Archive for May, 2009

We are pleased to announce to our industry friends the one year anniversary of SafeSourcing Inc. A company for procurement professionals.

Thursday, May 14th, 2009

Our website www.safesourcing.com. has been visited more than 40,000 times during our first year resulting in over 7.1 page views per visit with the average visit lasting greater than 6 minutes. All metrics are well above industry averages for site visits. These visits were generated from over 60 countries with a relatively low bounce rate of 30%.

This indicates that there is a wide level of interest in our approach to supporting companies Corporate Social Responsibility programs (CSR) with our safety and environmentally focused best practices that support e-negotiation in today?s world.

SafeSourcing is now conducting business in both North America and Asia. We have delivered significant savings to our customers and business partners in excess of 20% during an extremely tough economic period.

Our professional services business which supports our SafeSourceIt? product family is thriving with delivery of over 20 e-negotiation training sessions in Asia where our multi lingual application is running in both English and Kanji.

In support of our safety and environmental focus areas and corporate commitment to give back, Safesourcing is also very proud based on our early success that we were able to donate 1000 immunizations for the children of Haiti where almost a third of Haitians have no access to safe drinking water which can result in disease and a high death rate for children.

We have appreciated all of your comments over the last year and will continue to endeavor to provide timely and valuable guidance and tools to the procurement community.

Thank you!

Ron Southard

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One of my favorite daily readings is a twice a day every day blog post from Sourcing Innovation where Michael Lamoureux is known as ?the doctor?.

Wednesday, May 13th, 2009

In his most recent post, the doctor discusses near-shoring from an AMR research project that indicates that this process can be used as a form or risk management with which this author agrees.

Many people when referring to offshoring and near-shoring think they are only discussing jobs that have been replaced by remote resources from India and China. This was a major topic in the most recent political campaign for President of the U.S.A. This author believes this subject should be taken more broadly to include sources of supply for resale and not for resale products in the retail market.

Many retail executives may not even be familiar with this term. It has been around for a number of years now and in contrast to offshoring, nearshoring offers companies an opportunity to collaborate with suppliers located in the same or similar time zones. If you have ever tried to source products or services from Asia, compare the time difference with that of building a relationship with sources of supply in a local time zone such as in Argentina, Brazil Canada or Mexico. There are significant headaches associated with doing business with a supplier that is on the opposite end of the clock. By example: A company located in New York at 8 p.m. EST. trying to do business with a supplier in Tokyo at 9 a.m. the next morning. The New York based company is well past the end of their day and the Tokyo based company is at the very beginning of their next day.

From today?s Sourcing Innovation blog ?the doctor? posts: Hear, hear! I’ve always been for nearshore sourcing and home country sourcing not only because it decreases risks, but because it increases competitive advantage manufacturing flexibility while decreasing transportation costs and pollution.

In order to support near shore or home country sourcing, a significant database of new sources of supply is required where suppliers are adequately vetted against a number of safety and environmental certifications and a level of traceability is maintained. We all know that a key to sustainability in the e-negotiation process is a list of suppliers ready and willing to compete for your business. Running events with the same supplier?s quarter after quarter and year after year is not sustainable.

We look forward to and appreciate your comments.

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Data from the FDA should be of concern to food industry sourcing professionals and the Obama Administration.

Tuesday, May 12th, 2009

With the number of food scares we have endured during the last several years and the dollars that the FDA has spent on additional resources; shouldn?t the FDA be doing better than this?

According to an article in USA TODAY last week by Julie Schmit the FDA fell short of its goals in at least seventeen of thirty-nine states that they paid to do inspections during the 2007 -2008 contract year.

An FDA resource indicated that they do not meet their targets every year, but they are looking at continuous improvement. This author does not believe that a 43.5% failure rate indicates continuous improvement even if recent data was much worse. This of course does not speak to the fact that some states actually received no audits. In fact in the prior reporting periods, the State of Texas received no audits and is one of the largest FDA contract states.

