Archive for March, 2009

How can retailers go about staying focused on green initiatives when sourcing bulk hotel stays with e-negotiation tools?

Monday, March 30th, 2009

Recently in an article in Continental Magazine titled A GREEN NIGHTS SLEEP,author Neil Weilheimer posits Eco-friendly hotels offer travelers a variety of ways to love the Earth. In the article a spokeswoman for TripAdvisor.com quotes their survey where twenty six (26) percent of consumers indicated they planned to be more green conscious during the next year. Thirty four (34) percent indicated they would even be willing to pay more for it.

First it is important that a retailer set their own environmental guidelines, after all we are planning on paying our own programs forward to suppliers that support similar initiatives right? If a retailer follows best practices in the e-procurement process and during the discovery process follows a hotel stays template created with the environment in mind, they can do just that. In the same article, according to Patty Griffin, founder and president of the Green Hotels Association there are steps a consumer can take, and like wise so can a retailer.

Ask the hotels you are considering about their policies and practices. As an example:

1. Does the hotel use energy star approved appliances and televisions.
2. Are rooms cooled by ceiling fans to limit air conditioning usage?
3. What about their linens and towels, are they made of organic cotton?

Additionally you can check prospective hotels websites to see if they list other green initiatives that you can discuss with them further.

This author believes that it is not that difficult. Focus on your company’s social conscience and include that in your discovery. Then pay it forward based on more than just price.

We look forward to and appreciate your comments.

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Why should suppliers want to participate in e-negotiation events such as reverse auctions and on line Requests For Information?

Friday, March 27th, 2009

There are a number of significant benefits suppliers receive by participating in e-negotiation events.

Quite often when speaking to new suppliers to invite them to participate in a reverse auction or an on line request for information the question comes up; what’s in it for me? This is almost never the case for suppliers that have been involved in the practice before.

Supplier benefits may include but are not limited to the following:

1. Suppliers can accurately represent their company and its capabilities to a buyer or group of buyers.
2. Suppliers benefit from reduced cost of new business acquisition.
3. Suppliers are exposed to more opportunities for new business.
4. E-negotiations bring more potential business partnerships directly to the supplier’s door
5. E-negotiations are transparent and all requirements are clearly defined
6. Suppliers can have access to competitor best pricing during the auction, which helps suppliers position themselves correctly in the marketplace
7. All of the buyers terms and conditions, product specifications, and other pertinent information is clear and concise which allows for accurate quoting
8. Suppliers are introduced to tools they can use in their businesses in order to compress their pricing.
9. Suppliers can instantly submit and modify their bids electronically rather than submitting paper bids, providing a faster, more efficient purchasing process.

The next time a e-negotiation solution provider calls you on behalf of a company requesting your participation in an e-negotiation event, ask to be added to the database and what you have to do to be invited to all events in the future.

We look forward to and appreciate your comments.

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The Northern Lights are an amazing phenomenon that many are mesmerized by.

Thursday, March 26th, 2009

We do not need to be mesmerized to learn a little bit about food safety by looking to our northern border partner. Canada makes great progress with food safety with their Food Safety Enhancement Program (FSEP)

The Food Safety Enhancement Program (FSEP) is the Canadian Food Inspection Agency’s (CFIA) approach to encourage and support the development, implementation and maintenance of Hazard Analysis Critical Control Point (HACCP) systems in all federally registered establishments
The safety of food products produced in Canada is ultimately the responsibility of the food industry. Food inspection programs administered by the CFIA confirm that establishments have taken the appropriate steps to produce safe food products.

In the past, food manufacturers relied almost entirely on end-product testing to determine the safety of their products. Now, industry representatives and government together have developed scientifically sound principles based on HACCP to control production.

Hazard Analysis Critical Control Point (HACCP) was conceived in the 1960s when the US National Aeronautics and Space Administration. Since then, HACCP has been recognized internationally as a logical tool for adapting traditional inspection methods to a modern, science-based, food safety system.

