Welcome Wellcome

Wellcome Supermarket is one of the two leading supermarket chain in Hongkong established in 1945 and was integrated into the Jardine Matheson Group in 1964 through its subsidiary the Dairy Farm International Group.

It is one of the favorite shopping destination for most Hongkonger's as it offers a no frills and a wide selection of basic and imported grocery assortments.

Now in the Philippines through Dairy Farm International's part ownership of the Rustan's Supercenter Inc. Wellcome is one of the supermarket banner platform of Rustans Supercenter, having converted all the previous Rustan's Expresslane brand into the Wellcome brand banner.

Today Wellcome has more than 18 stores and is being positioned towards the community market of households offering wide selection of local and imported grocery products, dairy products, fresh fruits and vegetables, condiments.

It offers the same selections as Rustans Supercenters two other banner brands such as Shopwise and Rustans Supermarket but offers between 10%-25% more affordable prices with the same quality service and friendly staffs to assist shoppers.

Growing towards making Wellcome brand catapult a major share of the supermarket pie in the Philippines, it is aimed to have more branches open in various community locations.

Philippine Retailers going Global

Recent global report by CBRE Research entitled "How Active Are Retailers Globally?",  China is the leading most sought-after market among many global retailers with China garnering 58% among those polled, followed by Vietnam (48%), Malaysia (42%), Indonesia (39%), and Singapore (35%). 

The Philippines for one is a major player considering we have home-grown brands expanding their market overseas, including the US, Europe and Middle East.  We can be proud of our own retail brands capability to set its foot on the growing demands for quality brands abroad not just limited towards targeting our overseas Filipino market but is being recognize by foreign consumers as well.

Global Retailers' Targets

The report found that retailers globally are predominantly targeting countries with mature retail sectors, although a number of emerging markets in Asia Pacific also feature strongly. Retailers originating from Europe have shown a strong bias towards their own region with less than 15 per cent of retailers targeting markets outside the region. Retailers from the Americas are biased towards the US, but are also targeting European markets, and in particular Germany.

China leads the way for Asia Pacific, ranking as the fifth most popular destination for global retailers, with 22 per cent of surveyed retailers targeting the market in 2014. The importance of China globally cannot be underestimated, in part because of the impact having a presence there has on sales in other regions.

In Vietnam, middle class consumers with rising incomes and a hunger for style continue to draw retailers' interest. Ho Chi Minh City and Hanoi were both ranked in the top 10 cities of most new retailer entrants in 2012 and 2013, according to CBRE's Retail Hotspots in Asia Pacific report. The liberation of Foreign Direct Investment (FDI) on wholly-owned retail businesses from 2015 is expected to further stimulate this trend.

Retail spending has also been boosted by the growth in international tourists, especially affluent ones, following the opening of major new visitor attractions. Singapore has since become one of the gateway cities for brands new to Asia. Of some concern though for retailers in Singapore is the availability of qualified sales floor staff.

The Philippines will definitely be a major player overseas, we see many local retailers bringing in international endorsers in most of their advertisements, magazine and print ads, billboards across the Metro.  Its their way of internationalizing their brands and be recognizable overseas in the market they sought to expand.  Most notable home grown brands we can truly be proud of are Bench(Suyen Corp), Penshoppe(Golden ABC) are just few of the retail brands we can be proud of that has long set their presence in the US, Middle East markets and slowly penetrating the European markets.

We surely would see more local brands expanding abroad soon.

Shopping Mall vs Online Retail

The growing number of consumers who are turning towards buying online has significantly decrease the customer traffic flow amongst all brick and mortar retailers.  Sales momentum is perceptibly slowing in most retail stores. These tepid numbers reflect consumer apathy and general economic concerns.

Shopping malls still hold sway among many shoppers but not as before except during back to school, summer time, christmas and 3 day sale events. Reports indicate that the Internet is making up for some of the lost store traffic. It is increasingly evident that the shift from shopping in stores to shopping online is permanent and still rising.

In the past year more and more people felt comfortable with Internet shopping.  Special values and free shipping incentivized them to fulfill their need for basics and their family fashion apparel online.  One wonders what will happen in the future as even more sales shift to online.  

