Timico 2019

  • The evolution of technology procurement… from suppliers to partners

    John Holt, COO, Timico

    April 2019

    I’m really looking forward to being part of the panel discussion at RetailEXPO 2019: “How is tech procurement evolving and what are retailers looking for from supplier partnerships?”

    Recently, I’ve really seen a difference in the relationships that are being built between technology providers and retailers, because technology can now become a sales enabler, as well as it’s traditional role as a cost reducer.

    Historically, I think it’s fair to say the relationship that retailers had with me and the businesses I worked in was one of customer-supplier, where quite often the requirements specification was defined really closely by the retail team, and then the procurement role was to ensure that they got the best deal from whichever supplier could deliver. The deal was never just about the price, of course, but making sure that delivery capability, contractual SLAs, and flexibility to changes in business were all taken into account. Quite often though, the resulting contract, no matter how much time was put into it, never quite kept up with the changes over a 3-5 year period in modern retail and technology.

    As the world of Retail has evolved, tech companies have woken up to a different way of working, from supplier to partner. In my experience, this has meant immersing ourselves into the retailer’s business: Understanding all the pressures from changes in shoppers’ behaviours, increases in staff flexible working requirements, minimum wage changes, pensions auto-enrolment, optimising stock pools, click and collect, next day and even same-day delivery and so it goes on. This also means that we get the opportunity to speak with a much broader set of roles within the retailer. Rather than just ICT and Procurement professionals, we speak with regional managers, marketing, distribution centre managers, in some cases sitting alongside the internal IT team as one of their delivery partners.

    So, how do Retailers find the perfect partner? First and foremost, by identifying a strategy that best fits the business in relation to what you want to do (and realistically can) in-house and what you want to look outside for. There are certain components of the technology ‘stack’ that in the main will always come from external sources such as connectivity and core business trading applications such as EPoS, e-commerce, MMS and WMS, but other than that there are choices to be made, especially when it comes to services that are typically delivered by people – in-source, outsource, selectively-outsource, some other hybrid? Retail is a 24/7 business that must cope with huge workload variations, and so any partners really need to understand the impact of Peak – whether that be Christmas, Easter, The Cheltenham Festival, a World Cup or whatever your peak is – and make sure that they are ready to support you.

    When the strategy is in place you can explore the market, but what is the best way to do this? My advice based upon my own experience would be to utilise your network as much as you can. This will generally give you some very good insight on companies that you should consider speaking with – and potentially ones to avoid!

    This may well include a range of smaller players (and potentially even start-ups) to the larger, more well-known, and there are obviously pros and cons associated with each which will largely be governed by what it is you are looking to do. Sometimes a potential driver of change is lack of alignment with an existing supplier that perhaps hasn’t evolved in order to keep up as a retailer scales, but this doesn’t necessarily mean that bigger (company) is better. There are some excellent tech start-ups popping up all the time as well as a number of small but established companies.

    Some key criteria, for me anyway, is can they deliver what you need for a price that you consider to be reasonable, is it scalable and can you craft a tangible ROI. Assuming you can do all of these things, there’s also another one that I think sometimes gets overlooked but is something that really encapsulates the whole partner piece and it’s simply this… are they a good bunch of people that you think you and your team can work with.

    I’ve been lucky enough in the past to have been part of businesses that had success on the back of exactly that, where the differences between proposals whether it be solution design or commercials were so negligible that they needed to find another differentiator. It felt great, as it made all of the hard work and effort completely worthwhile.

    If you ever find yourselves in this position and want my advice on what to look out for, I can sum it up in a single word – passion. I’m not talking about sales people but instead the people that will end-up implementing the product or service and those that will then support it. The ones who will treat your business just as an extension of their business, who will support you through all the ups and downs in modern retail.

    Timico is the official sponsor of the Operations Stage at RetailEXPO 2019.