FSEP encourages establishments to adopt HACCP principles. An establishment’s HACCP system includes its HACCP plans and prerequisite programs as well as procedures for the maintenance of the HACCP system.

The HACCP system prevents food safety problems by providing control throughout the manufacturing process at critical steps identified as Critical Control Points (CCPs). These points permit operators to detect and control hazards before products are distributed.

We look forward to and appreciate your comments

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What are retail 3PL’s and what types of retailers use them?

Wednesday, March 25th, 2009

Do retail 3PL’s make it more difficult for smaller retailers to run e-negotiation events?

According to Wikipedia a third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or “third party” logistics services to companies for part, or sometimes all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

As such, there are a number of types of SPL’s within retail that may in fact service a single retailer. All might fall under this umbrella including wholesalers such as SUPERVALU, collective buyers such as TOPCO or even a retailer collaborative that may in fact just coordinate aggregated purchases and in fact pick other 3PL’s to provide warehousing, picking and packing and distribution. Each of these providers may in fact provide some or all of the same services and also may all be in play at an individual retailer. The later or collaborative of multiple retailers might even be looked at as a non asset based 3PL.

In all categories of third party logistics providers however it is still the end user or retailer regardless of size that determines what products they buy and accept delivery of in their stores. As such, it should be no more difficult for smaller retailers to run e-negotiation events? There will need to be discussions as to costs that are purely associated with the warehousing, slotting, picking and distribution of products by a 3PL once an e-negotiation event has been planned, but these items should be easy to break out for bid or add to the final pricing prior to award of business as a flat fee. This is a practice that all 3PL’s should be familiar with already. Retailers should anticipate that their existing 3PL depending on services offered would rather not have you conduct these types of events as it negatively impacts their volumes with manufacturers and other providers and as such their company’s margins.

Understanding your options and the flexibility that 3PL’s can provide may actually make it easier for all retailers to use e-negotiation tools to impact their bottom line.

We look forward to and appreciate your comments

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How Socially Responsible (SR) are your suppliers?

Tuesday, March 24th, 2009

What is Social Responsibility (SR) versus Corporate Social Responsibility (CSR) and how is it measured.

According to the ISO, SR is the need for organizations in both public and private sectors to behave in a socially responsible way that is becoming a generalized requirement of society.
Broadly speaking, we need to understand that the difference between Social Responsibility or SR and Corporate Social Responsibility or CSR is that SR applies to more than just companies. Although not totally accurate, this author likes to think of SR as an umbrella under which corporate or governmental social responsibilities reside. More often than not today governmental social responsibility is also falling more under the CSR umbrella.

As a result of increased global focus, during January of 2005 a group was established within the International Standards Organization or ISO, to develop an International Standard providing guidelines for social responsibility (SR). The objective is to produce a guidance document, written in plain language that is understandable and usable by non-specialists, and not a specification document intended for third party certification

It is felt that a guideline like ISO 26000 is required because of ever increasing globalization and a need to be more conscious of what we buy, but also of how the goods and services we buy have been produced and by who. Issues such as production that is harmful to the environment, child labor concerns, dangerous working environments, safety, and other inhumane conditions are just some of the examples of issues being openly discussed today. All companies and organizations aiming at long-term profitability and credibility are starting to realize that they must act in accordance with norms of right and wrong. The guidance standard will be published in 2010 as ISO 26000 and be voluntary to use. It will not include requirements and will thus not be a certification standard.

As always, we look forward to and appreciate your comments.

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AHA moments in product and food safety are just fine.

Monday, March 23rd, 2009

Kellogg CEO proposes food-safety reform plan.

One would hope that the announcement by Kellogg CEO David MacKay was not an AHA moment. However, if it was that’s ok if it causes authorities, companies and other leaders to work together to solve the crisis in food and product safety that is rampant in this country and around the globe today. MacKay told Congress (who always listen to the big guys) that Kellogg’s wants food safety placed under a new leader in the Health and Human Services department. We hope that this direction is not just because Kellogg lost Seventy Million Dollars as a result of the recent salmonella outbreak where they had to recall seven million cases of peanut butter crackers and cookies. If that is the case it’s just fine.

