In an era of digital transformation and omnichannel retail, global sourcing strategies have undergone significant changes. Saving money by seeking cheaper labor and raw materials abroad is nothing new. But the impact of the pandemic and other unforeseen recent challenges such as war and inflation have led to more creative sourcing and a focus on contributing to a more circular, responsible economy for omnichannel brands and their retail partners.
Let’s break down three tips for balancing a global supply chain with omnichannel expectations.
Many brands see opportunities in omnichannel commerce and are utilizing a combination of online and offline sales channels to fuel growth. Things like fulfillment, supply chain resilience, and trust in your sourcing partners becomes even more important to your success.
McKinsey reports that bigger buffers and safety stocks are still seen as an important tool for supply chain resilience for omnichannel retail brands. Higher overall stock levels have become the norm, however, their research suggests that companies are now looking for smarter ways to ensure resilience while keeping inventory costs under control.
Omnichannel sellers working with major retailers will be met with new guidelines and must very carefully understand the way that supply chain terminology is used in inventory optimization. For example, both digital and physical retail outlets rely on the Global Trade Item Number (GTIN) for product identification and a data sharing language called EDI (Electronic Data Interchange). These are a part of a globally accepted system of standards facilitated by GS1 organizations around the world. They help create supply chain visibility from source to store.
One of the major topics of discussion at recent GS1 US Small Business Roundtables has been the need, now more than ever, to diversify your vendor network. If one vendor drops the ball, it will impact your entire supply chain. It’s become typical for a small brand to find an interim supplier to work with if a main supplier has shortages or delays.
For example, last year, bottling was a significant challenge for many CPG brands. Delays in glass coming from Europe caused one small brand to put off a new product launch—issues such as shipping container availability, rising energy cost increases due to the war in Ukraine, and residual pandemic disruptions all factoring into this decision.
Even if you want to stay loyal to your suppliers, it’s important to have backups so that you can remain competitive, meet retailer requirements, and keep customers happy without delay. According to some participants, implementing GS1 Standards can make solving supply chain challenges easier, and they also help with efficiency, particularly in working with overseas suppliers.
The digital sourcing of raw materials offers the opportunity to improve process efficiencies and gain competitive advantages. Particularly in industries like apparel and general merchandise, digital advances such as 3D imaging have sped up what used to be a months-long process from procurement to the sale of a finished product.
In the digital era of sourcing, tools like ScanUnlimited are essential. These tools empower Amazon sellers to efficiently analyze wholesale lists in seconds, ensuring smarter product sourcing for omnichannel commerce success.
As the digital supply chain matures, brands must be aware of how standardized product information enables shorter product development cycles and transparency for consumers. With digitization, we lose the benefit of experiencing firsthand the touch and feel of that material. Suppliers have to provide more information for brands to understand the key attributes of a material and that needs to travel through the supply chain in a standardized way.
By defining attributes such as fiber or finish, this common language can then be applied to evaluate material sustainability. Shoppers today want to know about deeper product attributes such as organic cotton fabrics or how a product is made. Is the company using renewable energy? Is there humane treatment in the sourcing process?
To help make this information more readily available to consumers, GS1 US is working with brands and retailers around the world on a movement called Sunrise 2027 to phase out UPC barcodes on packaging in favor of using two-dimensional barcodes, such as QR codes. These robust codes would serve the function of “going beep” at checkout, while also holding more of the information that consumers crave and enable brand loyalty. Soon, consumers can access dynamic information about material origins and composition with a simple scan of a smartphone and brands can gain more insights into what consumers want to know.
Ultimately, against the competitive backdrop of omnichannel commerce, global sourcing has become more than just a procurement strategy, it’s like a game of chess. A retail brand must always anticipate their competitors’ strategies and make thoughtful moves to stay relevant, efficient, and profitable.
For more information about GS1 US and how we facilitate industry collaboration, please visit https://www.gs1us.org/industries-and-insights.