Category Archives: Best Practices

Competition When it Comes to Incontinence: Retailer Sourcing Considerations

Today’s guest post is from Elizabeth Skipor, a Consultant at Source One Management Services, specializing in Marketing Procurement from the mid-market to the Fortune 500 companies. Before joining Source One, she was a category manager/specialist for a major US retailer.

Whether or not you’re familiar with or are an avid shopper for incontinence products such as adult diapers and incontinence pads, merchants like Walgreens, CVS and WalMart, are expanding their product mix to not only enhance comfort and fit, but performance in this highly competitive market.

This means product development and sourcing divisions at these fine retailers are busy trying to stay ahead of the curve. According to Nonwovens Industry, it’s in developed markets that adult incontinence is outpacing growth in more established segments like baby diapers and feminine hygiene. In my experience (as a former procurement professional of one of these organizations), this is true and mainly due to the 74.9 million baby-boomers (or Demographic, for purposes of this article) who are not only remaining active but are living longer. The number of people age 65 and older has increased tenfold in the last century and in better health than ever before (Source: ABC News).

As a former major retail buyer and category specialist for the adult incontinence category and previously procured fabrics for major clothing brands, I had to ask myself this question: What were the requirements that were rated high on the list by the demographic and what did I do in preparation for sourcing the best of the best for such a sensitive category?

Based on market research, there are three majorly important factors to consider:

  • Product Performance;
  • Comfort & Fit;
  • Discreetness

These three areas are imperative to the demographic due to the demographic remaining active longer; “People are living longer and living more of their life in better health than before” said Richard Suzman, an expert at the National Institute on Aging, the lead agency in assembling the report. Quality of life and the ability to maintain an active lifestyle remains vastly important.

When it comes to performance, if the product fails in functionality and doesn’t perform perfectly as promised, it can not only cause an uproar of poor review with your demographic and more importantly your brand in totality can take a major hit on its’ reliability, directly causing a decline in sales.

So, what’s important here?

  1. Absorption!
    Therefore, utilizing the right product for you whether it’s bladder control pads, protective underwear & briefs. In to put it gently, these products range in absorbency protection from very light to ultimate absorption; they’re also available in different lengths and thicknesses, and some offer side protection barriers for added leakage protection. These products are designed to draw moisture away from the body, eliminate odour, encompasses side shields for added projection, and offers a thicker level of protection where it’s needed the most (Source: National Incontinence).
  2. Research & development, innovation and technology
    are the forefront of any product development initiative due to consumers wanting items faster and better at competitive prices, and in this case more comfortable and discreet to wear; retailers are investing heavily on technological innovation of adult incontinence to ensure the functionality of the items create strong brand loyalty as well as sourcing from. Some recent innovations include the application elastic nettings allowing for flexible, smooth and seamless fusions for grander comfort and feel for the consumer. Taking this innovation this a step further in application in relation to hygiene and skin protection, the web configuration of the net offers a unique level of breathability and air permeability that directly affects end users’ level of comfort. As these are only a few examples, the innovation behind incontinence is rapidly increasing and fast paced, while maintaining a cost competitive advantage with not only major brands but private owned brands as well.

Whether it’s private label or name branded product, sourcing a supplier who stays ahead of the demographics’ requirements is essential to the shelf life of the product. Aside from this, extensive tests are performed to ensure the promises on the labels are accurate.

Some key performance indicators for incontinence testing include the following:

  • Rewet
  • Breathability
  • Retention Capacity
  • Elasticity
  • Total Absorbent Capacity

Thanks Liz for the deep insights into the daily life of a Sourcing Professional. Sourcing isn’t always glamourous, but, to find savings, and value, the work has to be done.

Stay tuned to SI as we will, through collaboration with Source One, continue to bring you down-and-dirty details on categories everyone has to source, but no one wants to talk about. Sometimes you have to dive into the weeds to succeed (which is something every incontinent golfer knows).

What Makes a Good UX? Part III “Mission Control Dashboards”

Last week, after singing Bye, Bye to Monochrome UIs, we posted part II of what is to be a rather lengthy series on what makes a good UI, and more importantly, a good UX in a modern Sourcing or Procurement System. (Lengthy in that, after tackling the basics, we are going to dive into all the major components of your average Source to Pay system, and some of these components will require multiple posts on their own!)

In our first post (on What Makes a Good UI) where we noted that the full series is being published over on Spend Matters Pro [membership required], as it is the result of a deep long-term multi-blogger collaboration (led by the doctor and the prophet) and sponsored by Spend Matters, we outlined some of the fundamental requirements of a UI/UX for any Supply Management application which included, but was not limited to, integrated guidance, context awareness, “touch-less” automation, mobile support, and messaging as a competitive advantage.

