The E-Sourcing Process
an opportunity for retailers
In our previous blog post we discussed the role of warehouses and showed that sourcing processes evolve within the supply chain. At that period of time suppliers needed to manage and maintain their stock in large warehouses and engaged directly to wholesalers only. Those traditional warehouses and the roles of all participants have changed. Nowadays, warehouses don’t serve only as buffer within the supply chain anymore, the role of warehouses has transformed to huge distribution centres as vital links that are situated closer to the end customer. Hence, distribution centres are mainly operated by retailers and wholesalers, which obtain more influence within the supply chain. Especially the role of retailers has transformed drastically due to the fact that they are the direct touch points to consumers.
Manufacturers and suppliers are not anymore the only active part within the supply chain. In fact, wholesalers took over the procurement of products actively, using e-sourcing platforms like alibaba.com, made-in-china.com, globalsources.com, dhgate.com to get in touch with potential manufacturers. A long period of time, retailers were dependent on distributors’ offerings. For the last 5 to 8 years retailers have adapted their operational strategies by leveraging e-sourcing to new standards in order to engage directly in the sourcing process. Hence, manufacturers do not engage only with wholesalers and distributors anymore, retailers are growing target groups that boost their optimum production capacity.
With the rise of e-sourcing platforms, manufacturers were enabled to present their portfolio of goods and services online directly to all participants of the supply chain rather than to distributors only. Due to the use of advanced technology and the revolution of digitalization, sourcing processes evolved, too.
As mentioned before, retailers serve the end customers directly, being the closest touch point. As consequence they are more likely to receive instant feedback from customers than all other participants of the supply chain. In a way, retailers had been trapped between wholesalers / distributors and customers. The average end consumer seeks for quality products and services, branded goods preferably at a low price in a way where retailers were trapped as there was not much space for them to actively influence the market. Nowadays, retailers become the pro-active part within the supply chain, determining what products at what price end customers can pick from. Hence, manufacturers tailored their portfolio to retailers’ requirements. As result value added services emerged such as ODM and OEM, warehousing, freight forwarding, and many more. Especially ODM and OEM is of prime importance for retailers as these value added services are essential tools to directly respond to end customers’ needs.