Thank you, Matt. We at Arigo are seeing and hearing much of the same issues you have outlined. Private label and the associated global trade management is complex stuff. Since most retailers and brand owners were driven to Sourcing and Private label for better margins, anything that upsets that objective must be addressed. We all know, it is not getting any easier out there! Historically, low labor costs and consistent labor deflation have been key ingredients in maintaining and controlling margin. However, as Rick Darling, President of Lieng Fung USA indicated at a recent AAFA eventThe period of Labor Deflation we have enjoyed for years is behind usLogistics Costs are on the riseWe must all anticipate a 3-5% per year COGS increase over the foreseeable futureThe last remaining bastion of labor deflation opportunity is Africa and it will be sometime until the infrastructure is sufficient to see significant gains from that regionSo clearly, Private Label retailers and brand owners will have to look elsewhere for cost control, containment and margin protection
At the end of 2009, Arigo participated in research as well as a webinar with Aberdeen Research. In the Aberdeen Group Study, Best-in-Class Private Label Retailers and Wholesalers, indicated that they were planning to execute specific initiatives in 2010 that focus on 3 key areas all designed to maintain margins: Cost reduction in the supply chain – a continuous evaluation and re-evaluation processImproved sourcing operations and business process flowImproved vendor collaboration to reduce errors, improve quality and ensure compliance
So lets take a look at some of the results of that study30% of the Best-In-Class Retailers and Wholesalers reported increased lead times for delivery of product due to delays in procurement, negotiations, order cycle times, and trade promotions. 25% reported higher transportation and distribution costs To further underscore the issue, after a period of excess transportation and logistics capacity and therefore lower costs, logistics providers mothballed some of their capacity to align with demand. Today, our customers indicate there is a growing container capacity crisis as demand has increased. This translates into dramatically higher transportation and distribution costs, not to mention product availability issues.
With regard to Sourcing Operations:Today, many Private Label Retailers and Brand Owners have as many as 6-12 different systems to provide information regarding their Sourcing and associated global trade businesses. They are required to put significant integration infrastructure in place in, what is often, a challenging effort to get a 360 degree view of their Private Label Supply Chain. More often than not they lack a single version of the truth by which to make informed business decisions. Furthermore, without an over-arching view of:WorkflowCalendaringAnalytics And CollaborationRetailers and Brand Owners are left with silos of data, gaps in visibility and ultimately, increased risk of disruption, delay or outright breakdown of the supply chain. All of these dramatically and negatively impact margins.This was all corroborated by the Aberdeen Research:49% of these Best-in-Class Retailers and Wholesalersreported inadequate inbound and outbound visibility with their trading partners.42% reported a lack of real-time order status, payment and negotiation visibilitywith their trading partners.
Many similar concerns were revealed regarding Vendor Collaboration in the Aberdeen Research. 55% of the Best-in-Class Retailers and Wholesalers who participated in the research reportedlate, inaccurate, or missing data from their trading partners. 55% reported a lack of staff to manage retailer-supplier relationships.And 47% reported a lack of communication internally across departments. Let me point out, that when we refer to Trading Partners, we are referring to external as well as internal trading partners.
Hopefully Matt and I have provided a strong context and awareness of the problems each of you face supporting your Private Label and Associated Global Trade businesses. Now lets talk about solutions….Frameworks for Optimization
With rising labor, material and logistics costs…Business Process Improvement is the remaining opportunity to control costs and margin.To achieve this, we at Arigo believe that the “holy grail” is an end to end solution satisfying the rigorous needs and requirement of Private label Retailers and Brand owners. Unfortunately, as I mentioned earlier Private Label Sourcing and the Associated Global Trade Management is complex stuff and today, and for the foreseeable future, no one company, whether it be Oracle, SAP or smaller, boutique vendors can do it alone. Solutioning Private Label and Global trade requires PDM, PLM, ERP, Logistics/3PL and WMS capabilities…very sophisticated capabilities at that. Transactional data must be handled and overlayed by workflows, alerts, calendaring, analytics and collaboration. Although some vendors claim to do all of this, few if any, do. Aggregating data from these various, disparate applications and sources, providing data integration as well as physical access through a single portal/portlet – mash up framework provides both user and data visibility. Arigo achieves this with the Arigo Desktop. A desktop that is not limited to just our applications and transactions but allows use and management of 3rd party solutions from within a single desktop portal. A desktop that is not limited to just your physical computer desktop or laptop but also 100% available on any Smartphone, iPad, iPhone, etc.Once aggregated, retailers and brand owners are afforded a wealth of data, a single version of the truth, over which critical workflows, alerts, calendaring, analytics and collaboration can be leveraged. Arigo achieves this with its Arigo Business Intelligence framework.Finally, and for us, most excitingly, Enterprise Collaboration. First let me tell what Arigo Enterprise Collaboration is. At Arigo we have fused the technologies behind Enterprise 2.0, including SMS Messaging, email, Audio, Video Caming and Content/Community Building with our application suite. Frankly all of these technologies are commodities today…but what we have done is presented them from within our Arigo Desktop, tightly coupling them and most importantly capturing each of the interaction sessions, attaching them and archiving them to virtually any object, transaction, PO, Item, etc. so that they are retrievable. This provides clear, clean audit trails and promotes accountability with your trading partners, internal or external
So let’s take a quick look at how Arigo is addressing Visibility, Intelligence and in particular, Enterprise CollaborationNote how my co-presenters content is integrated into this mash-up both visually and internally.
