The procurement process in commerce is a finely-tuned mechanism, where the most crucial elements are long-term partnerships and mutual trust between parties. The pandemic and the war in Europe have permanently and significantly altered procurement processes. The sudden change eventually became the new norm.

Behind the core assortment and seasonally fluctuating selections is a complex, global supply chain, where procurement decisions are made a year in advance.

Intersport is an international sporting goods retailer operating in 42 countries. Globally, there are over 5,000 stores. In Finland, in addition to the online store, there are over 50 independently operated Intersport stores.

Global trends are taken into account in procurement decisions, but the emphasis is also on country-specific choices. The operations of brick-and-mortar stores and online commerce support each other, as the entire offering is visible online.

Crasman is Intersport's strategic partner in e-commerce. We have implemented online stores as well as product information and assortment management. Crasman has delved into Intersport's business processes and developed and adapted them, as ready-made systems have not directly met the complex demands of the business.

Choose your procurement partners carefully

Intersport is the world's largest international sports retail chain. The expectations for the range and their development have grown season by season. The international Intersport, also known as IIC, lays a solid foundation by negotiating pre-set agreements with major so-called mega-brands. This provides a strong basis and negotiation power even on a local level.

Genuine partners, such as suppliers and brands, evolve over time into strategic partners. Good, credible, loyal, and trustworthy partners are also retained.

Ilkka Hairo is the category manager responsible for all categories at Intersport. He states that a good procurement partner operates according to today's values, rules, and sustainability requirements, but that alone is not enough.

– Furthermore, it is essential to serve all our 50 independent stores, which make their own decisions from the planned chain assortment products. Therefore, a willingness to serve is also necessary.

Assortment procurement processes aim far ahead – partially blind

Critically reviewing brand strategy is always part of preparing for a new season.

– It is extremely important to go through the brand metrics and analyse their effectiveness in merchant partnerships, and through this, possibly change their emphasis in assortments. With the growth of e-commerce, we have also introduced new brands into our selection.

Plans are running in the background, tracking the achievement of set targets. Procurement binoculars are adjusted more than a year ahead, and there are no current season figures available yet. Trust and previous collaboration experiences are the be-all and end-all.

– We don't see figures from the upcoming season. Therefore, we must believe in the brand and trust how it has performed over the longer term.

Brands present their plans for the current season, which are mirrored against our own plans. Many details are crucial.

– We consider, for example, the underlying core selection, the brand's image and price-driven marketing. Teams create packages from categories, which are then campaigned into the marketing-produced frameworks. After this, order sheets, or so-called fronts, are made for the merchants, says Hairo.

The pace is tight, and by midsummer, orders for the following spring are already completed. However, arrangements for the next season's procurements have already been underway. Simultaneously, brands' timelines extend up to two years ahead.

Digital assortment management speeds up and streamlines work

Ilkka Hairo states that although digital systems are used for monitoring and directing processes, orders have so far been laboriously managed between merchants using Excel sheets.

– Currently, there is an ongoing transition to digital assortment management aimed at streamlining and speeding up orders, reducing errors, and significantly saving working hours.

– This transition allows us to move away from paper, as orders are transferred through digital channels between merchants and back to us.

The sudden change brought by the pandemic and the war created a new normal

A watershed moment in procurement processes began in 2020. The pandemic changed practices everywhere, shutting down factories and entire countries. People’s movements and habits also changed. Obtaining materials became difficult.

Hairo notes that the overall effects are immense.

– Factory closures in China due to lockdowns meant that productions are prioritised. Focus is placed on more profitable products, while those with higher production costs are sidelined.

The war of aggression initiated by Russia in Ukraine altered freight and logistics routes. Sanctions are also impacting the operations of the global supply chain.

– Air freight must detour around Russia, and rail traffic through the country has stopped. In addition to container shortages, European ports are congested.

In practice, the situation is reflected in order cancellations, delays, and changes. When orders are made a year in advance, the impacts are visible for a long time.

The work is a balancing act between an enticing product selection and a moderate inventory value. Ilkka Hairo remarks that the sudden change has become the new normal, and adjustments have already been made.

The game of goods requires effective cooperation, reliable partners, and good systems. One must know the exact stages of products, their locations, and, if necessary, be able to modify orders significantly.

– Without good partners, they would push the goods onto us with a take-it-or-leave-it mentality. But we have good cooperation, things run smoothly, and we can adapt operations according to the current situation.

Critical points in the procurement chain

The critical points in the procurement chain, according to Hairo, include the management and communication of the category's overall assortment.

It is important to find collections that meet store needs and are supported by marketing.

– In our brand strategy, we have considered the roles of different brands in different categories and how the selection of individual brands is weighted in the overall assortment. Communicating this aspect to the stores is also of prime importance.

Rising prices are also visible in the procurement chain. However, prices are not taken for granted; instead, they are negotiated based on pricing from brands.

– With price increases and the weakening of consumer purchasing power, we have also introduced new price points for different product groups.

The online store is a support to the physical store

Hairo reports that for Intersport, the transparency of the online store creates an essential overview of the offer for the consumer.

Everything being done and on sale is visible online. It is up to the stores to decide whether they want to purchase a product for the shelf.

In a merchant-driven store, it is crucial that the online store supports the physical location, offering consumers broader opportunities to receive service.

– Availability information is also displayed online for the stores, and purchased products can also be picked up from the brick-and-mortar store. This provides important added value and is therefore absolutely essential.

This blog post is part of the Crasman Insight review, where we delve deeper into the processes of e-commerce, from assortment management to warehousing and logistics.

Crasman Insight is a biannual publication covering phenomena, trends, and insightful contributors in e-commerce.

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