In the Philippines, there is still positive growth in the retail sector but these are being competed by Divisoria and Baclaran marketplace where people tend to look for great bargains and have their money felt like having more peso power.  The positive year in year sales is  not as significant as a few years back where most earns double digit growth, these days most retailers are striving to go beyond a positive 6-8% growth.

The recent surge in online shopping has even attracted international investors such as german-incubator Rocket Internet GMBH that set up across Europe, Asia and Africa online retailers such as Lazada, Zalora which in some way reduced the traditional mall retailers customer flow.   Though most online shoppers require payment through credit cards, these innovative online retailers have come up with ways to target non-credit card holders by offering Cash on delivery payments or deposit payments for the items the buyers are getting from these new retail concepts.

Retailers may still sell the same quantity of many items and goods, but the sales will occur outside brick and mortar stores.

Content Marketing

I came across reading about new technologies marketer and author Arnie Kuenn, about content publishing on social networking site and how your content marketing can reached countless audience through this platform.

I thought to myself, the world of marketing, sales has level up to new heights, every marketer, corporate advertising has moved several notches upward to reach more and more target audience.  Unlike in the regular brick and mortar store concept, everyone who is onto the social networking sites are potential target market.

In the traditional business of trading, marketing, retailing, its a face to face transaction, one customer at a time, then the surge of internet changes everything, we have boundless reach, a world without border and this plays well especially to the big league companies who have jumped into the online bandwagon earlier since they have seen the future of marketing.

I would have to say that digital marketing has been a great equalizer, as the possibility of a total unknown brand that cannot compete spending so much as against the advertising budget of multinationals can become instant household name if only they have the right content in their marketing.

Basically, content marketing is the art of communicating with your customers and prospects without selling. It is non-interruption marketing. Instead of pitching your products or services, you are delivering information that makes your buyer more intelligent. The essence of this content strategy is the belief that if we, as businesses, deliver consistent, ongoing valuable information to buyers, they ultimately reward us with their business and loyalty.

Though much can be told, the real winners are the consumers, they don't have to go queue long lines to pay for products they want to buy, or getting inside a shop to browse through thousands of SKU's and learn about why they have to buy those stuffs.  Nowadays, even at the comfort of their own home, workplace, even in public places they can use their tablets, smartphones, laptaps to check and even compare prices.

The challenge of every company that digitally markets online is to have quality content, thus content marketing is one of the most essential factor that will make your products, services stand out among the millions of gadgets, services, merchandise, goods.  This requires a well thought out plan, organized and targeted towards your expected target market. Its a battle of good, relevant content information that will in the end benefit both the brands, retailers, consumers alike.

Thought leaders and marketing experts from around the world, including the likes of Seth Godin and hundreds of the leading thinkers in marketing have concluded that content marketing isn’t just the future, it’s the present.

Video Blogging

Recently I came across this video of Jun Sisa as I have been browsing through countless Youtube videos and wanting to listen about this phenomenal Disney movie song, as I watched him sing his own version of "Let it go", I was amazed by the nice voice he has and his rendition of such song.  I can say, prior to me accidentally seeing his singing solo video, I have no idea whatsoever who he is, now what he does but surely he got my attention through Youtube video or shall I shall his video blog.

I remember a friend, who for the love of making imaginative story video of his day to day travails be it at home or outside of home and even creating funny scripted skits together with his friend, got people so amused that he began an online following that there were even total strangers who contacted him and sent him a Macbook and a videocamera cause they love the comical relief he brings and after a few years was discovered to be now part of a TV networks morning show as a host.  Who knows how it will alter your way of life for the better, the same way it did for my friend.

In a world where people are more and more interactive, people do share stories through creating videos on youtube.  Whether be it music videos, a video about peoples stories, travel, foodporn, someone has something to say and there are those who got the world attention by posting videos of their causes, how and what they see around them, showing how their friends, family, kids or even themselves would sing a certain song or dance for fun sake.

People are placing their personal videos, companies are showing their product/service on your own YouTube channel to reach a broader stream of audience whether for their own or their friends pleasures or to promote something thats unusually fun and exciting to share to the whole community.  Many of these blogger videos are connecting them through other social media platforms such as  a status on Facebook, LinkedIn, Slideshare, Twitter accounts.

So you see video blogging or creating videos on Youtube or posting it on your social networking sites has its own viral mechanism to bring across various thematic or non-thematic gestures, causes, beliefs and even marketing products and services for personal or corporate.  So how effective is it? That really depends on viewership and target audiences.