Another pressure point that may be leading companies such as Kellogg to refocus on this problem is the fact that our new President who is enjoying rock star status around the world has also made this a focal point of his new administration. Last week President Obama launched a special review of food safety programs that are in many cases decades old and not under the umbrella of a single government organization.

It is this authors hope that other CEO’s seize the opportunity to make this issue a focal point of their company versus a me too effort that does not get the necessary amount of attention inside most companies. In this case AHA moments are a good thing and piling on only helps to solve a problem.

Safesourcing Inc. has reached out to our congressional leaders to play any part we can in assisting with this process through the use of our tools, database and best practices in sourcing safer products around the world.

Please do your part, and as always we look forward to and appreciate your comments.

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TODAYS GUEST POST IS BY Ryan Melowic, Director of Customer Services at SafeSourcing

Friday, March 20th, 2009

China product safety issues are in the headlines again.

However this time it’s not food products. This issue is in the building materials category and is affecting more people than the last two salmonella outbreaks combined. In fact this time it’s drywall that’s threatening residents in Florida and other states. As if these economic times were not difficult enough, this is not something that stressed home owners needed to add to their growing list of worries
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Tens of thousands of homeowners have encountered numerous issues including the smell of rotten eggs, sinus problems, and sulfur gases that can corrode copper coils as well as electrical and plumbing components. Based on import estimates, as many as 60,000 U.S. homes may be affected.

A class action suit has been brought against the manufacture Knauf Plasterboard Tianjin who claims they have tests that show the gases given off by the drywall pose no health hazards. Presently Florida Regulators and the federal Consumer Product Safety Commission are investigating this issue.

These issues have forced some homeowners out of their homes and into rentals. Some of those affected can’t afford to rent additional living space.

Retailers and Contractors are also being negatively affected as well at a time when there is less work and the costs associated with the time it takes to field all the complaint calls as well as the time required to tear out and replace the contaminated drywall. These hours further erode already slim profit margins and net profitability.

Consumers are tired of spending hard earned money on things that harm them. Over the last year or two we’ve seen reports about lead in paint on children’s toys, tainted dog food, baby food, and a variety of other safety breakdowns. What is it going to take to force and monitor policy changes?

Holding suppliers accountable to a growing list of Safety Certifications during Supplier Research is a must in today’s market. Is your present e-negotiation provider referencing twenty-five different Safety Certifications for every supplier if not, consider the consequences beyond just the monetary impact it could have on your bottom company’s line?

As always thanks for reading and look forward to your comments.

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If you want a sustainable e-negotiation program some critical thinking is required.

Thursday, March 19th, 2009

A client recently asked me why a large suppliers database is important to creating a sustainable e-negotiation program and what else would help ensure the process is sustainable?

A logical focal point for hosting a competitive e-negotiation event is to assemble all of your present suppliers for a particular category who are held in good standing. These are suppliers from whom you have sourced products using traditional means in the past.

In general the principal is that the more vendors or suppliers that agree to participate in the e-negotiation event; the better your potential results. This however requires some strategic thought because you are beginning a process that you want to use on a recurring basis. As such inviting the same suppliers again and again may seem to make sense, but may not encourage the results you are looking for whether it is shorter delivery times, better quality products, better pricing or all of the aformentioned. This is a critical reason why it is important to have the most robust supplier data possible available for your regular review. If you can only find six local suppliers for a particular auction, they will all most likely agree to participate the first time around. However a key issue to consider is what will encourage them to participate the next time and again after that? Suppliers will almost always not be the same size. As such the smaller vendors will most likely bid early and drop out after the early rounds. These suppliers will most likely not agree to compete in the future as they consider their chance of winning the business unrealistic. There are however ways around this if you are creative. The suppliers that finish first or second or incumbents that are displaced will always agree to participate again, but lack of competition from new souruces of supply will make the e-negotiation evenrs less successful.

