The sourcing of quality safe retail products at the best market price is the most difficult job in retail. Part III of III

November 14th, 2008

In yesterdays post we concluded our discussion as to whether consumers have anything to worry about relative to safe products? Today in Part III let’s finish up with the retailers view.

In yesterdays post we concluded our discussion as to whether consumers have anything to worry about relative to safe products? Today in Part III let’s finish up with the retailers view.

A Retailers Perspective

Many retailers have rallied around support for safety in the supply chain. Many also have clear corporate guidelines and are socially conscious as regards to eco- standards that affect us all. However, common sense would dictate that we recognize that just “checking-off the box” doesn’t move us in the direction of the next level of safety or global renewal. We can monitor the “check-off” every day, but a check mark in a box does not mean that the practice was actually completed at the appropriate level of proficiency, if at all. Unfortunately, during 2007 retail companies had to spend nearly $30B to support various compliance measures not to mention moneys focused on eco-standards.

Even as retail companies try harder and harder to support more regulations, we continue to see safety alerts and product recalls from the FDA, the USDA, as well as other agencies that put retailers and their customers at unnecessary risk. New product introductions and new unchecked sources of supply from both companies and countries for which we may or may not have clean accurate data continue to make this a daunting task in an era of fewer employees required do more and more work.

Imagine the impact on retailer’s bottom line if that $30B was not needed to support these initiatives, or if it was easier to find good clean sources of supply that had the same level of concern for safety standards and focus on corporate social responsibility regarding eco- standards as our retailers do. The impact on U.S. retail alone would be staggering, an improvement in retail profit of 21.7% based on U.S. retail sales of $4T during 2007. The same results would require an unheard of sales increase of nearly $900M. Imagine the impact on jobs and the economy in general.

What Retailers Can Do

So, what can retailers do? How can they elevate their focus and make the job easier resulting in greater safety, more focus on their green initiatives and still reduce their cost of goods and improve profitability?

First, they need to understand that it is the effective execution of actual best practices through the use of best in class tools and proven processes that will yield them the integrity and “measurable” results that are demanded by their consumers, corporate boards’ and governance bodies.

Secondarily, there needs to be true collaboration without the incremental costs normally associated with implementing new processes. Collaboration really extends beyond traditional work relationships to incorporate a broader scope or objective. Collaboration demands a focus on success beyond “self”. The implantation of a collaborative culture is difficult because it calls for an apolitical, non-self-serving, but still driven business model. Most often we see this in very small work groups, or between one or two people who truly want success for the other as much as they want success for themselves.

Retailers Summary

Retailers want there customers not to have to worry about safety. They encourage their suppliers to be proactive in becoming aware of what they are doing to support safety and environmental standards and to hold their raw material providers accountable to the same standards. Retailers are also committed to using the most current tools and processes to allay their customers concerns.

We look forward to your comments

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