The typical person may not know offhand what CPGs are (consumer packaged goods), but you can bet they interact with them every day. The CPG industry produces everyday items. These are the products you find in grocery stores, big-box stores, hardware stores, and convenience stores. People increasingly buy them online.
Strategic sourcing has been growing in importance in the world of procurement. The traditional sourcing strategy of picking the supplier who offers the lowest cost worked for centuries but doesn’t cut it in a modern, globalized business climate.
Digital transformation has become an important topic for most procurement teams today. As I advise procurement leaders on how to approach digital initiatives I find myself looking back on experiences from high school and college where I was lucky enough to participate in the digital transformation of an entire community of practice: competitive debate. While there are important differences between competitive debate and procurement, I believe that readers curious about digital transformation will find the lessons I learned during my time in debate both illuminating and extremely practical.
Let’s talk about stress at work. It’s rarely sought after, and work-related stress can be especially problematic. When you work eight hours a day at a job (and sometimes more), there’s no escaping it. Everyone feels pressure at work (and that in itself is not necessarily a bad thing), but when little pain points become constant more serious stress results.
In the old days, food manufacturers didn’t sweat the issue of finding food suppliers. They looked local and went with the lowest prices. Often, they would build a processing factory right near the fields where they sourced their raw ingredients. Canning and bottling plants were built nearby, so the entire process was often run within a small geographical area.
The food and beverage industry is a massive one, especially in North America. According to the United States Department of Agriculture (USDA), in 2019, U.S. consumers, businesses, and government agencies spent $1.77 trillion on food and beverages in grocery stores and other retailers. Generally speaking, food and beverage prices remain fairly stable, increasing just 2.3% per year over the past decade. Consumers are resistant to big hikes in food prices. At the same time, the food and beverage sector tends to operate on razor-thin margins.
You’re a procurement professional. The company or organization you work for has tasked you to choose a strategic sourcing software that supports this new way of doing things.
Many companies are content with employing a reactive sourcing strategy. When material sourcing, their procurement team responds to requirements from the business side of the operation as they arise. That’s fine—sourcing professionals have the expertise to deal with this common scenario—but is it the best way to be doing things? That is debatable.
It doesn’t matter what kind of business or organization you work for; if you’re part of the sourcing process, you’re working under pressure. Strategic sourcing stress is caused by day-to-day occurrences and manual process.
The business landscape continues to evolve at an increasingly rapid pace each and every year. As a supplier, you’re tasked with keeping up with this pace of change and responding to bid opportunities, inbound inquiries, and hitting your quarterly targets. This means building relationships with buyers is of the utmost importance when trying to win business. Otherwise, you’re crossing your fingers and hoping that just being the lowest-priced supplier in the market will get it done. Buyers know that the best price doesn’t always carry across the life of the project and frequently use total cost of ownership analysis to calculate the best value outcome when making award decisions.