So when one has to incorporate video into your social marketing strategy or bridge across the fun-filled sharing of your own experience, product and services or you just simple want people to take notice, why not create videos and start posting it on Youtube, afterall there are great examples of people who shot their way to fame using this platform, some even got it as far as Hollywood, taken notice by American TV hosts such as Oprah Winfrey, Ellen de Generes and who knows who may be watching your video. 

Just keep in mind these few success tips:

1.    Keep it simple and short (3-5 minutes).

2.    Talk about the value to the viewer…not you.

3.    Make it fun and be comical to view.

4.    Be happy on camera.

5.    What’s in the background (make sure your background does not distract your audience from your message).

6.    How’s the lighting (shot to fame needs good lighting).

7.    How’s the sound (must be audible and clear).

8.    Prepare, prepare, prepare (know what you want to say and when).

9.    Practice, practice, practice (constant practice makes perfect).

10.  Always have your video devices with you you never know when an opportunity to record will arise.

So why not start your own video, you'll never know if its going to reach which audience so long as the message is clear and you know it will delight your unanimous world viewers.  Who knows what this can do to change the course of your life, it might even shot your way to world fame.

AT THE TOSS OF A COIN, A US$5M DEAL WAS DONE

THE YEAR WAS 1988...

John Gokongwei and Henry Sy are tough competitors in terms of retail space building and mall propagation all across the Philippines. When the Ortigas prime property where Robinsons Galleria now stands, was up for sale by Don Paco Ortigas, These two business tycoons were keen on having this choicest among the Prime Ortigas properties. 

John Gokongwei's bid was P1,900 ($95) per square meter while Henry Sy's bid was P2,000 ($100) per square meter. At first, Henry Sy was comfortably happy because he thought he won the right to build whatever he intends to build then on this property they were bidding for then. But with John Gokongwei's business sense said he would also take care of paying the five percent agents commission, or another P100 per square meter, in effect offering the same amount as Henry Sy gave. 

A discussion ensued that Henry Sy protested and he insisted before Don Francisco Ortigas that he won that bid because the agents commission was not part of the terms of bidding. John Gokongwei said he would go to court. Don Francisco Ortigas was naturally apprehensive about the prospect of a court case. Considering he was selling a property for the first time in a long time, he did not want even the slightest hint of negative publicity.

He also felt that the legal process would take 10 years. So he instead decided to throw in another property for sale and proposed that a toss of a coin would determine who would get the property. That way, everyone comes out a winner. So Mr. Ortigas tossed the coin and thats how Henry Sy ended up with the SM Megamall site w/c he got as a consolation from losing the Prime Ortigas corner lot,  He negotiated in joint partnership with the Alba group to come up with the much bigger floor area for the present Megamall site.  

And so as they say, the rest is history and comparing the two behemoth Malls in the Ortigas area, Henry Sy finally had the last laugh since his Megamall has outdone the money being raked in by the Robinson's Galleria Mall. 

TO HAVE $1M, IS IT ENOUGH FOR YOU TO RETIRE?

We have always been taught by our parents when we were young, to study well, get good grades in school, get a good education, graduate from college get a good paying job and save.  But what if we have done all we could to achieve their advice and yet in this fast-changing, corporate greed and wanton desire to spend more and more, we don't achieve the saving part of this heirarchial step by step advice from our parents.

Is it us who are wrong are are they remissed on their advice. The answer is neither, they gave us true, good and sound advice, and as dutiful children, we have obeyed yet as they say, life is full of uncertainties.  The daunting question is, Are we right to be working for others or should we be an entrepreneur, most likely all people would say, "They ought to be an entrepreneur... BUT".

Excuses, excuses, the most inexplicable of all human excuse, "Monetary, Financial, Lack of Capital, Funding concern, etc". All points to the blame of lack, absence of financial overflow, yet what is considered to be more than enough for us to say, we are on our own?

We have all sorts of excuses why we don't plunge ourselves into the arena of "being your own boss" and yet we always complain about how meager our income is going for us, or we do not have enough to get by"

My simple answer, "QUIT COMPLAINING, and Quit your job, it'll save you alot of emotional stress and unhappiness, and to add another note to that, it will save your boss, your company, your peers at work alot of trouble of all your unhappy rantings and complaints.

