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— September 27, 2006

3PL Services

Hackett Group Finds Supplier Diversity Doesn't Mean Higher Costs
Increasing the reliance on women- and minority-owned businesses as suppliers does not cost leading procurement organizations more, according to new research from The Hackett Group, a strategic advisory firm. In fact, some cutting-edge companies find quite the opposite is true, and are finding ways to use supplier diversity to drive new sources of revenue.
Hackett's research shows that world-class procurement organizations which focus heavily on supplier diversity don't sacrifice procurement savings to do so. In addition, these leading procurement organizations have slightly higher adoption rates of supplier diversity programs as typical companies, yet are able to generate 133 percent greater return on the cost of procurement operations than average performers, driving an additional $3.6m to their company's bottom line for every $1m in procurement operations costs.
Hackett's research showed that typical companies today dedicate 8 percent of their spending to women- and minority-owned suppliers, and that these suppliers make up 9.7 percent of the total supply base. World-class procurement organizations perform slightly better in both of these areas. Most companies focus on supplier diversity voluntarily, as part of an overall program to improve their corporate image. Government and commercial requirements are also among their leading rationales.
“Many people will tell you that they don't use more minority suppliers because they can't afford to,” says Hackett senior business advisor Kurt Albertson. “They automatically assume that supplier diversity programs are an administrative nightmare, a burden that increases spending. But that's simply not true. Companies that focus in this area, driven by a sense of social responsibility, government mandates, or a range of other factors, are just as able to run effective procurement operations as their peers that ignore supplier diversity.”
According to Chris Sawchuk, Hackett procurement practice leader, “Some companies even turn their commitment to supplier diversity to a strategic business advantage. Top performers in this area often heavily promote them, internally and externally, because they believe it's something their employees and customers care about. While the direct revenue impact of these programs is very difficult to measure, we've seen cases where companies directly attribute supplier diversity programs to specific improvements in market share.”
http://www.thehackettgroup.com

Pre-Shipment Inspection Can Guarantee Delivery of Merchandise You Want
By demanding that pre-shipment inspection be a condition to payment, buyers of imported goods can protect themselves against fraud and poor quality merchandise, says David Rizzo, a global trade management consultant with JPMorgan Chase Vastera.
But what if you are an exporter that deals with hundreds or thousands of business partners around the world? How do you manage the demands of pre-shipment inspection on not only an individual level, but also on a country-by-country level as many nations require the pre-shipment inspection (PSI) of imported goods?
“While it may look like your international order is ready to ship, it actually may not be,” according to Rizzo. “Implementing the proper processes and procedures to address pre-shipment requirements will keep help you keep your supply chain moving and avoid additional customs duties.
“In many countries, PSI is regulated by the importing country and is in place as a method of ensuring that the goods entering a specific country are valued properly, that duty is properly assessed, and that the goods are in good quality. For export to countries with import certification schemes, PSI is a necessary step to receive an import certificate for the shipment. Without this certificate, the shipment will not be able to clear customs in the country of destination.
“For individuals, PSI offers importers the certainty that the goods arriving at their place of destination are in conformity with required specifications. These specifications can be a customer's own requirements or legal demands.”
Rizzo says that the inspection is performed by a private organization and the onus for arranging the inspection relies upon the importer. In most cases, the importer may choose between one of several inspections agencies, although some countries will only sanction one particular company to perform an inspection for that country. In most cases the importer also bears the costs of the inspection. In very rare instances, the costs are covered by the government of the importing country.
The importer will contact the local office of an inspection agency after the opening of an import license and either pay for the inspection up front, or make an installment payment based upon the goods value.
An inspection order will be sent from the agency in the importing country to its counterpart in the country of export. The inspection agency of the exporting country will then contact the exporter to arrange a date, place and time to perform the inspection.
Pre-shipment inspection is comprises a detailed inspection of equipment or materials after manufacture, but prior to shipment. The scope can include quantity and quality, packing and marking, and supervision of loading. Upon a successful inspection, the agency will issue a Clean Report of Findings (CRF) that will confirm the goods value, condition and classification. The CFR can be provided against a Letter of Credit and authorized by a Chamber of Commerce. The goods can now be exported and the importer will use the CRF to effect importation.
Visit http://www.export.gov/logistics/exp_inspections.asp for a list of countries that require PSI.
http://www.vastera.com

UK Retailer Names TradeStone to Provide Sourcing Software
J D Williams & Company Ltd., a major direct home shopping retailer in the UK that includes the J D Williams and Simply Be brand catalogs, as well as web sites such as VivaLaDiva.com will use TradeStone software to bring together the various departments involved in product development and sourcing, as well as to automate administration, ensure best practices, and give its designers more time to create innovative products.
J D Williams offers an extensive range of clothing, footwear, household and electronic goods.
The software developer says that its TradeStone Suite, which includes the Unified Buying Engine and Product Development, Sourcing, the Virtual Showroom, retail PLM, Logistics and Finance modules, “makes it as easy to source products from across the globe as it is from across the street.”
"J D Williams is moving aggressively to triple their collections and introduce fast fashion to their unique customer," says Sue Welch, CEO and founder of TradeStone Software. "The demand for close collaboration and rapid product development with suppliers around the world was a key driver in their selection of TradeStone to support those needs and unify their buying process on a global basis."
http://www.tradestonesoftware.com

