Exploring the Source and Contract Process for Retail

The retail industry is facing many challenges that disrupt the sourcing and contracting phase.

• With changing consumer preferences such as more sustainable and organic products, organizations need to launch different products.
• With new emerging business models such as online retail, organizations in retail need to maintain purpose driven.
• With competitors transforming, organizations in retail need to keep the margins high.

For example, Brian has a private label company, meaning he sells a specific brand that can only be found in his retail stores. No other competitor has the same product.

His customers like his pasta sauce better than a national brand because they appreciate the quality, packaging, and sustainable his company upholds. The work he puts into the product to differentiate from other competitors brings in new customers and ensures that no other store will have the same item. He needs to be able to communicate his requirements to the contract manufactures and at the same time collect, from the contract manufacturer, information about ingredients used, manufacturing process, nutrition, and allergens.

However, Brian struggles with sourcing suppliers for his business. He needs to be able to get the product to market quickly with low costs. As the primary contact with his manufacturers he must make sure to have a good connection and communication. Private labels usually have multiple suppliers that provide for these products; therefore, Brian needs to additionally create an efficient supplier onboarding and qualification process.

This video covers the product sourcing process for the retail industry and how it works in SAP Ariba solutions.