Maybe the Obama administration should be using some stimulus dollars to insure the safety of our food supply. I have posted before on the new administrations concerns relative to food safety. The administration actually claims that their economic stimulus initiatives will in fact add or save as many as 3.5 million jobs. New Flash. Put a few of the stimulus dollars into ensuring an acceptable rate of success in FDA audits and inspections.

In the USA TODAY article, the FDA indicated that other priorities such as food borne illness outbreaks absorb so many FDA and state resources that audits are skipped. This is a chicken or the egg excuse as far as this author is concerned. If all audits and inspections were conducted on time and companies held accountable to audit standards, we might not have had some of the food borne illness outbreaks in the first place.

While it remains imperative that next generation supplier databases offer traceability to the original source of supply and adherence to a number of food safety certifications, proper inspection and audits completed on schedule at an acceptable rate of over 90% is imperative to insuring consumer satisfaction with our food supply chain.

We appreciate and look forward to your comments.

Ron Southard

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Locating, managing and updating supplier information that companies choose to do business with has never been more difficult.

Monday, May 11th, 2009

Regulatory requirements change almost daily as the supply chain continues to broaden globally. Emerging industries, new sources of supply, safety factors, environmental factors, detailed supplier information and traceability are but a few of the issues that require regular maintenance in order to mitigate a company?s risk.

Solution Providers to procurement professionals that provide supplier databases that are part of automating the procurement process, need to step up and make sure that their data support these changes on a regular basis to the greatest extent possible by providing knowledge ware that interacts with both regulatory agencies and suppliers to insure consumer safety and environmental impact as more new sources of supply and new products enter the supply chain on a daily basis.

Actions that solution providers can take may include but are not limited to:

1. Monitor daily alert data as to product recalls and safety warnings.
2. Trace warnings back to the original source of supply automatically and maintain history.
3. Require that suppliers meet certain safety certifications in order to participate in their database.
4. Require that suppliers meet required environmental certifications or programs in order to participate in their database
5. Provide a regular purge of suppliers that do not comply with necessary standards.
6. Adhere to a strict RFI process for new suppliers requesting participation in their database.
7. Provide a rating system for suppliers that are offered to companies as new sources of supply.
8. Monitor regulatory agencies such as ISO for new standards and include them as further requirements in supplier databases.

Ask your solution provider what their process is to grow manage and maintain their supplier database for your benefit.

We look forward to and appreciate your comments.

Ron Southard

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Truly understanding what traceability means from your suppliers is a key to your CSR initiatives.

Friday, May 8th, 2009

I had the TODAY SHOW on in the background this morning and heard something about tracing products from trees to napkins that caught my attention.

We certainly are all aware that paper and paper products come from trees. We are also aware if we care of the impact deforestation has on our planet. It just makes sense to source products from recycled materials in order to limit this process.

It occurred to me as I listened to the show that a question that we in the procurement profession might all ask since we are aware that napkins come from trees is; Can we trace the napkins that we purchase all the way back to the forest that that napkin came from? This would be an excellent test for our suppliers, distributors and wholesalers that claim to support traceability beyond one forward one back.

The TODAY SHOW segment I was watching was a review of the eight-part original series, ?Eco Trip: The Real Cost of Living?, hosted by eco-adventurer David de Rothschild, which premiered on Sundance Channel on April 21st at 9:00pm e/p. The series traces the origins and environmental impact of common everyday products such as a cotton t-shirt or a gold ring. ?Eco Trip: The Real Cost of Living? is airing as part of THE GREEN, Sundance Channel?s weekly ecological programming block. This is a great opportunity for a team meeting and educational opportunity relative to traceability and eco focused sourcing.

This author believes that tt is incumbent on all procurement professionals to understand where the products they procure for company use as well as for resale come from and how through a well thought out procurement process they can have a positive impact on the environment. In this case choosing suppliers that offer recycled product alternatives and doing something as simple as posting signage that indicates that taking just one napkin instead of a handful at all locations in a store that offer branded (another area for consideration) napkins from salad bars to bakeries to break rooms can have a positive impact on the environment while also providing backbone to your companies CSR initiatives.