Start out on your own, as I have always lived by, its not about the money, its not about lack of capital, that prevents people from going into entrepreneurship. Its thei lack if initiative, its their fear of having to shoulder all the responsibilities of possible failure, well, if you have a "failure mentality" you will never be a success.

Money is not the problem, its not the money that makes the idea work. Its the idea that makes the money come your way, some business need not start out with a big capital investment, some can do the "buy and sell" trade, there are sites online you can post anything to sell without having to carry inventories, if you don't have the money to buy and to sell, once you get your first online buyer inquiring, require a 50% downpayment deposit and balance upon your delivery of the goods.  Or you can borrow from family or friends to start buying and selling.  There are countless of ways to start your way to entrepreneurship, the real question is, Are you willing to get out of your comfort zone.

UP DILIMAN

The 10th Philippine Blogging Summit 2014 will be held today at my favorite campus hang out, University of the Philippines in Diliman, Quezon City.  I haven't been to UP Diliman campus for quite a few months since December 2013 and this is another fresh breather to see once again the beacon of Philippines freedom flowing ideas and talents.

It began back during my college days when I had a girlfriend who studied BS Tourism that I first got a glimpse of this beacon of the brightest minds.  I've got to meet some very interesting folks, the liberality of their principles, that help me mold my own distinct principles in life as well. I got the fascination for books, opinions, arts even crafts that moving forward I have taken a short course in Photography and had an interesting immersion into the lifestyle of a UP student is like.

I love UP and all it holds dear including sports that I am fond of watching the afternoon games practice in the open field of the sunken garden or go to the UP gym just to watch friends have their Physical Education Class. Here did I also first saw my glimpse of a fencing class.  Oh How I have always fancy to be able to learn how to play fencing. But nah, I am just too lazy I guess or too spendthrift to spend enrolling to learn it. lol.
Anyways, I am excited to see the fresh greenery and breath the air of this campus today and tomorrow. Surely it will be a fun-filled socially knowing new people amongst the best of the best Philippine bloggers.

Getting Social on the Web

Recently The Philippines celebrated the 20th year of the internet in the Philippines, it has come a long way from the time internet was first introduced to us.  I remember those were the years of many changes, from analog to digital. Who would have imagined that nowadays even a phone and tablet can have access to those valuable information in just a click.

Most businesses these days must have one or more company websites of their own, to promote their goods, products and services.  It is estimated that people are more and more dependent on the net for information, from news media to traffic updates, how to's from DIY, to pastry and cooking and a whole lot more.

Social networking sites connects people who may not even know they each exist prior to being "friends" or "have following" in these social media sites.  Its like our ancestors will take multiple lifetimes to get to meet new people around the globe, but it now only takes a fraction of ones lifetime these days to connect and start communicating with a total stranger on the web.

Blogging, which I have used as a means to share my thoughts has evolved gradually from one concept to the others, some even has used blogging to catapult them to the business world and community.  Most web-based business has started out as a blog to share thoughts and ideas, share stories and even awesome places they have visited.

Now there's twitter, google+, free online selling websites, instagram, and one can easily create their own web pages and many more.  Its a limitless world of impossibilities and the future seems more exciting than ever before.

What would be the next revolution in this digital sphere of community building and in business.

Philippines Hosting 2015 Asia Pacific Retailers Convention

We do have hardworking retailing leaders that works hard to catapult the Philippines at par and always ready to showcase our best for the world to see. 

THE Philippines won the right to host again the Asia-Pacific Retailers Convention and Exhibition (APRCE) in 2015, the same event that placed the country on the global retail radar when Manila hosted it 22 years ago.

The Philippine Retailers Association (PRA), the country’s largest organization of retailers and suppliers/service providers and the prime movers in the retail industry, recently announced that it won the bid to bring the gathering of the region’s retail industry leaders to the country for the second time during the Heads of Delegations (HOD) meeting of the Federation of Asia Pacific Retailers Association (FAPRA).

FAPRA is the regional organization of retailers composed of 17 member-countries, including the Philippines, Singapore, Indonesia, Thailand, Hong Kong, Malaysia, Vietnam, Australia, New Zealand, Japan, South Korea, Taiwan, China, Mongolia, Turkey, Fiji and India

With Southeast Asia becoming a borderless single market by 2015. The Philippines hosting the APRCE is a perfect showcase of what our local retailers can offer the international market.  APRCE is the longest-running regional retail conference and expo in the Asia-Pacific region.

