Procurement strategy

Situation

The margins in the fashion retail business are traditionally quite low. Success depends a lot on what the buyer is purchasing (market know-how) and at what conditions the products can be supplied – mainly from Asia (sourcing know-how). A lean and efficient sourcing process is also key for success. Fierce competition forced our client to develop a new sourcing strategy.

The know-how about the sourcing markets in Asia and respective price points were available. The experience on badge sizes, material qualities, product features, contract volumes etc. was in the company. However, the process was too slow, too complicated and not aligned across product groups. A large group workshop was planned to jointly work out and agree on a new sourcing strategy.

Approach

During preparation the project team gathered important facts to be assembled in the Factbook. The team also developed some alternatives for potential future strategies. Various dimensions were formed differently like customer segments, product segments, process responsibilities, functional set up of organizational units and systems support from the IT. The project team consisted exclusively of own employees.

From the very beginning this led to a high level of responsibility for the outcome. Some external experts added selective experience and know-how generating important impulses. During the large group workshop the prepared alternatives were proposed and acted  as a really good starting point. Lively discussions and iterations produced a good onward development. A final large group discussion opened the forum for ultimate balancing of the matured alternatives. Finally the decisions were taken by the CEO and the top management team.

The group then worked out the implementation roadmap and responsibilities as well as next steps were assigned on the spot. In addition communication measures were created, so that the participants were enabled to explain the outcome directly to all other employees. The sponsors were clear with regard to their expectations; all participants carry the same responsibility to engage with one another and drive change as well as the implementation.

Result

A new sourcing strategy was developed, aligned and finalized. The roadmap for implementation was built and agreed, clear responsibilities assigned as well as the immediate next steps. Only a few months later the first positive business results were measurable.