A logical question would then be. If we only have six suppliers available; how many should we invite to participate? Should we invite them all? Every company will answer this question differently. When considering the future, do we want events or do we want continual process improvement that drives continuous savings?

There are several possible solutions to consider. First, only invite four participants to begin with. This will create a competitive environment for your auction. Let’s assume that in twelve months when you repeat this e-negotiation event that the two largest suppliers agree to return. You could now invite supplier’s number five and six that were not included in the original event. You have now created a competitive auction for the second year or cycle. A second thought might be to not invite all of the largest suppliers to your first auction, in order to manage the quality of your suppliers for future auctions. This type of critical thinking supports continual process improvement in e-procurement implementations.

We look forward to and appreciate your comments.

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Certified Humane Raised & Handled. Far too often law makers look the other way.

Wednesday, March 18th, 2009

What sourcing lessons can be learned from HBO’s documentary “Death on a Factory Farm?”

This author has to admit that I changed the channel on several occasions last night when watching the above mentioned documentary on HBO. I just could not tolerate or watch the violent behavior and mistreatment of hogs and their piglets on the Wile Hog Farm located in North East Ohio.

It is however part of my job to understand these practices in order to advise retail clients as to better ways to source meat products for their stores and understanding the brutality of this documentary is part of that.

Our SafeSourceIt™ Supplier Database with over 300,000 suppliers from around the world holds suppliers accountable to a number of standards that are included in a table in our database, templates library and best practices used in identifying and qualifying new sources of supply. One of those standards is Certified Humane Raised & Handled. The Certified Humane Raised & Handled program is an inspection, certification and labeling program for meat, poultry, egg and dairy products from animals raised to humane care standards. Wile Hog Farms practiced none of these. In fact we go a step further at SafeSourcing. We will not allow Wile Hog Farm or others who treat animals inhumanely to participate in our database. We will also ask processors if they accept Hogs from Wile Hog Farm. If they do, we may recommend to a retailer to not include them in an auction or replenishment event.

The question you are now asking yourself is; what impact will this have? At present, probably not much, but someone has to begin to hold the sources of our food supply accountable. Obviously our law enforcement organizations don’t take this seriously. In fact of the ten criminal counts at the end of 1 1/2 days of testimony, Wayne County Municipal Judge Stuart K. Miller found Joe Wiles guilty on only one count of improperly handling piglets, grabbing them and throwing them by their ears and legs.

I encourage you to watch this documentary if you are in the meat procurement business and then answer the question as to whether you want Safesourcing looking out for your best interests when sourcing safe products or someone else.

We look forward to and appreciate your comments.

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Is our nation’s food safety system a risk to public health? Let’s look at Bisphenol.

Tuesday, March 17th, 2009

The U.S. Congress is finally going to ban BPA. It only took us a year after Canada did the same.

Our president says our nation’s food safety system is at risk. Is Bisphenol an example of something that required our attention long before now?

On March 13th both the house and senate introduced legislation to ban bisphenol A in all food and beverage containers. Even better news is that Sunoco indicated that it will effuse to sell BPA to companies for use in food and water containers for children under three. The question here is what comes first the chicken or the egg. With the number of lobbyists that Sunoco has in Washington, they certainly were aware of the fact that legislation was going to be introduced.

Studies continue to indicate that this product is extremely harmful. It is this author’s belief that BPA should be banned in all products period. There is just no good reason for use by a product of this nature in any food related product. BPA has been tied to obesity, diabetes, breast cancer, testicular cancer, hyperactivity and reproductive failure.

As major manufacturers such as Gerber and others step up and discontinue using BPA in the making of baby bottles, it is time for all manufacturers to follow suite.

What questions does your e-negotiation supplier ask when sourcing private label bottled water, or other beverages or food products on your behalf relative BPA.

If you would like to learn more about this product please visit our blog post from November 9th of last year “Re-Examining bispnenol A BPA in North America”

As always we look forward to and appreciate your comments.

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