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Tactics Watch SOURCING SUPPLIERS

March 28, 2012
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Quest For Quality
When it comes to finding a private label supplier, it’s important to take the right steps so you find the best fit for you.

 BY ED FINKEL

What is the cleanest road map toward effectively sourcing suppliers?
The major steps along that road begin with scoping the possibilities on the longer list in a given category by doing everything from attending trade shows to scanning suppliers’ ads in publications like PLBuyer, says Doug Baker, vice president of Arlington Heights, Ill.-based Federated Group, Inc., a sales and marketing company in the grocery, foodservice, drug and convenience store business that works in the private label arena.
As you’re doing so, make sure you’re focusing on suppliers that share your cultural and business goals-and that they carry the right selection of items, says Roger Pepperl, marketing director at wholesaler Stemilt Growers, Wenatchee, Wash.
Then vet out your top two or three by pulling third-party audits and asking them to send product samples, says Baker. Inquire about their quality and safety standards and get a sense of how flexible they’re able and willing to be, he says. Pepperl advises not getting too overly focused on price. And once you’ve awarded the contract, develop useful metrics for measuring performance, Baker says.

SURVEY THE FIELD
Federated Foods has a category development group that’s charged with knowing the full scope of suppliers in every category, whether domestic or international, Baker says. They attend trade shows in the United States and abroad, and “they’re bringing back information about suppliers, specifically ones we haven’t seen before or who are doing something new,” he says. But Federated only goes to those lengths “if we have a customer or see something in the analytical data that tells us we need to be finding the best thing since sliced bread.”
The other scenario, which does not involve the same amount of legwork at least in the literal sense, involves looking at everything from magazine ads to Web sites devoted to private label sourcing, as well as getting information from customers who field suppliers’ calls. “The call will come into the customer: ‘Hi, I’m Johnny Manufacturing. I’m making the next marshmallow kumquat out of my bathtub,’” Baker says. “We bring that information back and build our database. Right now, we have 800 suppliers in the database and actively use 50 percent of them.”

VET THE SHORT LIST
Once Federated narrows its list to two or three suppliers, safety is always priority No. 1 for the attorney-owned company, Baker says.
The company starts by pulling third-party audits to make sure the potential supplier’s manufacturing processes are considered to be safe, then asks to be sent product samples so the customer can match them against their national brand target “or whatever the spec. is the customer wants in their product,” Baker says.

FROM CULTURE TO SKUS
As marketing director at Stemilt for 11 years and a retailer for 21 years before that, Pepperl says he understands both sides of the fence. “The most important thing you have to do is pick a supplier that has the cultural goals you share,” he says. “Make sure the supplier shares your goal of delighting the consumer and escalating sales.”
Pepperl mentions another important attribute: “Make sure your supplier carries the selection of items you need to run your business,” he says. “Are they focused on new, contemporary items in their SKU selection that matches up with where you’re going?”Although safety is the top priority, customers will want to make sure that a supplier is flexible and high quality before they sign off, Baker says. “They want quality in plant, quality in product, quality in financials,” he says.
Suppliers want customers with stable, long-term relationships, Baker says, but customers will want to be sure suppliers are flexible within that stability. That helps to “maintain competitiveness and look for initiatives and opportunities to help them compete or differentiate within their market,” he says. “If they don’t feel suppliers are doing that, they’ll start looking. It’s very important to be able to build that personal relationship with the customer, and act as a partner, so hopefully everybody is walking away feeling comfortable that they got what they needed.”

KEEP PRICE IN PERSPECTIVE
Price is always going to be important, but make sure it’s not the sole driving factor in your decision, Pepperl says. “There’s a reason for the price-there’s quality, there’s service,” he says. “What kind of farming goes behind it? What kinds of innovations are behind the product? What kinds of services are there to support the product?”
If you buy solely on price, “You just get the cheapest. That often leads to failure,” he says.
Once the contract is awarded, Baker suggests thinking through how to measure performance. “On-times, shorts, deductions-how often do those things happen?” he says. “How often are the supplier and I sitting across the table from each other going through issues?”
“There are a lot of new suppliers out there, but we work with a lot of suppliers who have been around a very long time,” Baker adds. “They wouldn’t have been around if it weren’t for being reputable, for always being there for a customer when they need them.”

SIDEBAR:
Five Keys to Effectively Sourcing Suppliers
1. Scope out potential suppliers by attending trade shows.
2. Look at everything from magazine ads to Web sites devoted to private label sourcing.
3. Pull third-party audits and ask suppliers for product samples.
4. Get a sense of how flexible suppliers are able and willing to be.
5. Develop useful metrics for measuring performance.

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