Oct 14

Written by: RSouthard
10/14/2008 6:00 AM

Does the complexity of the retail environment deter retailers from utilizing e-procurement tools?

In yesterday’s blog post, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who’s the customer and who’s the supplier.

An element necessary to this conversation which was not considered in yesterdays post and offers significant pressure to each individual complexity element is the state of the global economy. Applying the present economic condition to any of the complexity elements listed above can have a negative impact on another complexity element. As an example, an existing source of supply may go out of business or may make a business decision to retract their reach as a result of transportation costs. Either of these conditions may have a huge complex impact on complexity element (# 7) limited view of new sources of supply while also introducing strain to complexity element (#3) long term inherited relationships. As jobs retract, complexity element (#5) is always impacted as existing procurement knowledge workers have to pick up the slack of departed associates where they may not know the suppliers or even have an existing relationship.

Where do solution providers focus their attention in order to begin to address these conditions and drive an increase in e-procurement utilization? The first complexity element that requires attention is (#5) lack of time. Although quite often offered as an objection by retailers (we don’t have time for this right now) this complexity element must be taken into consideration during the design phase of application development. Functional specifications must include significant provisions for doing the same job in significantly more efficient ways. This is not about best practices implementation or application surround services. These are not application attributes; they are ways to drive additional revenues from a retailer once contracts have been signed. These services need to be engineered into the application through the use of intelligent agents and intuitive design that result in significant time savings with the same headcount for day to day activities that can be proved easily.

We look forward to your comments.  

Copyright ©2008 Ron Southard

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