Companies More Likely to Accept Trade Finance Metrics Now
More than two-thirds of companies are investigating or putting in place so-called supply chain finance programs to improve financial metrics and lower end-to-end costs, says a new report from Aberdeen Research, Boston. “New innovations in trade finance, supplier payment terms, and invoice automation are helping early adopters gain a cost advantage while building a lower-risk supply chain,” according to the Supply Chain Finance Benchmark Report. Aberdeen says that small and large companies alike are benefiting from these advances.
http://www.aberdeen.com

2nd Annual Procurement Officers' Summit in November
The Second Annual Procurement Officers' Summit is set for Nov. 16-17, 2006, at the Westin Waterfront Hotel in Boston, according to event sponsors Aberdeen Group and Purchasing Magazine.
Scheduled keynote speaker are John Sculley, past CEO of Pepsico and Apple Computer, and John Paterson, CPO of IBM.
Event organizers describe the summit as the preeminent best practices and networking event for global supply management executives to accelerate strategies in procurement and supply management, and learn “what it takes to turn supply management into a competitive weapon.”
http://www.aberdeen.com and http://www.purchasing.com

Capgemini: Few Retailers Prepared for Multi-Channel Retailing
Successful multi-channel retailing demands new information technology infrastructure to give seamless integration across all customer touchpoints—but very few retailers have the IT budget or inclination to tackle major infrastructure projects.
As most IT directors will have long-since discovered, mention the need for new “infrastructure investment” at a board meeting and the result is likely to be glazed expressions and incomprehension. Yet, according to Tanya Lawler, ex-Argos and now vice president of retail at Capgemini, a new approach to infrastructure is vital if retailers really are to succeed in creating true channel integration that puts the customer first.
“Infrastructure investment has to be seen as a vital component of multi-channel strategy,” she says, “and is vital if businesses are going to integrate inventory or order management, for example, across channels.”
Capgemini has been hosting a series of round tables for CIOs and CEOs on multi-channel strategies and policy and Lawler believes that too many are taking a short-term approach to channel development, while others are simply refusing to acknowledge that the bricks and mortar retail model they have known all their working lives is being transformed by technology. “They are keeping their heads down and hoping for an eventual upturn in trade,” she says, “but that isn't going to happen.” As she points out, any major retailer who has yet to implement a transactional web site has already fallen “at least five years” behind its competitors.
“IT has to be seen as a revenue generator,” she says, “and the problem with many big IT projects—like ERP—is that they do not generate revenue. They may reduce complexity in a business but they do not generate additional revenue. IT infrastructure is complex and it is vital to understand what it needs to look like in a multi-channel world and then move towards that while focusing on where it can help to drive new business.”
A key challenge for many will be the predicted demands of online trade for this coming Christmas.
Handling the expected increase in volume of business will present a major challenge for many retailers due to poorly integrated inventory systems. In many cases stock will be located in individual stores rather than central warehouses where it can satisfy online orders. Unless retailers have systems in place to direct shoppers to their nearest store to collect goods that are “out of stock” on the web site, for example, then there could be many disappointed shoppers. Equally, if customers cannot buy online and are not redirected to their nearest branch then stores may well have to cope with surplus inventory and excessive markdowns in the clearance sales eroding margin still further.
As Capgemini points out, traditional, long-established retailers are most likely to face constraints due to embedded technology with siloed platforms supporting each separate channel or elderly mainframes limiting flexibility. In contrast, newer entrants are likely to have simpler, integrated infrastructures based on the latest technology so have an in-built advantage when it comes to multi-channel management.
(This article was initially published in the UK-based RetailBulletin.)
http://www.capgemini.com

Guarino Takes CEO Spot at ICG Commerce
ICG Commerce, a procurement services provider, has named Carl Guarino its chief executive officer. Michael Zisman will become chairman of the ICG board.
“Joining a market leader that is solely committed to enabling leading companies to maximize the value and impact of their procurement efforts is a very exciting opportunity,” says Guarino. “By bringing together a unique combination of sourcing expertise and an operational infrastructure, no company is better positioned to help customers reduce costs and increase competitiveness.”
Prior to joining ICG Commerce, Guarino was executive vice president with SEI Investments, a global provider of outsourced asset management, investment processing and investment operations solutions.
Zisman was elected board chairman after serving on the ICG Commerce board since 2004.
ICG Commerce offers procurement outsourcing solutions to support sourcing, transactional buying, category management and information management.
http://www.icgcommerce.com

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