Then, in Part II, we began our deep dive into what all of this means, starting with “Smart Systems” that drive integrated guidance leveraging new “AI” techniques -— better termed automated reasoning (AR), as software isn’t truly intelligent —- that adapt and learn over time. These systems mix semantic technology, sentiment analysis, key-phrase driven expert systems and other machine learning techniques with history to determine what the user is doing and what the user wants to do and offer appropriate guidance. But that’s just one aspect (and the full Spend Matters Pro article on Smart Systems and Messaging, Chat, and Collaboration also dived into critical MCC aspects among other things.

Yesterday, over on Spend Matters Pro [membership required], the prophet and the doctor released the next part of their UX Series, Advanced Mobile and “Mission Control” Dashboards where we dove deep (and I mean deep, Mariana Trench deep) into two more key requirements of modern Sourcing or Procurement application, namely advanced mobile enablement (which is way more than just e-mail, FYI) and what we are terming “mission control dashboards”.

The real key here is “mission control dashboards”, and not just plain old first generation dashboards (which are very dangerous and dysfunctional) which, if present, should result in the application under consideration being banned for life from your organization.

You see, whereas static first generation dashboards give you useless (and I mean useless) reports (which, at best, show a stoplight indictor with no description or backup data that lulls you in to a false sense of complacency or urgency), a modern mission control dashboard replaces those static widgets with modern fully enabled GUI widgets that allow users to drill down, initiate, and execute relevant actions such as data retrieval, workflow kick-off, or collaborative corrective actions. They can embed “apps” and “portlets” and allow a user to get what they need, and where they need, in 3-clicks, without missing anything important. They are the customizeable interactive views that applications have been missing. But, again, this is only the case for truly modern dashboards. First generation dashboards still belong in the dung-heap. For a truly deep dive into what these are, what they can do, and how they are used, check out the Pro piece [membership required].

P.S. Again, if you are a vendor invited to the Sourcing, SRM, CLM, or Spend Analysis Solution Map, this is a series you do NOT want to miss!

What is Visibility?

This is a term that has been overused and abused by Supply Management vendors for years who like to claim that their tool will give you unprecedented visibility into your supply chain, but just what does that mean? If you look up the definition, the first (or second) definition you’ll find in many dictionaries is something along the lines of the state or fact of being visible, which isn’t very useful when visible is defined as that [which] can be seen. So what do we have to see?

Well, if you talk to many vendors, you have to see the data is. Specifically, the vendor might tell you that you need to see the data on where your order is in terms of production, shipment, or delivery. And this is good, but it’s not enough. While this will tell you that production on an order is three (3) days behind, it won’t tell you why. Is the plant recovering from a backlog, and about to put your order into overtime production tomorrow? Are they suffering from a worker shortage, or strike, and your order is delayed another week? Or have the components and/or raw materials not yet arrived? And if it’s the latter situation, why? Is it a transportation delay? A production delay? Or a raw material shortage that may take months to correct? So you need visibility into the status of your order and all of your supplier’s orders that impact your orders. But this isn’t always enough.

While it would be great to know as soon as a delay occurs that could potentially impact your supply chain, and give you more time to respond and potentially create and/or implement mitigations and counter-measures (such as finding an alternate source of supply or stepping in to help the supplier solve the problem), this still doesn’t give you any indication of problems that could be brewing.

That’s why other vendors try to sell you risk-focussed data solutions such as financial viability reports (from credit-based data) and activity reports (from import/export data). But these solutions only allow you to judge supplier viability, they don’t allow you to determine if an external event in the supplier’s locale (such as war breaking out or a likely natural disaster) could take the supplier out even if they are financially viable and low-risk from a business perspective.

So other solutions try to sell you country-based risk assessment solutions with data on each of the locales you are doing business with. And this is a type of visibility. As are sustainability tracking solutions which track sustainability data (with regards to environmental, legislative, and other types of compliance data) to try and predict current and future supplier health based upon a sustainability score that goes beyond pure financial data. And this is another type of visibility.

But then not only do you really need to understand your current costs, but your potential costs when doing a Sourcing event, based on current market rates and expected currency fluctuations and transportation costs over the contract term. It’s also important to know not only current tariffs and taxes, but any proposed changes and the rate of change associated with those tariffs and taxes. Some countries (like Brazil) will change import rates across categories almost weekly. Others will only change once a year or when new trade agreements are struck.

And you need to see usage. If you bought a solution for the entire sourcing department, is the entire team using it? How often? And how does that compare to how often they could be using it? If 30 categories should be put out to bid over the course of a year, but only 20 are, why? Is it because a couple of users are still giving contracts to incumbent vendors without proper bids? Is it because the old curmudgeon thinks his 3-bids-and-a-buy spreadsheet approach is superior? Is it because the tool makes it so damn difficult to create an RFX with all the necessary attachments (because your sourcing 100 line item bill of materials where each line needs its own specification attachments and the buyer has to upload them one by one) that the team only has time to do 20 categories? You need to know.

