By Joe Skorupa
The recession highlighted what many shoppers already knew: private label products are more than generic substitutes for branded items. In many cases, they have become valuable brands in themselves. By offering products found nowhere else, retailers build a moat of differentiation around their businesses. Here’s how CIOs can support their organization’s private label initiatives.
Retailers making the journey to private label success use their extensive customer knowledge to sharpen new product design. They find good partners to collaborate with manufacturing. And strong private label lines not only produce higher margins but also boost the retailer's brand by delivering competitive differentiation and higher levels of customer loyalty.
But like all major business initiatives, a private label program necessarily triggers an IT response. A number of major IT systems need to be fully engaged to achieve expected benefits. Here’s a list of applications and services CIOs need to integrate or upgrade to support their organizations private label initiatives:
- Supply chain execution to speed up reaction times across geographically disperse regions. Also logistics needs to be tightened up to ensure predictable lead times, delivery windows and smoothing out entry through ports. Cost reduction is necessary to ensure margins are maintained. And, finally, create a score carding system for suppliers to determine who is and who is not meeting expectations.
- Product lifecycle management is critical to ensure product quality and contract specifications are maintained. Also, detailed tracking of products and their components is necessary to comply with legal mandates.
- Customer analytic capabilities, especially from loyalty programs, must be finely tuned and delivered to merchandisers and marketers to provide insights into new product creation, accurate forecasting, and optimized assortments.
- A private label scorecard should be created to track key metrics of success, such as top-line sales, costs, margins, variance above and below plan, regions, clusters, categories, stores and SKUs.
- Visibility into the supply chain in near-real time and as close to the SKU level as possible is necessary to ensure private label success. Automated alerts for important variances and exceptions should be included. This level of transparency will also improve performance of such other departments as store operations, merchandising, and sales and marketing.
For an in-depth report on this topic you can download “Managing Private Label: Maximizing Differentiation, Minimizing Cost” by clicking here.