Smart Sourcing Moves Front-and-Center in Retail’s Fight to Stay Competitive

December 4, 2017

As retailers compete for shoppers’ increasingly fickle attention and dollars, sourcing is beginning to emerge from the shadows to take the spotlight as a key pillar in building a competitive strategy. Today’s consumers not only care about the ultimate finished product, but also about the ingredients, sustainability, carbon-footprint, optimum harvesting and manufacturing processes behind it.

These factors, coupled with rapidly changing political and economic climates around the world, are increasingly spurring retailers to take a proactive approach to sourcing—a trend that will only continue in the coming years, predicts Vipon Kumar, Chief Sourcing Officer for Daymon.

“If I had to coin a phrase for what we’ve seen over the last year is that sourcing is no longer about thinking outside the box, it’s thinking without a box,” says Kumar. “The field of play for retailers is to satisfy the needs of consumers and delight them. As sourcing partners, to help them be effective in that field of play, we must be willing to lead from the front line and set this experiment in motion in order to satisfy the consumer.”

Kumar points to the emergence of value chain co-sourcing as an example of how sourcing models have already begun to evolve to deliver on new consumer demands. Ever-increasing consumer interest in sustainable, local and organic products, transparent processes and clean labeling will only continue to drive these types of changes.

At Daymon, Kumar says another tactic they’re exploring is proactive, trend-led sourcing. “In the past, we have been largely reactive—waiting until a retailer asks for a bid to start our sourcing exercise. Now we are working to close the distance between thought leadership, sourcing and the retail shelf by creating sources of supply for trends our thought leadership team identifies before a retailer even asks.” The recently concluded ANUGA Show in Cologne, Germany showcased top trends such as clean label, green, taste balance, kitchen symphony and ancient grains.  “These are leading indicators of the sourcing work ahead of us,” says Kumar.

But smart sourcing doesn’t just mean finding the products—it also means getting them at the right price. “You can only do so much on the sell side, especially in retail where you often have to meet or beat the price of your competitor. So the way to make money is on the buy side—making more profit by buying it at the right time, from the right place and negotiating the best deal with suppliers following our fact-based negotiation techniques,” Kumar explains.

One area where all of these trends are converging, particularly for grocery retailers, is in general merchandise (GM), says Kumar. “The nature of GM is changing. People are looking for sophisticated, functional products, which blend in and enhance their home and work environment and provide a seamless experience shopping between food and non-food. The ubiquitous plastic plates made of petro-chemical ingredients will continue to lose ground to sustainable bio-plastic (made from corn and soy or bamboo). This demands more innovation and creativity from retailers,” he explains

By giving consumers what they want today and in future—and making the right deals with qualified value chain partners—grocery retailers could stand to win big in providing lifestyle solutions across their field of play (food, non-food, near food, baby, pet, health and beauty care, and seasonal productions). The key, says Kumar, is “not to lose sight of what’s on the table tomorrow because we’re so focused on today.”

To learn more about Daymon’s global sourcing and supply chain services, contact Vipon Kumar, Chief Sourcing Officer, at vkumar@daymon.com.

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