The new challenge for manufacturers and the FCMG sector

To stay competitive, it has become essential for manufacturers and major retailers to be able to identify the best sources for procurement. Increasing numbers of them are importing goods from low cost countries – principally China. Efficient sourcing and bulk-buying are the keys to cutting costs and keeping down prices. But reduced purchasing costs must not be offset by a resulting increase in transport and logistics costs. Manufacturers and distributors need to know the costs of their supply chain as accurately as possible.

They must be able to calculate the total delivered cost for each product (including purchase price, customs fees, transport and logistics costs before actual placement) to be able to make an objective judgement about the best source of supply.

DDS Logistics, the French leader in Transport Management Systems (TMS), has developed a web-based Sourcing International module that all stakeholders in the process (suppliers, purchasers, shippers etc.) can use to collaborate in real time and exchange information and orders concerning sourcing, so that the buyer can find the supplier offering the best quality/price ratio.Major groups, like Carrefour, now use it and have contributed to its development with their own suggestions.

Carrefour Group, precursor and initiator of the Sourcing International module

As Jérôme Bour, CEO of DDS Logistics, points out: “More and more manufacturers and major distributors now relocate their production facilities or sources of supply to low-cost countries to reduce their operating costs. They then face the difficult task of selecting their suppliers and often underestimate the logistics and transport components involved. To be certain of reducing costs, these factors should be integrated right from the sourcing phase, when products are being selected.” As a publisher of software for international transport and commerce, the company therefore decided to bolster its DDS Shipper package with a module specifically designed to facilitate international sourcing. Carrefour Group, a long-standing customer of DDS Logistics, was one of the earliest to use it, first for supplying its points of sale in Europe and later extending it to all its brands round the world. The Group was so convinced of the potential of the Sourcing International module that it has participated actively in its design.
“We have been collaborating with DDS Logistics for over 10 years. We originally asked it, as a young start-up, to optimise our transport function, to help us manage and monitor deliveries of non-food goods around France,” explains Ghislain Esquerre, Methods and Systems Manager for Carrefour Group’s Sales and Marketing Divisions. “At the same time we undertook a complete reorganisation of our internal structures and realised that we needed to develop two complementary modules; one to manage our referential (supplier database) and calculate costs, the second to manage orders in such a way as to have an integrated suite (referential, order, delivery). Implementing the new organisation, along with the new modules, allowed us to deploy the software in our different sourcing offices in Asia. We next wanted to structure our Sourcing procedure so we asked DDS Logistics to develop a global solution suitable for our organisation that would manage all the components of our Sourcing function. Efficient Sourcing is vital for leveraging growth. We need to have specialised structures in manufacturing regions and use appropriate IT solutions.” The lessons learnt from fulfilling Carrefour’s requirements and an analysis of sourcing at the global level were key factors behind the creation of DDS Logistics’ Sourcing module. Since then the application has developed further, incorporating on-line procurement and the logistics aspects, providing a tailor-made answer to the constraints and requirements of both manufacturers and major distributors.

The Sourcing module significantly reduces product selection time thanks to the automation and acceleration of the sourcing process

DDS Logistics made supply source management a major priority for its Sourcing module. Buyers enter their requirements in the online module so that suppliers can respond directly with their offers. They can then analyse and select the offers that best satisfy their requirements. Information about suppliers, specifications and logistical data are all stored in the module, which has several major advantages: time is saved, administrative tasks reduced and data once used successfully can be assumed reliable.

Decision-making facilitated by a sophisticated module for calculating real costs

The Sourcing module is able to simulate a product’s real cost, from factory to point of sale. Though easy-to-use, the module nevertheless considers all the constraints of international purchasing (depending on the product’s specific logistical needs: packing, weight, volume, handling conditions, means of transport, itinerary and the places concerned, fees and taxes etc.). In addition, the module facilitates the management of exchange constraints (from a purchase price in currency X it can calculate a sales price in currency Y). When acquisition costs are automatically displayed for comparison in the software, purchasing decisions are so much easier! For Carrefour Group, the costing function is a major advantage: “The sales price can be sent to the Group’s different Business Units along with the original product description, irrespective of the currency of either purchase or sales. Our very diverse range of supplies can come from anywhere around the world, depending on our product lines.” “It was a few simple ideas from Ghislain Esquerre that helped us carry out this project successfully: the keys to optimisation are Simplicity, Acceleration and Security,” concludes Jérôme Bour.

The Sourcing module is used today by Carrefour and Conforama.