CHAPTER 5 SUPPLY SOURCES

LEARNING OBJECTIVES Understand how the supply base can contribute to the achievement of retail product management objectives Introduce different types of supplier, and understand how they can be accessed Explore supplier factors that are used in supplier selection, evaluation and monitoring Develop an understanding of retailer-supplier relationships and how they affect the buying process

TYPES OF SUPPLIER Manufacturers (direct) Agents Wholesalers and distributors The ‘grey’ market Alliances and concessions Choice will depend on:  size of supplier and retailer  channel power  brand appeal  other selection criteria (see later)

SUPPLIER SEARCH (SOURCING) An important and on-going part of RPM Usually undertaken by buyers / selectors / sourcing managers Assistant buyers may initially screen suppliers who approach retailer Supplier search is increasingly on a global scale Trade shows and supplier catalogues are important sources for smaller retailers

CHOOSING A SUPPLIER Assessing a supplier’s suitability to retailer Supplier assessment stages:  initial assessment (see Table 5.1)  references, visits and product testing (technologist appraisal)  trial order  supplier evaluation  supplier monitoring Some retailers out-source supplier assessment

RETAILER-SUPPLIER RELATIONSHIP DEVELOPMENT Traditional buying process models  ignore the fact that most retailer-supplier transactions take place within an on-going relationship  ignore the fact that suppliers are often the instigators of a buying decision (product suggestion) Revisiting the B2B buying process resulted in the INTERACTION MODEL (IMP, 1982)

THE INTERACTION MODEL: FIGURE 5.1

STAGES OF DEVELOPMENT IN RETAILER-SUPPLIER RELATIONSHIPS (FIGURE 5.2)

SUPPLY CHAIN MANAGEMENT Operational efficiency derived from the alignment of retailer’s and supplier’s logistical systems Requires partnership approach with suppliers Depends on integrated information technology and data sharing Increasing responsibility on suppliers to ensure product availability Increasing responsibility on suppliers to improve product variety / development