Oct 13

Written by: RSouthard
10/13/2008 6:00 AM

Can scientific measurement systems not designed for retail be used to understand why e-procurement has not gained the level of utilization it should within the retail industry?

First we need to define complexity theory. In part, Wikipedia defines complexity theory broadly speaking as a system that tries to understand how organizations adapt to their environments. Now let’s try to understand the retail environment because it is critical to understanding how and why merchandise is purchased and sold today in order to define the habits developed over time within this complex system.

The word retail was originally taken from the French term retaillier which meant to sell at retail or in small quantities directly to customers. Not the typical definition of retail one might get today. So, it’s precisely at this point that we begin to discover the chaotic makeup of complexity theory. Small is a relative term and customer can be a complex term in its own right. As such, we can assume that customer can be a single consumer, a single store, a multiple store regional chain or internationally focused mega retailers such as Wal-Mart, and Tesco.

Additionally, we can also assume that the distribution channel can in fact be the retailer, a collective buyer organization such as IGA the Independent Grocers Alliance, collaborative groups, distributors, wholesalers such as SUPERVALU as well as manufacturers. Introducing the purchasing relationships between these disparate organizations where one can buy from all or any and understanding the interactions at the individual procurement professional level we begin to define the potential chaotic environment that retail procurement professionals face today. When we understand the  lack of staff, the consistent change in the global supply chain and the importance placed on long term inherited relationships, it’s hardly any wonder that new tools designed to save time and add money to the bottom line ever make it to market.

Tomorrow in part two we will discuss how solutions providers can help retailers evaluate and implement these tools without significant human investment and as a by product address larger amounts of their spend resulting in significant time and cost savings.

We look forward to your comments.