Cut from the right cloth – how to strategically source fashion
Hemant Gupta, CFO at Blackberrys, on how the Indian menswear brand has implemented a digital procurement solution through its partnership with Ivalua.
Blackberrys (not to be confused with the mobile phone manufacturer) is among the top three domestic menswear brands in India (and the first to introduce off-the-peg suits) dealing with all departments of retail across pan-Indian multi-brand outlets, ecommerce and large format branded stores carrying its three ranges of menswear – Mainline, Urban and Casual. Blackberrys apparel was founded in 1991 in the bylanes of Chandni Chowk, New Delhi. Starting out in wholesale, before moving to retail, under the leadership of the Mohan brothers, Blackberrys offers a one stop shop for every man’s wardrobe needs with 217 exclusive stores across 115 cities.
Blackberrys CFO Hemant Gupta explains to Supply Chain Digital that the company was eager to avoid resting on its laurels while exploring new ways of improving its procurement strategy. “We were keen to build on our offline activity, where we still value interpersonal skills, and develop our ability to do procurement negotiations online. We had a new structure and procurement team in place but we needed help with planning so we decided to get support from Ivalua,” he recalls.
“By taking this process online we were able to achieve the centralisation of data, further develop our supplier database and receive reports from the system to help us properly monitor spend. For procurement it offers a fair and transparent process when selecting a particular vendor because everything is now online with e-sourcing. Before that, our offline model didn’t give a 360-degree view when we were awarding contracts because costing is not the only factor – we are also looking at service agreements and quality control, as retail is a tricky business.”
Gupta notes that once you are doing trade purchases it’s mostly based on the quality parameters. He explains it’s compulsory for Blackberrys internal stakeholders to select at least three vendors on the same quality parameters then they are good to go with cost negotiations. This means that when a good price has been agreed, the deal won’t be rejected due to quality issues that ultimately could affect the end consumer and damage the brand’s reputation.
The partnership with Ivalua grew from Blackberrys’ collaboration with Consus, which were using the Ivalua platform to outsource the management of procurement functions. “Consus work in our office providing us with resources to manage our negotiations online, improve visibility, share various reports and manage the centralisation of data,” reveals Gupta. “Over the past three years our discounting has increased by almost 25% which has helped drive a reduction in margins. As CFO I need to improve the bottom line of the company so we needed new partnerships like this to work on procurement of both trade purchases and non-trade purchases.”
Blackberrys has had to focus on meeting the challenge of changing its operational mind set, moving away from some manual elements and keeping all stakeholders on the same page. “Cost-cutting is no longer the solution for sustainable profitability; the key to success is finding creative ways to optimise it,” says Gupta. “Non-trade purchases, such as marketing spend to drive footfall into stores with the launch of each new season range, are traditionally handled offline. We’ve decided to challenge ourselves to reduce rates we pay for procurement because there’s a historical trend to quality parameters and rates being set with certain suppliers for trade purchases. Previously there has been a complete monopoly of the vendor but because of the AI that the online system creates, suppliers realise there is competition which encourages more competitive pricing.”
The company introduced Ivalua in 2016. Prior to this it was using only traditional manual sourcing methods with no visibility on spend or central database for maintaining contracts beyond their expiry. Allowing it to manage a dual structure of internal stakeholders and external vendors, Blackberrys has embraced automated processing, lowering risk and increasing efficiency while utilising hassle-free tracking (when issuing the PO to realise savings in the post sourcing process) and renewal of contracts for improved control and transparency.
Article First Published on Supply Chain Digital , June 19th 2018