The event will run from September 30 to October 2, 2015 at the SMX Convention Center.  Registration is open just sign up at twww.2015aprcemanila.com.ph

SALE SALE SALE

All year round, we see this most recognized four-letter word, that conveys a very powerful message.  No need for any further explanation yet all of us know that it certainly means, a more affordable price goods to buy, more value for our money, big savings.

Being in the retail industry myself, I would like to emphasize the many facets, benefits of what this word means for both retailers and consumers.

Most customers are appealed towards the word "SALE" being displayed alongside merchandise/goods being sold, and have you observed that this is most often being displayed store-wide during special occasions such as Graduation Day, Summer season, Back to school, Halloween, Christmas and New Year are the major "Sale season" and there are the "Payday Sale", "End-of-Season Sale", "Holiday Sale", "Father's Day Sale", "Mother's Day Sale", "Grandparents Day Sale", "Anniversary Sale" to name a few.

There are also the departmental Sale : "Toy Sale", "Furniture Sale",  "Lingerie Sale", "Mens Wear Sale", "Appliance Sale" and many other category or brand sale.

As part of retail, the reason "Sale" is being implemented in-store is to draw the buying crowd, especially during payday, another reason is for retailers to be able to deplete their stock inventories to free up the retail shelves and turn them into cash to have more cash-flow to purchase new items to be sold in their stores. This is the avenue for most retailers, department store, business owners to make customers feel being active part of the exchange of goods for their money.Stores are more likely to place sale signs on items with higher unit volumes.  Unit volumes vary across products.

Store sale sign and price strategies are entirely endogenous in the model, as is the impact of sale signs on demand.  Demand increases for products with sale signs because customers believe these products are less likely to be available in the future.

As for profit margins : stores are more likely to place sale signs on items with higher profit margins.  The shift in demand upon use of a sale sign can lead to higher prices and also higher unit volumes.

The effectiveness of sale signs by arguing that they inform customers about which products have relatively low prices, thus helping customers decide whether to purchase now, visit another store or perhaps return to the same store in the future.

Sale signs makes the consumers aware of price-markdown, big discounts that may translate to perceived big saving also increase demand for products.  The apparent effectiveness of this simple strategy is surprising; sale signs are inexpensive to produce.

On the part of the consumers, they most often have limited or incomplete idea of the true value of the products being put on sale, they may not have any hint if these are over-stocks, for depletion or are priced with higher margins.  The main point why customers are drawn towards "Sale" is their notion that they can find good deals of what they have wanted to buy in the past but limited due to the regular pricing, or they have the perceived savings to be made, this also hasten their decision-making in the urgency to immediately purchase even if the product does not immediately pose a need for the consumer.

In summary, its a win-win for the customers, if the retailers put on sale their premium and regular items that are not at all over-stocked or slow-selling, if its being offered all across product stock keeping units(SKU) and not just on the selected items that they deemed to be old stocks or non moving items.  For the consumers, they also would be giving the much needed help by buying the products put on sale be it discounted or full-markdown priced.  Since this will entail the business to have more cash-flow to buy new merchandise to put on display for their future shopping pleasure.

Strategic Sourcing

The ground on which retail and consumer goods sourcing organizations have long been based has shifted in recent years, the result of competitive and regulatory changes, rising costs, and the Internet, which brings issues of quality and working conditions to the attention of end users around the world in near real time.

It is a landscape rich with opportunity. Sourcing organizations that develop the key capabilities needed to leverage such opportunity will position themselves and their companies for success well into the future.

A SHIFTING LANDSCAPE

There have been a number of changes that, taken together, have fundamentally altered the sourcing organization landscape. Among them are:

Shift from deflation to inflation. For much of the aughts, the levels of personal consumption and cost were headed in opposite directions, with the first moving higher, while the second fell or stayed flat. Then in 2011, costs started to spike, but expenditures remained relatively unchanged. Now that the days of deflation are over, suppliers, producers and retailers need to adjust to the “new normal.” 

Proliferation of sourcing location options. There is no one country poised to become the “next China.” As such, picking an effective sourcing base now requires advanced macroeconomic forecasting that takes into account everything from political turmoil to currency changes to infrastructure development.