And if you had all these solutions, you could certainly argue that you had supply chain visibility, but the question is, how complete is it? The reality is that you only have data visibility, and while that’s a great start, supply chains don’t run on data alone. They also run on processes … processes used to plan the supply chains, manage the supply chains, and correct them when things go wrong. How much visibility do these solutions give you into your processes?

Think of your average sourcing, procurement, and even BoB Source-to-Pay platforms. How many of them have the ability to even design basic project management templates with workflows, milestones, approval chains, party, and counter-party obligation requirements that give you the ability to plan, track, and maintain visibility through the entire process? There’s the market research, the sourcing, the contract negotiation and lifecycle management, the supplier relationship management and development, the day to day procurement, the inventory management and replenishment, the MRO, and so on that needs to be done, process oriented, day to day. And you need visibility into that too!

And, even if you have all of the data and process visibility described above, is it enough? How much do you need to see to be confident that the chances of an unpredicted event are sufficiently low and/or the chances of you not knowing about an unpredictable event soon enough to implement mitigations are sufficiently low? It’s hard to say. It probably depends upon your operation, your risk exposure, and the strength of your supply chain and supplier relationships. But it is safe to say you need a significant amount of visibility, and that you should starting figuring out what that is today.

Pay the Piper on Time or Pay the Price!

In response to abysmal payment terms of 120 days or more, which were seriously crippling smaller suppliers, the UK has instituted a requirement for large businesses to report on their UK payment practices twice a year, with failure to do so a criminal offence with unlimited fines. The goal is that the mandatory reporting requirement, which requires companies to report on the average time it takes to pay invoices for the majority of contracts (0-30 days, 31-60 days, and 61+ days), will encourage businesses to improve their payment practices as a result of transparency and public scrutiny.

It’s a shame that this requirement only exists in the UK, because not only should you know, and be prepared to report on, how fast you are paying your suppliers, but you should be striving to pay all of your suppliers within 30 days of receipt of a valid invoice, because your success depends on their success, and while a happy supplier, like the pied piper, will catch and lead the supply chain problem rats away, an unhappy one will allow those problem rats to multiply, and possibly even aid in their reproduction and spreading.

Suppliers are critical to your success. They not only provide the raw materials, products, and services you need, but often the raw materials, products, and services your customers need — and if these raw materials, products, and/or services are not of high quality, delivered timely, and supported enthusiastically, your customers will not be happy. Unhappy customers, especially those not under or nearing the end of their contracts, tend to defect.

A supplier is only likely to provide high quality, supported, timely products and services if it is happy. And believe the doctor when he tells you that a supplier will NOT be happy if that supplier is not paid on a relatively timely basis most of the time. Like you, suppliers need predictable cashflow and if you give them a cashflow nightmare, they will not be too concerned about giving you an inventory forecasting or customer satisfaction nightmare.

So don’t rely on a forthcoming guidance or industry initiative to tell you when to pay the piper. Just pay the piper and reap the benefits. (And if you not only pay on time, but pay early, you’ll be a customer of choice, and those customers tend to get all the benefits.)

The M&A Mania Ain’t Over Yet … But …


 

With one hand, pick up your copy of The Hitchhiker’s Guide to the Galaxy, with your other hand grab a Pan Galactic Gargle Blaster, have a seat, and read a few random entries while you have a nice relaxing drink. And definitely don’t panic.

In fact, don’t even give the acquisition a second thought right now. Why? The reality is that, for at least six months, nothing is going to change and you don’t have anything to worry about in the short term. First of all, takes a while for companies to figure out whether they are going to keep the tech, and then if they are going to merge it or keep it separate. Secondly, what to do with the teams. How they integrate (and who stays and who goes) and work together. Then the offices need to be harmonized. Etc.

Now, it’s a very real possibility that the company might have bought your provider just to squash the competition and/or try to get you as a customer, and that’s okay, because not only will it not happen overnight, but if you’re doing your job, you’re (re)evaluating your solution options at least once a year (before budget season) to not only identify what you are missing, but whether or not your current tech is still up to snuff. So, if the worst happens, or looks like it will happen, you already know who your likely options are and can start that RFP process.

Plus, if a company is paying 10, 20, 40, 100 million for another company, they probably don’t want to lose you as a customer (as they can’t afford to lose anyone at those prices for a few years), so even if their plan is to kill the technology and move you onto their platform (which will, hopefully be better … by the time they try to do so), they’re not going to force you overnight … they will honour your contract (which you signed and ensured had a change of ownership clause to your liking, right) and likely present you with a long term plan.

In other words, you have time to figure things out, and, to be honest, you should be moving much faster than the vendor anyway. So take another sip of that Pan Galactic Gargle Blaster and don’t panic!