Arigo just announced our new Enterprise Collaboration functionality last week which will be available this fall. Within this framework we are providing attachment and archiving functionality of collaboration sessions, down to the object level, available throughout our applications. What this means is that private label retailers and brand owners are now able to communicate in real time, near real time, synchronously and asynchronously with your trading partners, whether they be internal or external. In fact…you will be able to communicate with them as if they were standing right next to you and about the only thing you could not do, is…physically shake their hand. That is precisely why we refer to our Enterprise Collaboration capability as the Virtual Handshake!Let me share with you a real world scenario and opportunity….DY 3x Video Cam
This sequence provides a story board of an escalating situation with a sample that required several collaborations to get right. What started out as a simple back and forth via Instant Messaging, then required some face-to-face discussion via Video Conferencing and finally a video caming of the problem and corrective action. All of these interactions are captured and archived with the item, sample, RFQ and/or PO providing a complete audit trail as well as reference tool. This enhances accountability and ultimately controls cost by providing instant problem resolution. Hopefully you can see how this could save rework, time and money.
To summarize. Enterprise Collaboration = Cost ReductionAt a recent trade event, I overheard a story of garments manufactured in Asia. They contained inappropriate zippers that had to be reworked once the garments arrived domestically. The labor costs in China were $1.84/hour and $.49 in Vietnam. The rework was done domestically at 5-10x more. Tighter collaboration and auditable quality assurance prior to shipping would have eliminated this issue. Clearly, as it played out, this had dramatic impact on margin not to mention product delivery to the retailer.
So with that, let me turn you back to Andy to review Today’s Takeaways.
The Virtual Handshake Controlling Cost in the Private Label Global Supply Chain Through Improved Trade Content, Integration, and Enterprise Collaboration
Our Best Practice Experts Matt Gersper President, Global Data Mining, LLC & Customs Info Donny Askin CEO, Arigo
Connect with Us Twitter #vhswebinar Visit Arigo Blog www.arigo.com/blog Follow Arigo on Twitter @ArigoSoftware Follow Global Data Mining on Twitter @gdmllc
The Virtual Handshake Connect to your trading partners through: Trade content Data integration Enterprise Collaboration
Today’s Takeaways Control/avoid common private label global supply chain disruptions
AAFA Findings Cost challenges in supply chain Rick Darling – President, LF USA: Labor Deflation Period has ended Logistics Costs rising COGS will rise 3-5% per year over the long term
Aberdeen Research, 2009 In 2010, Best-in-Class Private Label Retailers indicated need for improvements in three key areas of the global supply chain: Cost Reduction Sourcing Operations Vendor Collaboration
Aberdeen Findings Cost reduction 30% reported increase in lead times for delivery of product from suppliers/trading partners due to delays in procurement, negotiations, order cycle times, and trade promotions. 25% reported higher transportation and distribution costs compared to budgeted or forecasted costs. Aberdeen Research, 2009
Aberdeen Findings Sourcing Operations 49% report inadequate inbound and outbound visibility and processes with suppliers and trading partners. 48% report lack of real-time sales data visibility to suppliers and trading partners. 42% report lack of real-time order status visibility, payment & negotiation processes with suppliers and trading partners. Aberdeen Research, 2009
Aberdeen Findings Vendor Collaboration 55% report late, inaccurate, or missing data from suppliers and trading partners. 55% report lack of staff to manage retailer-supplier relationships. 47% report lack of communication internally across departments. Aberdeen Research, 2009
Framework for Optimization Visibility Intelligence Collaboration Trade Content Data Management Applications
Business Process Improvement:The Remaining Opportunity to Control Margin PLM Visibility Aggregated Mash-up Desktop WMS PDM Intelligence Aggregated Analytics Collaboration Over entire Global Supply Chain 3PL ERP
Enterprise Collaboration = Integrated IM, Email, Video, Audio, and Community Attach and archive at the item level
Enterprise Collaboration = Cost Reduction Communicate in real time, near-real time, synchronously or asynchronously Communicate to solves issues in real-time, globally Better negotiations with suppliers and trading partners – protect your margin!
Today’s Takeaways Control/avoid common private label global supply chain disruptions
Control/Improve time-to-market with Enterprise Collaboration across the private label global supply chain
Taking the Next Step… Register for our next free webinar What: Trade Optimization Hits Mark for CFO’s Top 2010 Concerns When: Thursday, July 15, 2010 from 2:00 pm - 2:30 pm EST Where: Register by visiting http://bit.ly/d8Zxz5 Call us directly at 928-567-7191 Visit the website http://gdmllc.com
Taking the Next Step… Register for a full demo of Enterprise Collaboration Online http://bit.ly/bSURQd Call us directly (978) 528-2284 Visit the website & blog www.arigo.com www.arigo.com/blog