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The business procurement process is a machine tuned to its peak, where the most important things are long cooperation agreements and the parties' trust in each other. Coronavirus and the war in Europe changed procurement processes permanently and significantly. The sudden change eventually became the new normal.
Behind the store's basic selection and ranges that follow seasonal variations is a complex and global procurement chain in which procurement decisions are made a year in advance.
Intersport is an international sports equipment store that operates in 42 countries. There are more than 5,000 stores worldwide. In addition to the online store, there are more than 50 independent Intersport stores in Finland.
In procurement decisions, global trends are listened to, but country-specific choices are also weighted. The functions of the brick-and-mortar stores and the online store also support each other when the entire offer can be viewed online.
Crasman is a strategic partner of Intersport's online business. We have implemented Online Stores and product information and selection management. Crasman has delved into Intersport's business processes. It has developed and adapted them, because ready-made systems have not provided a direct response to the complex requirements of business.
Choose your procurement partner carefully
Intersport is the world's largest international sports retail chain. Expectations for the selection and their development have grown seasonally. The international Intersport, or IIC, creates a good basis for doing things by negotiating the big, so-called ready contracts with mega-brands. This provides a strong basis and a bargaining chip at the local level as well.
The right partners, such as suppliers and brands, are selected as strategic partners over time. Good, credible, loyal and reliable partners are also kept.
Ilkka Hairo is the product group manager of Intersport's selections, responsible for all categories. He says that a good procurement partner works according to today's values, rules and responsibility requirements, but that alone is not enough.
- In addition, we have to serve all of our 50 independent stores, which make their own solutions from the planned products of the chain selections. That's why you also have to be service-oriented.
Selection procurement processes aim far - partly blindly
A critical review of the brand strategy is always a part of preparing for the new season.
- It is very important to go through the key figures of the brands and analyse their functionality in merchant cooperation and through this possibly change their importance in the selections. With the growth of online shopping, we have also added new brands to the selections.
Plans run in the background of the processes, which monitor the achievement of the set goals. The procurement binoculars have been adjusted to more than a year, and no figures are yet available for the current season. So trust and previous cooperation experiences are the foundation of everything.
- We don't see figures from the coming season. That's why you have to believe in the brand and trust how it has worked over a longer period of time.
The brands present their plan for the current season, which is mirrored against their own plan. Many details are essential.
- We take into account, for example, the underlying basic selection, brand image and price-driven marketing. The workgroups make packages out of the categories, in which they are campaigned on frameworks produced by marketing. After this, the packages are made into so-called homepages, i.e. offers for ordering, says Hairo.
The pace is tight, and by Midsummer the orders for next spring will be done. However, acquisitions for the next season have already been running in the background. At the same time, the time span of brands extends up to two years.
Digital selection management speeds up and streamlines work
Ilkka Hairo says that even though various digital systems are used for process flows and monitoring, orders have been handled laboriously between traders using Excel until now.
- A transition to digital selection management is currently underway, the goal of which is to streamline and speed up orders, reduce errors and significantly save working hours.
- In this way, we can get rid of paper, with orders going through digital channels to merchants and back to us.
The sudden change brought by Coronavirus and the war created a new normal
The watershed in procurement processes began in 2020. Coronavirus changed practices everywhere, and it closed factories and entire countries. People's movement and habits also changed. Access to materials became difficult.
Hairo states that the overall effects are enormous.
- In China, the closing of factories due to lockdowns meant that productions were prioritised. We focused on more profitable products and products with higher production costs were left unmade.
The war of aggression started by Russia in Ukraine changed freight and logistics routes. Sanctions are also felt in the operations of the global trade chain.
- Air freight has to go around Russia and train traffic through the country has stopped. In addition to the container shortage, European ports are also blocked.
In practice, the situation is reflected in order cancellations, delays and changes. When orders are made a year in advance, the effects are still visible for a long time.
The work is a balancing act between an interesting product selection and a moderate stock value. Ilkka Hairo says that the sudden change has become the new normal and the changes have already been reacted to.
The goods game requires functional cooperation, reliable partners and good systems. You have to know the exact steps, locations of the products and, if necessary, you have to be able to drastically modify the orders.
- If we didn't have good partners, they would push the goods to us with the attitude of take it or leave it. But we have good cooperation, it works and we can adapt the functions according to the current situation.
Critical points of the supply chain
Hairo lists the management and communication of the overall selection of the category as critical points in the procurement chain.
It is important to find collections that meet the needs of stores and that are supported by marketing.
- In our brand strategy, we have thought about the roles of different brands in different categories and how the selection of individual brands is weighted in the overall selection. Introducing this issue to the shops is also of prime importance.
The increase in prices can also be seen in the supply chain. However, the prices are not taken as given, but the prices coming from the brands are negotiated.
- With the increase in prices and the weakening of consumers' purchasing power, we have also brought us new price points for the supply of different product groups.
The online store is a support for the brick and mortar store
Hairo says that, for Intersport, the transparency of the online store creates an important overall picture of the offer for the consumer.
Everything that is made and that is for sale can be seen online. It is up to the stores to decide if they want to buy the products for the shelves.
In a merchant-led store, it is important that the online store is a solid support and the consumer has wider opportunities to receive service.
- Availability information for stores can also be seen online, and purchased products can also be picked up from a brick-and-mortar store. It brings important added value and is therefore absolutely important.
This blog post is part of the Crasman Insight review, in which we delve deeper into the processes of e-commerce, from selection management to storage and transportation.
Crasman Insight is a publication about e-commerce phenomena, trends and insightful experts. Crasman Insight is published twice a year.
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