The Retailer Spring Edition 2023

THE RETAILER

42

COST SAVING PATHS LESS TRAVELED

Manish Vora Executive Vice President – Head of Manufacturing, Retail & Consumer Products WNS

A ctionable strategies in the Goods-Not For-Resale (GNFR) procurement spend space that increase transparency, stream line processes and technology, and supply sus tainable benefits for the long run. When it comes to Goods-Not-For-Resale (GNFR) spend, also known as indirect spend, the term “cost savings” typically calls to mind traditional procurement pathways like rate negotiations and competitive bidding. However, a wealth of cost reduction is accessible by tapping into the collective “how” of spend category, supplier, process, and spend man agement. In an industry as margin tight as retail, these hidden gems can substantially improve an organization’s bottom line overall. Spend Management Spend is about money and transparency. In sectors such as retail, often there is a prominent level of rigour around end-product cost categories, but a lack of understanding of systems for business support spend categories, i.e. GNFR. As a result, the millions spent annually in areas such as professional services, facilities, MRO (maintenance, repair, and operations), utilities, and even marketing can become treasure troves of savings opportunities. The first step to finding these nuggets is to explore the details. Are there several suppliers for a specific good or service that can be leveraged? Have you competitively bid in this category recently? Are there contractual terms or structures that could be more favourable or cost-effective? Although some of this information will come from your procurement data streams, that tells only part of the story. Asking informed ques tions of your business stakeholders is an invaluable way to glean crucial insights into the internal landscape. You’ll likely emerge from this deep dive with a bowl of low-hanging fruit to nibble on as you research more pervasive improvements.

Category Strategy Once you’ve captured the surface-level savings above, you need to lay a strong strategic foundation for the future of each spend area. Enter the category strategy. This formalized management structure looks across business require ments, industry dynamics, economics, the supply landscape, and other considerations to craft a proactive plan for the operation of the category, typically over a 3–5-year period. The still-fresh memory of the pandemic, coupled with ongoing supply chain chaos and challenging macroeconomic conditions, makes it daunting to consider long-term planning. However, documenting your strategic path for the future offers significant opportunities for a company. Whether that means integrating facilities, management solutions or transforming your marketing agency model, these evolutions require a deliberate strategy to gain momentum. As strong a roadmap as it is, a category strategy is only as beneficial as the category manager wielding it, and often additional training is warranted to build the skillset of employees. Strategic procurement resources frequently have strengths that naturally equip them to develop and execute portions of a category strategy. For example, an analyst is adept at building the spend profile of a category plan, whilst a relation ship-driven person will have little challenge meeting with stakeholders. Both individuals may have capability growth opportunities to round out their category management acumen.

themselves.” ‘‘

One of the most under-utilized sources of cost reduction comes from suppliers