There are very few retailers beyond the very largest that even use e-procurement tools and more specifically reverse auction tools. In the very largest companies these are legacy tools that are installed behind the company?s fire wall and staffed by company employees. In other cases these tools are embedded in very large scale implementations of integrated supply chain offerings and don?t even get used because the retailer does not know how to host a reverse auction, doesn?t know how to use the tool or don?t have access to a robust retail database, event template library or best practice methodologies.

E-procurement tools also known as spend management offerings and a variety of other naming conventions within the procurement space is crowed with offerings both new and old. Segmentation is typically by industry based on the experience of those who conceived of the company. With the genesis of these offerings in the late 1990?s, many applications and the resulting functionality are a little long in the tooth. This tends to happen to companies once they have a large customer base that drives their release content and drives scope creep and the resulting delays or have not been profitable enough to re-engineer their applications in order to keep up with advances in technology.

As such, the question as to whether or not to host full service or self service events in many cases is determined by the application and its provider. Questions a company might ask when trying to make this determination might include but certainly are limited to the following.

1. Is this application easy enough to use so that a company could host self service events if they wanted to?
2. Is the application intuitive enough that the lowest level user could build a simple event without instruction?
3. Can this be done in less than 20 minutes?
4. Does the application make it easy to source suppliers?
5. Does the application make it easy to access and post product specifications?
6. Is the application easy for suppliers to use?
7. Do suppliers have to change screen views all of the time?
8. Is the e-procurement event screen interactive or static?
9. Can you show me all of the above in fewer than 30 minutes?
10. Have new and innovative tools been added to the application?

If the answer to all of these questions is yes, the question as to whether to host self service or full service events has been answered for you. If you would like to, you can. Additionally, your provider should offer the flowing services and price them accordingly.

1. Full Service
2. Self Service
3. Assisted Service
4. Hybrid Service

We look forward to your comments

In essence, SQF and GFSI are programs administered by two separate organizations CIES and FMI that are supportive of each other and use ISO 9000 and its derivative ISO 22000 as standards guideline towards driving food safety in the global supply chain.

According to Wikipedia, ISO 22000 is a standard developed by the International Organization for Standardization dealing with food safety and is a general derivative of ISO 9000 which sets standards for quality management. As such, ISO 22000 guides food safety management systems – requirements for any organization in the food chain. Since food safety hazards can occur at any stage in the food chain from production to consumption it is essential that adequate control be in place that by the ISO are referred to as Critical Control Points or potential points of failure in the supply chain that when managed properly can mitigate the risk associated with the hazard ever taking place.

The ISO 22000 international standard specifies the requirements for a food safety management system which SQF and GFSI are that involves interactive communication, systems management and prerequisite programs and the principles of Hazard Analysis and Critical Control Points (HACCP).This is a systematic preventive approach to food safety which addresses physical, chemical and biological hazards as a means of prevention rather than finished product inspection which could be much more costly.

Think of the ISO as a standards creating body, and SQF and GFSI as programs that at a minimum focus on holding the entire food supply chain accountable to those and other standards.

We look forward to your comments.

Yesterday we discussed GFSI the Global Food Safety Initiative. Today we?ll provide a brief overview of the SQF program that is owned and administered by FMI the Food Marketing Institute www.fmi.org at the request of its retail members. An FMI Advisory Board provides overall policy advice, guidance and direction to the SQF Institute

SQF simply put means Safe Quality Food and is an initiative that has been under development for over ten years. This certificate program is a fully integrated food safety and quality management protocol designed specifically for the food industry. By achieving SQF certification, suppliers provide an external verification of their commitment to producing safe, quality food.

There are two certifications available from the SQF Institute. The first is the SQF 1000 Code which is designed specifically for primary producers. The second the SQF 2000 Code is more focused on the food manufacturing and distribution segments of the industry.

The intention of SQF is to utilize one industry program that meets the requirements and at the same time provides efficiencies for suppliers. SQF and the SQF 1000 and 2000 codes are recognized by the Global Food Safety Initiative GFSI as conforming to the highest of international standards.

SQF has been implemented by over 5000 companies operating around the world including Asia-Pacific, the Middle East, United States, Europe and South America.

To learn more about this important initiative, please visit www.sqfi.com.

We look forward to your comments and questions.

If you read the news paper, watch television or surf the web, current events would suggest that we all should.

Seven year s ago during May 2000, a group of international retailer CEOs proposed a program that would focus on three key initiatives; The need to enhance food safety, the need to insure consumer protection and the need to strengthen consumer confidence.

The proposed program would set requirements for food safety schemes and improve cost efficiency throughout the food supply chain. Following their lead, CIES founded in 1953 as the International Committee of Food Retail Chains, and today known as CIES ? The Food Business Forum developed its food safety programs to specifically help food safety stakeholders work together towards the following:

1. Decreasing food safety scares and risks
2. Providing better quality products for consumers
3. Enhancing transparency between all links in the food chain.