A good question to ask oneself is where we can find suppliers that carry these types of products, what certifications do these suppliers carry and does our e-procurement solution provider offer best practices in this area as part of our existing fee structure.

We look forward to and appreciate your comments.

Ron Southard

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Are your community auditions green enough? ?Star of the day, who will it be? Your consumers vote will hold the key.

Thursday, May 7th, 2009

This may date me, because I remember this show very well. ?Community Auditions? was a television talent show, which aired on Sunday mornings for 37 years. How doe these programs relate to companies environmental sourcing practices?

It?s really pretty simple; a vote still holds the key. This may not be a vote that consumers of retail companies cast at a polling place. It is more of a vote that consumers that care cast on behalf of a retail company at the checkout because of that companies every day actions to support the environment.

In a USA TODAY article titled Celebs use star power to spotlight pet causes by Seung Min Kim, actor Mathew Modine is quoted as saying that the spot light will quickly go away if you don?t walk the walk. Modine was referring to his charity Bicycle for a Day, which encourages people to improve the environment and their health. He goes on to say if you don?t practice what your preach people will turn their backs on you immediately.

This absolutely equates to how consumers increasingly are making their decisions where they shop. Websites can claim all kinds of green practices, but the proof is in the pudding so to speak as to how company?s individual programs support those claims.

In the procurement area, and in particular the e-negotiation process the question might be asked what specifically do companies do to insure that the products they are buying are safe for consumers and the environment?

It?s one thing to offer reusable bags at the checkout because your local government is promoting legislation to outlaw the use of plastic bags in your area. It is quite another thing to ask your supplier what alternatives they offer for greener bags, or a bag that is recyclable or their willingness to participate in helping you source reusable bags. It is one thing for companies that manufacture for retailers to buy lower cost ingredients to make their finished goods. It is quite another to make sample evaluation and plant or warehouse visits a required check mark on your category to market strategy.

Ask your e-negotiation provider how they hold suppliers accountable to safety and environmental standards and traceability. Ask them how easy this would be to include in your standard procurement process without adding to your work level .

Welook forward to and appreciate your comments.

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A good way to help control and reduce retail shrinkage is to offer overstock items in the form of a forward auction.

Wednesday, May 6th, 2009

Why is it that we never hear of retailers running forward auctions? There are dozens of sources waiting to buy your overstock which all retailers know will reduce shrink and improve bottom line profitability.

If you go to any internet search engine and type in the term overstock, the data returned is in the millions of pages. Many of these links are locations for Business to Business (B2B) and Business to Consumer (B2C) companies that will gladly agree to participate in e-negotiation events in the form of a forward auction to purchase your overstock or liquidated products for resale through their on line offerings.

Online forward auctions are an ideal way to get the best price for capital equipment, materials, overstock and services you may want to sell, such as when you need to liquidate excess inventory. There are two basic types of forward auctions. The first is a liquidation auction where sellers are reducing inventory from overstock or liquidation and buyers are seeking to obtain the lowest price for items they have an interest in for resale and other purposes. The second type is more of a marketing auction where sellers are trying to sell unique items and buyers wish to obtain unique items. This is typical of an eBay type of offering.

Much of retail shrink happens in the back room or receiving area of retail stores. It just so happens that this is also the location of much of the overstock in the retail community. Much of this product sits there month after month resulting in significant margin hits to quarterly and annual earnings and as such to a company?s stock price.

Ask your e-negotiation solution provider how they can help reduce your overstock and shrink with forward auction tools, and who they would invite as buyers. You company stakeholders will applaud your efforts.

We look forward to and appreciate your comments.
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Let?s not mistake the term sustainability for only things environmental.

Tuesday, May 5th, 2009

I have posted quite often on the tools necessary to create a sustainable process in the e-negotiation business. In this case sustainability has nothing to do with the environment unless off course companies include an environmental focus as part of their overall procurement strategy.

