth of experience covers the entire process from range planning right through to logistics and the hand-off to finance. Eqos helps retailers to standardize best practices to better manage one or a combination of sourcing processes and critical paths across the many different types of retail lines, from general merchandise, to food, to hard lines and apparel.

 

Supporting both private label initiatives and branded product strategies, Eqos solutions streamline the sourcing processes associated with own-brand product development, from product concept through production, to final delivery in store. We build forward-thinking, cross-enterprise processes that promote collaboration between retailers, their suppliers, buying offices and other trading partners.

 

Being different is what gives each retailer its competitive edge. Eqos understands that every retailer has its own specific business model, rules, and critical paths. We will work with you to make sure that we provide you with the best fit for your business, whether you sell any combination of branded or private-label goods, food or hardlines, fast-fashion apparel or continuity lines, or whether you source through agents or direct from the manufacturer. Professional services industry experts will help you configure the template solutions to fit your exact requirements, allowing you to scale and grow, enabling the flexibility and opportunity to expand into new areas of retail, leveraging historical data and analytics to improve future product development and drive continuous process improvement.

 

Whether wanting to work more efficiently with known and trusted suppliers or expanding into new product categories involving new supply relationships, Eqos solutions provide the infrastructure and the know-how to help retailers succeed.



Now picture the scene...

It's first thing Monday morning in the bustling offices of a national retailer. It's been several months now since the company decided to expand beyond its traditional grocery categories. Sales of the new homeware products have been better than expected. Expansion into more categories is on the cards.

 

As the team comes out of its weekly planning meeting they log on to the Eqos system to check their individual alerts to see if there's anything that requires their immediate attention.

 

The buyer responsible for the new 'back to school' product range sees an alert telling him that there's a delay in the product development process for the themed plastic lunchboxes. The quality control team has identified a problem with the plastic their favoured supplier wants to use - it's just not durable enough. To meet the range launch deadline he will have to either work with the supplier on the quality of the raw materials or look for an alternative supplier. The buyer also checks that the shipment of apparel en route from China is on time. The shipment left Shanghai a week ago and is on track to arrive in port in four weeks. When the containers arrive at the main distribution center (DC) the items will be immediately cross-docked to ensure delivery to the local distribution centres.

 

The system alerts the audit team to the schedule of corrective actions that came up during the latest round of supplier audits. If the poultry supplier in Holland doesn't make the necessary updates to its facilities within the next week they will have to alert the buyers to permanently select an alternative source of supply.

 

The deadline for submitting quotes for the new range of soft furnishings has passed. The suppliers entered their quotes straight into the Eqos system using a web browser - so much easier than filling in spreadsheets and emailing them back. The online system is saving time for the retailer too - there's no need to transfer data from multiple spreadsheets and faxes and the risks inherent with the manual re-keying of data have dropped dramatically. The buyers can now review the quotes easily using the quote comparison functionality in the Eqos system.

 

This is particularly important as the team considers the impact of using European suppliers to fill in the immediate demand for the bed linen ranges. Transporting goods by road and air from a more local supply may well be quicker than shipping them from India, but the total landed cost will be very different. The system easily generates a full cost comparison report so the head of merchandising can make a decision on the best supply strategy.

 

There's been a change to the anticipated order quantity for the bed linen products. Sales last quarter were far better than imagined. The buyer makes the change to the RFQ once in the Eqos system and an alert is sent out automatically to suppliers. Once they've logged on and submitted their new quotes they'll be able to see the impact on lead time and costs.

 

One of the buyers is fresh back from her trip to China where she met with potential suppliers of the new private-label cookware products. On meeting them at the trade show she had given each supplier log-on instructions for the Eqos system. Glancing at the dashboard, she can see that most of the suppliers have already begun to enter information about their organizations and manufacturing facilities into the Eqos system. Following this initial information review she'll soon be able to select the suppliers which she would like to invite to quote.

 

Managing a series of complex sourcing processes is never easy. The picture we've painted here serves to show a very small number of ways in which the Eqos PLM, Global Sourcing and Supplier Management solution can help support your team to make your life simpler, clearer, more efficient, and ultimately more effective. To join the leading global retailers already taking advantage of Eqos, please contact us and find out how Eqos can help you.

 

 

Eqos - your secret sourcing advantage



[1] The Super 50, Progressive Grocer, May 2007

[2] UK Grocery Retailing Factsheet, IDG, May 2007

[3] European Grocery Retailing 2007, Verdict, Feb 2007

[4] Retail Asia, July 2007

[5] AMR Alert: Consumer Goods Private Label: Advice on Climbing a Slippery Slope, by Lora Cecere, Mike Griswold; May 17, 2007

[6] ECR Optimal Shelf Availability: Increasing shopper satisfaction at the moment of truth by ECR Europe and Roland Berger Consultants, 2003

[7] Retail IT Benchmarking Study, 2006-2007, AMR Research, September 2007