GFSI is coordinated by CIES today with the following mission and objectives:

The GFSI Mission:

Continuous improvement in food safety management systems to ensure confidence in the delivery of safe food to consumers .

The GFSI Objectives are to:

1. Foster convergence between food safety standards through maintaining a benchmarking process for food safety management schemes.
2. Improve cost efficiency throughout the food supply chain through the common acceptance of GFSI recognized standards by retailers around the world.
3. Provide a unique international stakeholder platform for networking, knowledge exchange and sharing of best food safety practices and information.

Although GFSI began as an international standard, it laid the groundwork for many future initiatives in food safety and other areas of safety in practice today such as the FMI SQF program, and has been adopted by major retailers throughout the world such as WAL-MART, TESCO, ROYAL-AHOLD, MCDONALDS, HORMEL FOODS and others. To learn more about this important initiatives continuing development please visit www.ciesnet.com.

We look forward to your comments.

Since not everyone eats jalapeños’, I have to imagine it is hard to track people getting sick from these spicy gems which I happen to love. To a non lover, just one bite might upset there stomach without salmonella.

The one thing we know at this point is that we don’t know what we don’t know. When I posted my first blog on the Salmonella outbreak there were up to 145 reported cases and 23 hospitalizations associated with the tomato recall since the first reported cases in early April. By June 16th the CDC reported that 277 people were infected with the same strain called saintpaul. As of today July 10th 2008 the number has risen to more than 1000 people in forty two states and Canada. According to federal officials this is now the largest food-borne illness in decades. Now we are supposed to avoid, fresh jalapeño and Serrano peppers, and maybe even cilantro.

Tomato growers are actually mowing down fields on harvests that normally last through early autumn because demand is off. And according to retailers although sales are improving demand on some varieties were off by as much as 50% as little as three weeks ago.

Something has to be done to protect our food supply as consumers eat more and more exotic foods. The television, internet and print media are loaded today with cooking information that did not even exist 25 years ago. People just don’t eat plain food any more and are constantly trying more exotic dishes. This is only going to continue to grow as our world becomes smaller and smaller.

It may take entrepreneurs to provide the answer. What is sorely needed is a database of manufacturers, suppliers, brokers, growers and products that can be searched in a variety of ways in order to trace goods to their original source of supply when situations like this occur. Safety is the key area of focus whether it is lead in toys or food-borne illnesses. It is incumbent on suppliers to provide this information freely and openly when it is asked of them. When a safety situation occurs the retailer-broker-supplier-distributor-grower chain can then be easily searched so that our limited government resources can be productive with their existing resources. Technology is the answer.

We look forward to your comments.

Since not everyone eats jalapeños?, I have to imagine it is hard to track people getting sick from these spicy gems which I happen to love. To a non lover, just one bite might upset there stomach without salmonella.

The one thing we know at this point is that we don?t know what we don?t know. When I posted my first blog on the Salmonella outbreak there were up to 145 reported cases and 23 hospitalizations associated with the tomato recall since the first reported cases in early April. By June 16th the CDC reported that 277 people were infected with the same strain called saintpaul. As of today July 10th 2008 the number has risen to more than 1000 people in forty two states and Canada. According to federal officials this is now the largest food-borne illness in decades. Now we are supposed to avoid, fresh jalapeño and Serrano peppers, and maybe even cilantro.

Tomato growers are actually mowing down fields on harvests that normally last through early autumn because demand is off. And according to retailers although sales are improving demand on some varieties were off by as much as 50% as little as three weeks ago.

Something has to be done to protect our food supply as consumers eat more and more exotic foods. The television, internet and print media are loaded today with cooking information that did not even exist 25 years ago. People just don?t eat plain food any more and are constantly trying more exotic dishes. This is only going to continue to grow as our world becomes smaller and smaller.

It may take entrepreneurs to provide the answer. What is sorely needed is a database of manufacturers, suppliers, brokers, growers and products that can be searched in a variety of ways in order to trace goods to their original source of supply when situations like this occur. Safety is the key area of focus whether it is lead in toys or food-borne illnesses. It is incumbent on suppliers to provide this information freely and openly when it is asked of them. When a safety situation occurs the retailer-broker-supplier-distributor-grower chain can then be easily searched so that our limited government resources can be productive with their existing resources. Technology is the answer.

We look forward to your comments.

All Retail industry leaders know for a fact that e-procurement improvements can directly improve their bottom line as well as positively impact shareholder and stakeholder equity. In many cases in upper tier companies significant strides have been made to this end. Unfortunately, at the lower end of tier one and in almost all mid tier companies the same can not be said. This is not based on a lack of desire on the part of mid tier retailers as it is based on large software and consulting providers not willing to price their products or spend time in the mid tier market.

