By Retail Brew Staff
less than 3 min read
Definition:
Buying stuff gets complicated fast when you’re a large retailer. It’s a multistage process involving sourcing, price negotiation, and purchasing. Procurement is the catch-all term for the whole kit and caboodle. Under the label falls everything from securing products from the manufacturer to shipping them across the world and storing them in a warehouse. The Association for Supply Chain Management breaks it down this way: Procurement is “planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operation.” In other words, it encompasses a significant portion of what retailers do short of selling goods to customers.
The evolution of procurement: The procurement process got a good hard shake from the last several years of pandemic-related shutdowns, trade disputes, and geopolitical blowups. Many retailers overhauled how they obtain goods, with big changes including a mass exodus out of China to other producer nations such as Vietnam, ongoing negotiations between buyers and sellers over who has to bear the cost of tariffs, and efforts to source goods domestically to avoid any number of global trade challenges.
Procurement in context: “As a number of retailers have stressed, keeping prices down is a top priority for much of the industry, and CPGs appear equally sensitive to price. ‘There’s going to be this inherent tension between retailers and CPGs about…who eats that cost,’ Tom Madrecki, VP of supply chain and logistics for the Consumer Brands Association, told Retail Brew.”
