3 Replies Latest reply on Nov 14, 2011 11:14 AM by Andrew Gill

    Promotional Items & Merchandise Sourcing: Share Your Secrets

    tminahan Master

      Our friends at Sourcing Interests Group (SIG) have put out an APB to understand best practices for sourcing promotional items. Some of the questions they are looking to answer include:


      • How was your pricing schedule constructed? Did you use tiered pricing? Did you (or would you) use a reverse auction to negotiate this category?
      • What service level did you agree upon? Key index?
      • What were your lessons learned -- a.k.a., what would you do differently next time?


      Sourcing promotional merchandise is a good way to get your foot in the door to influencing and managing marketing spend. Having answers to the above questions can ensure you don't stub your toe.


      Any insights or recommendations you could share would be greatly appreciated.

        • Re: Promotional Items & Merchandise Sourcing: Share Your Secrets
          Susan Patrick Harris Novice

          For Promotional items reverse auction could be effective because the the industry distribution model. Would be interested in a deep dive into this category. For example: What is the best time to source Promotional Items? 

            • Re: Promotional Items & Merchandise Sourcing: Share Your Secrets
              Miguel Paramo Novice

              Hi all,

              If there is a clear policy on what promotional items can be purchased and which cannot be purchased, I think is possible to standarized the list of promotional items to buy, and therefore do a reverse auction to select the most competitive supplier. In other words, determine a fixed cost for each item during a period of time (let's say a year). Anyone in the company will be able to purchase the products using a catalog (if needed using tiered pricing).


              I think the challenge is what to do if new and different promotional items are needed. Something not negotiated before. Do you do another ad-hoc tender? do you have a maverick functionality in your catalog so the final user can order the product that is not available? and if you have that functionality how do you guarantee the price received is competitive? has anyone got a suggestion?


              Re the best time of the year to purchase promocional items. I think it depends on the product and if it is an ad-hoc purchase or a continuous need.

              In any case, if you are going to procure the products from China, take care with the Chinese New Year! factories are closed for one or two weeks and delays can be important.




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                • Re: Promotional Items & Merchandise Sourcing: Share Your Secrets
                  Andrew Gill Master

                  At Reed Elsevier, we're using eAuctions for promotional items almost every week.


                  We only use a pool of preferred, and pre-qualified suppliers because this helps us ensure our suppliers have agreed to our Supplier Code of Conduct to ensure their ways of work match our values, as well as ensuring we've an agreed mechanism of payment.


                  In preparing our specification, we work with our stakeholder to agree if product substitutions is possible i.e. branded for own / white label etc and what the delivery date is.  If it's a large quantity, we'll also ask the stakeholder if they need 100% of that quantity on day one, or a smaller number as this may mean we can have the first shipment by air to meet an immediate need, but the balance may be possible by sea freight, at a lower cost.


                  Suppliers are sent a written specification and full colour image, and asked to submit questions if necessary.


                  If substitutions are allowed, we include time for the alternate article to be delivered and get a physical approval.


                  Two days before the eAuction, training on how to bid is given by us, and our proof of learning is to ask pre-bids to be submitted within an hour or two of the training.  We allow ourselves time to sanity check the prebids i.e. if something is too low, or too high. At pre-bid time, we'll also ask the supplier lead time, as they may highlight a lower cost can give us a longer turnaround time.


                  On the day of the eAuction, the event runs for a minimum of 15 or 20 minutes depending on the number of events the suppliers have taken part in; in addition we allow extensions or overtime of three minute for each winning bid.


                  Spot buying really works here because our needs change from month to month based on campaigns, and for items such as USB flash memory, the market prices change each each.

                  Total time : 20 minutes to build the eAuction.  30 minutes for supplier training. 40 minutes for eAuction. 5 minutes for reporting / optimization






                  Andrew Gill | Global eSourcing Manager | Reed Elsevier