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Procurement Complexity Simplified: Lower cost, increased profitability

Procurement professionals understand the direct impact they can deliver to the bottom line. 5% of reduced COGS deliver at a minimum an equal margin benefit as 50% increases sales – Can your company afford not to value procurement professionals?

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“Lean Procurement ” – customer centricity at its best

The main objective of any company is to improve the bottom line and return equitable value to shareholders. This is achieved in three ways:

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Long-term value at iDDea

Written by Suzie Lynch

I am writing this piece on long-term value for our stakeholders and clients following a day of strategic sourcing discussions. It is strategy-driven procurement principles that produce sustainable practices.  So, to answer your next question …

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PLMA – Private Label Manufacturers Association

Private Label accounts for 38% of the market share in Europe. (Bord Bia)  However, CEO Tara McCarthy of Bord Bia referenced significant opportunities for growth in a number of categories. Continental European retailers are at a market share level of 32% which is significantly behind the UK rate of 52% (IRI Worldwide). On a whole, the objective required of procurement professionals in the retail industry is to ‘buy better’ to compete with discounters. With the unknown of post-Brexit, the trade tariffs need to be taken into consideration to combat future costs whilst maintaining quality for the consumer. The agri-food exports across Ireland are predicted to dramatically move over the next 24 months. (Teagasc) This rapid movement to alternative suppliers will put pressure on food retailers across Ireland to react in advance as supply base options narrow for the demand on EU suppliers. The German discounters like Aldi & Lidl have dramatically improved their offering since first arriving in 1999. With the focus now on local produce and Irish origin the larger retailers are lowering price points as the discounters compete on quality.

This week I flew into Schiphol airport to attend one of the largest Private Label trade shows, PLMA for the first time. In my role I focus on sourcing for private label for Irish retailers. PLMA held in Rai in Amsterdam is a 2 day event involving over 4000 global exhibitors from suppliers to manufacturers. It is one of the largest trade shows in Europe after Anuga in Cologne. It caters for both Food (fresh, frozen and refrigerated foods, dry grocery and beverages) and Non-food products (cosmetics, health & beauty, household and kitchen, auto aftercare, garden and household DIY) and includes suppliers for major retailers and discounters across the world.

Over 5000 visitors and buyers descended on the conference to find new and existing products to compete within the retail industry and engage with potential suppliers. The annual event is important to attend as manufacturers are investing in their companies to be able to provide larger ranges and have teams of product developers and technologists to bring new lines to life to compete in this heavily saturated industry.

 

With the aforementioned rise of discounters in Ireland, neighbouring retailers across the EU have subsequently lowered prices of product to compete but have also expanded their range to include non-food goods. The non-food section increases year on year at PLMA as there is more of a demand from consumers on retailers to provide a ‘one stop shop’ to include an array of products from clothing, garden and DIY products.

Amongst many others, I met Dry-lock, one of the most impressive stands in the trade show in which large digital screens were used as walls to display video adverts of the products and how the new ‘magic tube’ technology works. Dry-lock supply private label nappies to major retailers and have recently developed a new technology to compete with branded Pampers magic tube technology for more absorption than leading brands. With a very impressive resume of fast tracking to success in just 5 years from first opening their doors they have already established themselves to be serious competitors within private label.

Health was also on the agenda with many confectionery and cereal companies making claims of using little or no sugar only naturally occurring. Alternatives to salt-heavy snacks were substituted for trendy ingredients such as quinoa and kale. Gluten free was also a hot topic and is in high demand along with the need of multiple allergens to be omitted from factory lines. Ireland’s population has a higher than average percentage of coeliac affected people due the high-existence of wheat in the diet.

Ireland also had greater presence on stands than in the past with the Origin Green logo displayed across the section. It appeared Irish suppliers had focused on both premiumisation to enforce quality and expansion of ranges so that retailers can include important claims on product packs sought after by consumers as well as buyers to increase loyalty to the private label brand.

 

 

My advice for goers in PLMA- have ideas on what products you are looking to hone in on. There is a room filled with thousands of experts and innovative ideas for retailers and businesses to grow their current range. The halls are organised into regions so that each pavilion consists of relevant products of that origin, i.e. Italian includes pasta and sauces etc. Navigation is key in PLMA and with over 14 halls the new app is a must for a user-friendly experience. In preparation for PLMA, once registered it is wise to communicate to current suppliers/agents that may also be in attendance on the day to catch-up and arrange a meeting to discuss product ranges etc. The majority of exhibitors included products belonging to UK and EU retailers that they cater for. This is a great benchmarking exercise to see how your products measures up across the market.

 

After nursing my blisters from the circa 40,000 steps I took over the two days I found the benefits to exceed my expectations for my first attendance of PLMA.  On that note, preparation is key in PLMA but also to keep an open mind to products as a buyer which may identify gaps in your range to compete with retailers. Maybe I will see you there next year?

Introduction to contract management

Why contract management?

Historically, contract management is the poorer relative in the phases of the strategic sourcing cycle. It does not get much attention as it is time-consuming, labor intensive and it sits between various user departments and procurement with a supervisory role. Most the time, no clear demarcation of ownership and responsibility is the root cause of contract issues.

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The Science of Value

Everyone likes formulae. Once we can quantify, we can measure, we can compare, equalize or subtract, we believe it to be closer to the truth. Our understanding is amplified with the supporting data that we can verify and validate…

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Looking forward to the Strategic Public Procurement Conference in Paris

This conference aims to raise awareness among decision makers and the procurement community about the benefits of strategic procurement, with an emphasis on sustainability, social responsibility, and innovation. It will feature speakers recognised for their expertise and leadership in the field. 

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iDDea featured in the Southern Star

Check out this great article about iDDea.

iDDea Southern Star 11 May

New Force Emerges to redefine Strategic Procurement

iDDea procurement powerhouse

to deliver value to buyers that goes beyond just cost savings

iDDea powerhouse

Award Winning Irish sourcing company, e-Quiddity and Procurement Consultants, IDD Consult have merged to form iDDea – The Science of Value™.  iDDea combines strategic sourcing, buying benchmarks and training services to deliver value to the procurement function beyond cost savings. iDDea has redefined the benefit of strategic procurement for buyers, internal stakeholders and suppliers to realise organisation-wide value.

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Oscars are won by People, not data

I was reading a very interesting and insightful article this week of Donal Daly, Executive Chairman at Altify, about “The Misleading Statistics Problem and Increasing Customer Complexity”. Donal speaks of the danger of using averages and one line numbers to build a story, that only supports one side of the reality but sells like hot cross buns on an Easter Sunday.

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