Vendor base consolidation. After the global credit crunch forced the shuttering of many factories, leading consumer products companies began establishing long-term relationships with vertically integrated manufacturers that provide production capabilities and a full range of services across multiple countries.

Increase in regulations. Product-related regulations have become more complex and stringent in recent years and are increasingly particular not just to countries, but also to cities and states. Consider California’s Proposition 65, which requires companies to notify the public about potentially harmful chemicals in the products they purchase.

Near-real-time consumer awareness of quality issues and working conditions. The Internet, which has further sped up the 24-hour news cycle and added to the mix social media and online reviews, has made it virtually impossible to contain issues of poor quality or subpar working conditions, as a leading retailer’s recall of its yoga pants and the devastating factory fires in Bangladesh made clear.

THE NEW SOURCING ORGANIZATION

In light of the 21st-century challenges facing sourcing organizations, we have identified nine capabilities necessary for success, and arranged them by category: strategy, supply base and speed.

Strategy

The first and most critical step is for organizations to accurately assess how closely their sourcing and overall business strategies align with one another. In the process, they need to identify those areas in which they can independently excel and those in which they need to seek the help of partners.

1. Sourcing location: An effective sourcing location strategy should take into account the following factors:

• Macroeconomic: Labor climate, political stability, currency movements, energy rates, raw material availability, duties, regulations and country competencies
• Consumer: Costing or pricing strategy, order quantities, product classifications, merchandising strategy, quality requirements, lead times, and calendars
• Market: Retail sales, future-season orders, unemployment rates and trade regulations
• Vendor skills: Financial stability, factory locations, production capabilities, capacities, raw material supply base and product lead times
• Internal: Capabilities and needs, financial investments in overseas offices
• Cost: Not just the buying price, but the total cost, which often includes hidden expenditures before, during and after sourcing
• Service level: How fast the sourcing organization can get products from the sourcing base to a brand’s DC
• Speed: How quickly the products can reach consumers and how agile the sourcing organization is in responding to changes in demand

Special mention needs to be made of near-shoring, or bringing manufacturing closer to home. The reduction in cycle times and money saved on transportation and labor costs have prompted retailers from Target to The Children’s Place to Zara to near-shore a portion of their manufacturing, while most brands continue to task Asia-based suppliers with handling full orders should the initial sample sell well.

Consumer products manufacturers are near-shoring as well. For example, GE, by near-shoring its GeoSpring water heater, has been able to drop the price from $1,599 to $1,299 on lower material and shipping costs and fewer labor hours. Meanwhile, it’s been able to increase the GeoSpring’s quality and energy efficiency and to slash the time needed to incorporate design updates from five weeks to mere minutes.

2. Operating model/organizational structure. When deciding what should be insourced and what should be contracted to outside vendors, the leading practice is to invest in improving capabilities that are necessary for supporting the core business strategy and outsource those that are more transactional in nature or for which the company has limited competence.

The operating model should also take into account what should be handled centrally and what should be decentralized. For example, in addition to merchandising and sourcing, Dick’s Sporting Goods uses its overseas sourcing team to contract out support services that include compliance and quality testing. PVH uses its overseas offices for fit and color approval, fabric management, quality, and production management, all of which contribute to shorter cycle times, while Carter’s has handed over supplier evaluation and verification to its local sourcing offices, believing that it’s the people on the ground who are most familiar with local vendors’ capabilities.

3. Innovation. The ability to identify and commercialize new ideas—whether in the form of materials, construction, production or product use—is crucial for success in the 21st century. Doing so requires that the sourcing organization be structured and measured to support innovation, with the ability to both identify and enable the development of new concepts.

To be sure, few organizations can turn truly cutting-edge ideas into market-ready solutions using just internal resources; forging strong relationships with external partners, including vendors that have demonstrated a commitment to innovation as well as academic institutions, is often necessary.

With that in mind, Hanesbrands in 2009 signeda joint development agreement with Naturally Advanced Technologies to commercialize a cost-effective and environmentally sensitive alternative to cotton, a proprietary flax-based fiber created using NAT’s CRAiLAR® technology. In 2011, the two inked a 10-year supply deal for the fiber.

Supply Base

Sourcing organizations must actively work to establish and maintain partner relationships and be vigilant about ensuring their partners’ reliability and effectiveness.

