How can retailers help to turn around the economy immediately?

March 4th, 2009

With the economy in shambles and retailers results terrible

With the economy in shambles and retailers results terrible, now is the best time for retailers to use SaaS oriented e-negotiation tools to drive down costs immediately.

During the last several years, we have seen a revolution in technology for the supply chain…why is it important for retailers to address their spending more aggressively now while the economy is in shambles.

The answer may be so simple that it is getting over looked by the executive suite. An immediate and significant reduction in cost of goods can save jobs, reduce prices for consumers and shore up sagging bottom lines. These benefits can be measured immediately have a positive impact on results in the current quarter.

Regardless of the economy, Cost of Goods or COGS is really the last large area that retailers can focus on to drive significant cost out of their business immediately. I know that everyone in graduate school comes out thinking that the best place to cut costs is in personnel, but in this case they are wrong.

During the last two decades, initiatives around customers in the form of CRM programs, Efficient Consumer Response initiatives, and large scale data warehouses for decision support have been implemented. In the same time there has been no appreciable improvement the bottom line for many retailers. Today SaaS oriented low cost e-procurement solutions are available that can be implemented almost immediately at almost no cost to improve the effectiveness of buyers by offering them a broader universe of supplier choices over a shorter period of time, without the need to conduct detailed research, and as such makes their job easier.

We can also immediately calculate the dollar and percentage return on investment at the conclusion of an e-procurement event so the ROI in many cases is instantaneous and with historical saving of greater than 15% is many times 10X or greater. Since these are direct savings versus budget or approved capital expenditure, the dollars drop directly to the bottom line and can easily be converted to basis points of improvement that are factual. This author is not aware of any other application focus area that can make this claim.

We look forward to and appreciate your comments.

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