According to Wikipedia a simple definition of sustainability, in general terms, is the ability to maintain balance of a certain process or state in any system. It is now most frequently used in connection with biological and human systems. In an ecological context, sustainability can be defined as the ability of an ecosystem to maintain ecological processes, functions, biodiversity and productivity into the future.

Sustainability has become a complex term that can be applied to almost every system on earth.

From a corporate perspective many investors look at sustainability as a framework for disciplined and responsible management, a key success factor in achieving economic gains. Relative to e-negotiation this means being able to run the same process (events) over and over again quarter after quarter and year after year as the standard way in which a company endeavors to improve quality, workflow and compress prices. To the extent that this process supports companies social initiatives relative to the environment and humanity new terminologies such as the term triple bottom line are emerging in discussions at the board level.

The Global Sourcing Council tells us that although sustainability has found its permanent place in corporate boardrooms, execution is still a challenging journey. Implementing sustainability in global sourcing operations becomes even more complex as it creates its own unique challenges.

Global service providers that subscribe to sustainable strategies will benefit by gaining competitive, green advantage with the global organizations.

Ask your e-negotiation service provider how they intend to implement a sustainable program for your company.

We look forward to and appreciate your comments.

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Twenty steps to running high quality retail e-procurement events.

Monday, May 4th, 2009

E- negotiation events have been around since the late 1990?s and are commonly referred to as reverse auction events. These events may also include any or all of the RFI, RFP and RFQ process.

These sessions can from time to time also run as forward auctions in order to reduce over stock conditions and reduce shrink. Regardless of the naming convention used there are certain rules which if followed will create higher quality events for the retailer and the supplier? This will result in creating better savings opportunities or cost avoidance in a tough market. The importance of focusing on a clear process will increase event participation. This focus on quality will be recognized by your existing trading partners and potential new sources of supply, and will keep them coming back in the future to compete fairly for your business.

1. Executive sponsorship is mandatory
a. This is required at the CEO, CFO, CPO, CLO or head of the supply chain.
2. Get the entire buying organization together for a kickoff session.
3. Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4. Discuss and agree on success criteria.
5. Every event is not a homerun. Singles and doubles score runs.
6. Create a fun environment.
7. Consider prizes for the most creative use of an auction.
8. Use scorecards by department with percent of savings.
9. Discuss the meaning and importance of corporate aggregation.
10. Hand out event templates to gather existing product specifications.
11. Put a time requirement on data collection.
12. Gather an accurate list of your present suppliers.
13. Work with your sourcing company to identify a top 100 list of events.
14. Calendar the events.
15. Prioritize by dollar value, date and strategic value.
16. Conduct department level discovery meetings of 30 minutes to an hour.
17. Investigate existing contract language.
18. Look for auto renewal (evergreen) language roadblocks.
19. Determine alternate sources of supply with your sourcing company.
20. Develop an event rules and instruction template and post with each event.

Although these steps are not all encompassing, they provide a general format for getting started that offers the best opportunity for price compression that results in the reduction in cost of goods, expenses and an immediate improvement in corporate earnings. Be sure to combine this with a business partner that understands your business.

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

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The Design for Environment Program is another tool for retail procurement planners to use in support of Triple Bottom Line accounting.

Friday, May 1st, 2009

The Design for the Environment Program is a United States Environmental Protection Agency (USEPA) program that works to prevent pollution, and the risk pollution presents to humans and the environment.

According to Wikipedia Design for Environment (DfE) is a general concept that refers to a variety of design approaches that attempt to reduce the overall environmental impact of a product, process or service, where environmental impacts are considered across its life cycle. Life cycle assessment (LCA) is employed to forecast the impacts of different (production) alternatives of the product in question, thus being able to choose the environmentally most friendly. Different software tools have been developed to assist designers in finding optimized products (or processes/services). Design for Environment includes several subsidiary approaches, such as Design for Disassembly (to facilitate recycling and source reduction.

Please continue to support triple bottom line and do your part to hold your suppliers accountable to how they design their products and programs for retail and consumer utilization. Ask your procurement solution providers how they work with suppliers on your behalf in this area.

We continue to look forward to and appreciate your comments.

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