4. Supplier relationship management (SRM). Companies with a strong SRM program in place can yield substantially greater cost savings than companies with lackluster SRM programs or none at all: one to two basis points per year, on average. Within three to five years, such savings create a significant gap between top and bottom performers.

When building SRM programs, there are four key areas of focus:

• Stratification: Tiering the supplier base to prioritize and manage supplier relationships according to strategic importance
• Collaboration: Creating continuous improvement programs to strengthen supplier capabilities and performance of joint activities
• Evaluation: Defining metrics to evaluate supplier performance
• Governance: Developing clearly defined roles and responsibilities, both internally and externally, and defining cadence to prioritize and track progress

Companies serious about enhancing their SRM efforts develop Lean manufacturing models, diversify production locations, strengthen just-in-time replenishment and implement defined initiatives to lower cost, boost productivity and improve responsiveness across the nodes that make up the end-to-end value chain.

5. Supplier compliance. The increasing number and complexity of regulatory requirements—coupled with heightened consumer awareness of any missteps—mean it’s more important than ever to have good visibility into supplier compliance. However, it goes both ways: Branded wholesalers need to make sure their retail partners are the right ones too.

Such deep understanding and mutual trust can be established by way of transparent data sharing, facilitated by a team of key players that represent distribution, merchandising, inventory control and auditing and who are tasked with reviewing all aspects of compliance policies and procedures, including making recommendations and implementing improvements.

The benefit of vendor compliance is twofold: It not only helps to reduce the amount of time spent handling supplier glitches and improving overall product quality, but it also lessens the chance of negative press, which these days can be virtually impossible to contain.

6. Supplier risk. The scope of potential supplier risk is vast: It can include everything from a supplier’s financial health to its ability to respond to service requirements in a timely and effective manner to potential work stoppages—even natural disasters. To minimize risk, sourcing organizations need to first identify it, then proactively address it.

The best way to identify risk is to use a scorecard or something equivalent on which suppliers’ performance across risk categories is assessed and then assigned a rating. Doing so will yield a comparative snapshot of supplier risk in one central location and, in the process, bring to light the areas where risk mitigation strategies need to be put into place.

Speed

Neither a good strategy nor a properly managed supply base will be effective without the ability to get product to market quickly and effectively.

7. Local sourcing and vertical integration. When it comes to speed, perhaps the best example is Zara and its dual supply chain, which sees its most trend-dependent items produced locally to reduce lead times, while basics are produced more cheaply in Asia. Elsewhere, Carter’s has cut its lead times to 105 days (versus an industry average of 144) by making sure all negotiations are concluded before purchase orders are issued.

In grocery, Whole Foods has developed strong networks of local farmers to cut lead times for perishable products, an approach that also helps reduce the chance of product shortfalls.

8. Multi-echelon inventory. Another way to improve speed and boost sales is to manage inventory at multiple locations in the supply chain. Such an effort requires close collaboration between the retailer and manufacturer across the supply chain, and upstream, between the manufacturer and its suppliers.

Gap, for example, purchased several years’ worth of the unique denim used in Old Navy’s Rockstar jeans line in an effort to reduce costs. Through close collaboration with the mill, it was able to provide daily updates on color, quantity and size, filling out the pipeline more accurately and boosting average unit retail.

9. Sustainability and product compliance. Adhering to product safety and labor regulations and developing products with the environment in mind not only engenders goodwill with customers and reduces costs, it also decreases risk and, as a result, helps organizations get their products to more markets without delay. VF’s restricted substance list, for example, lets it make products that can be sold in any country around the globe.

H&M takes it a step further: It’s the world’s largest buyer of certified organic cotton and features a Conscious Collection made of sustainable materials and an in-store clothing recycling center. Its secret is working with highly rated suppliers (53% of production is carried out by first- or second-tier suppliers) that are more attuned than most to environmental and labor performance.

And Green Mountain Coffee Roasters (GMCR) invests heavily in the farm communities from which it sources coffee beans; it funded more than 75 supply chain projects in 14 countries in 2012 alone.

The number of changes that sourcing organizations have had to contend with in recent years is unprecedented, and there are undoubtedly more on the way. But sourcing organizations that are armed with the capabilities that support their strategy, effectively leverage their supply base and ensure that speed is at the core of all their operations will not just survive in such a dynamic environment, they will thrive.