In these mid tier markets, it?s an unfortunate circumstance that procurement departments or purchasing as it had traditionally been known has not evolved significantly beyond its traditional functionality in many cases. Many mid tier companies will introduce you to their category managers. However, it very quickly becomes clear that although many have strong backgrounds as product buyers; very few have been exposed to the most current e-procurement tools available today. This is in no way the fault of the purchasing department or of the retailer. Reduced staff counts and the aforementioned lack of attention from software and consulting providers as well as a lack of near by formal e-procurement training programs combine to make the transition to e-procurement tools difficult.

What can retailers in the mid tier markets do? The answer may be working with boutique software houses that have no where near the overhead of the largest companies in this space. The largest well known companies in the e-procurement space may dominate your web based searches because they can afford to pay for large numbers of key words used in web searches. It may actually pay to drill down a few pages beyond your original search to find companies that have unique e-procurement software offerings that are often developed by highly skilled entrepreneurs that know the retail procurement business and can offer e-procurement solutions for a fraction of the cost associated with the better known legacy providers. The risks associated with this approach are minimal as most offers in the e-procurement space are offered as a hosted service today. All that is required on the retailer?s part is internet access. You might even get treated more like a customer to boot.

We look forward to your comments.

In fact, there has never been a better time to save money. Suppliers that are hurting want your business and incumbent suppliers don?t want to lose your business. What a great time to have suppliers compete for your business?

There could not be a better environment for using reverse auctions and other hosted spend management tools. And, when you are using a full service hosted tool, your valuable resources and associates are free to tackle other issues. This really is a common sense approach. If during hard economic times, you were to put more of your spend under the management of these types of tools, your customers just might thank you with more loyalty in the way of increased wallet share. It?s time for protective buyers to look for alternative sources of supply and place a larger percentage of spend under management.This is an area in which Retail lags all industries.

In a study released during May by the Aberdeen Group titled Strategic Sourcing in EMEA, the study revealed that top-performing enterprises utilize e-sourcing solutions for a remarkable 56% of their addressable spend. This study included an evaluation of an astonishing 230 EMEA based sourcing programs. In addition, the best in class organizations realized cost savings 40% higher than all other organizations.

It is time to look at how we do things and make some needed changes. If a super market company?s total cost of goods were 72% of revenue, and supermarket net profitability averaged 1%. What type of net profit improvement might we anticipate if a $500M supermarket retailer were to assign just 10% of their total spend to these types of tools? The math is pretty simple. Existing net profit at 1% would equal $5M. Present cost of goods at 72% would equal $360M. If 10% of total spend were assigned which is $36M to these tools and savings averaged only 10%, this retailer would reduce cost of goods by $3.6M or an astonishing improvement in net profit of 72%. Theoretically these savings should drop straight to the bottom line minus certain switching costs associated with new suppliers and savings timing based on actual delivery timeframes.

The cost of these types of tools, are so minimal in a hosted environment that they almost do not impact the financial example listed above. Remember in the Aberdeen report, best practices companies assigned 56% of available spend. Their models may differ based on Industry. What are we waiting for?

I look forward to your comments.

Is having access to new sources of supply from new and emerging markets through e-procurement tools a priority for your company?

Sourcing from China can provide companies with unprecedented access to a new supply base. This is a critical step in maintaining and lowering your costs in a challenging global economy.

Important questions that may be asked of your provider include but are certainly not limited to the following. These questions will help to minimize the risks that are commonly associated with the use of long distance global supply chains.
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1. Does your provider have experienced customer service representatives who have procurement expertise in hosted e-procurement events?
2. Does your provider have a well documented e-procurement strategy?
3. Do the suppliers in your provider?s database have a clear understanding of the products or services being purchased?
4. Are your provider?s tools flexible enough to support a variety e-procurement event types.
5. Does your provider offer a robust specification library with hundreds of templates for each type of reverse auction?
6. Does your provider conduct ongoing supplier development including audits and local training
7. Does your provider offer safety certification RFI compliance?
8. Does your provider test suppliers for their eco strategies?

The SafeSourcing SafeSourceIt? North American Supplier Database was released to the retail market on May 12th of this year with over 95,000 suppliers. This database will add over 9,000 China based suppliers by the end of July in addition to 8,000 additional North American suppliers. This supports our mission to continually evolve our product offerings in order to offer the best tools in the industry to our retail partners.

We look forward to your comments.

Primary success in e-procurement programs is ultimately measured by cost reductions that drop directly to a company?s bottom line. More than once I have heard; ?did we hit a home run?? Less emphasis is placed on cost avoidance and sustainability and as such can often lead to less spend be assigned to these very effective tools than should be.

In order to ensure that results are sustainable; the strategies for all targeted e-procurement categories require consistent deployment across all departments throughout the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier selection, and a solid strategy that is well understood by all buyers and category managers for negotiation and award of business.

Supplier selection and management is a critical stage that requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone with the procurement organization could negatively impact the potential results of an e-procurement event. Historical long term relationships that drive behind the scene comments like; ?don?t worry we?ll be fine? to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your program. Not to mention the potential legal implications.

If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tool?s that are offered in the form of SaaS or Software as a Service, ask your provider why?

I look forward to your comments.

Ron