SafeSourcing Blog

If you’re using an e-procurement service or if you are thinking about using one, you need to think about an important factor; what kind of service will I receive? At SafeSourcing, there is a significant focus placed on getting your RFQ event from specification to run in less than two weeks. In this timeframe, there will be no cut corners. All participating suppliers will receive training, any RFI’s required will be collected, and final event approval will be secured and the event run within the two week timeframe.

Think about the benefit of efficiently running your events. If you are looking to reduce your costs quickly, you will find success. If you are nearing the end date of an existing contract and want price compression before renewal, we can run your event. In the SafeSourcing customer service department, we know that time is of the essence.

But efficiency by itself is not enough. Companies should also expect their e-procurement service provider to provide a personal touch and be willing to take the time to work directly with you to plan for and to run your events. Your SafeSourcing team will be there from the start to help find categories and products that will benefit from e-negotiation. From there, we will work directly with you to develop an action plan to reduce your spend quickly. “One retailer recently said to me; you are just more detail oriented than others”.

These are just a couple of examples of what companies should expect from their e-procurement provider. You owe it to yourself to research the providers and to know what to look for. For additional free e-procurement information please visit our SafeSourcing Wiki and our SafeSourcing Blog archives.

We look forward to and appreciate your comments.

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Retail is a tough business to begin with. The supermarket business vertical in general is a net one percent business and has been for as far back as one would care to look. As such, the impact of a down market can have an immediate impact. So it just makes sense that during tough economic times those retailers and their suppliers have to continually shuffle their priorities in order to keep the doors open.

In an article in the Arizona Republic titled Lessons of recessions resonate with retailers by Anne D’Innocenzio of the Associated Press it was stated by Michael Niemira the chief economist at the International Council of Shopping Centers that 143,000 retail stores closed last year and that 140,000 would close this year followed by 135,000 in 2010. That’s a total of 418,000 stores.

That is some major hunkering down. Retailers very quickly retract to profitable operating areas, profitable stores and profitable products. Some are forced to enter bankruptcy for protection. Supplier relationships become extremely important. However these business environs are no friendlier for suppliers whose business is also shrinking and could leave retailers without a source of supply if they go into bankruptcy or worse out of business.

It is precisely at this time that retailers should be looking for alternative sources of supply. This does not mean they have to change sources of supply, but a backup plan certainly makes sense with the potential impact that a lost source of supply might have. With the forward looking forecast for store closures to continue through at least 2010, there is still a need to protect and increase your view of the available supply chain.

One way to do this is through the use of e-negotiation tools. Specifically supplier databases. A sensible place to start is with your existing procurement tools provider if you have one. If you don’t; now may be a good time to review alternatives available specifically for retailers.

Some characteristics retailers should look for in a supplier database might include but are certainly not limited to the following.

1. A database of retail suppliers
2. Availability in the form of SaaS
3. The size of the database
4. Search Flexibility
5. Export Parameters
6. Category structure
7. Sub category structure
8. Additional data elements
a. Safety focus
b. Environmental focus
9. RFI data

Retailers should remember that much the same as they are trying to protect their customers and market share with coupons, discounts as well as any number of continuity and other marketing programs that all suppliers are doing exactly the same thing. Suppliers that you are not doing business with have programs and discounts to offer in order to attract new business. Your existing suppliers are offering the same. This may be the best time ever to explore these opportunities.

We look forward to and appreciate your comments.

Ron Southard

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I was reading an interesting article in the Money Section of the September 10th issue of USA TODAY titled Hospital CEO’s find ways to save by Del Jones. You have to be kidding me. The sub title was Managing staff time, inventory can cut costs. Does this mean that while times were good and profits were a plenty that this was not the right way to run a business?

One reference in the article went on to discuss how a hospital carried twenty varieties of rubber gloves of different colors and thicknesses and that now doctors would have to choose from just two types. The article also indicated that this would reduce costs on gloves by almost 52% because of a larger volume based on just two types. You have to be kidding me. This is just an example of poor negotiation and poor purchasing discipline. We are talking about basic collaboration and aggregation strategies that most large organizations should have in place already. Surprisingly many do not. This type of collaboration should be taking place between disparate departments by aggregating similar product purchases. The products do not even need to be the exact same products to drive deeper discounts or quality improvement.

There are any number of quality management systems, procurement systems and supply chain management systems available on the market today. Many are available as hosted on demand offerings that make these tools easily accessible for companies of all sizes.

It still amazes me that they are not in greater use.

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

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This author does understand that insuring specification adherence is not an easy job. In order to do so, retailers require data that is not readily available to them. As such sources of that data need to come from somewhere. It can’t come from the supplier because you are asking a company to police themselves, and we all are aware of many examples in the past when that has not worked to well. As such third parties such as your supply chain software providers or procurement software providers appear to be the logical choice.

I recently read in the Arizona Republic on September 7th an article titled Anger uncorked at bottle maker by Michael Hill of the Associated Press. The article went on to quote a Vermont teacher who switched to aluminum bottles over two years ago for her two young daughters because of BPA or bisphenol-A which is a substance this author has posted about on a number of occasions. Apparently the manufacturer new that the bottles they sold contained trace amounts of BPA in the epoxy liners, but sold them as green and safe bottles. The manufacturer is now running a mail in recall program through the end of October where consumers can pick a new bottle that no longer contains any BPA.

The question this begs, and so aptly put by the mom is just how far does a consumer have to dig when trying to find safe and green alternatives for their families.

This is a process that e-negotiation suppliers can have an impact on if they capture the correct information prior to assisting retailers in sourcing these products. Beyond just hosting a retailers events, there is a lot of data that can be collected relative to a suppliers certifications and answers to specific questions such as; Does this product contain any BPA at all? In addition, samples can be provided that can also be tested if required.

It’s a shame that consumers have to do research beyond buying products that their retailer of choice markets as safe and green. It’s also a shame that retailers have to add this type of research to their procurement process.

Ask your e-procurement solutions provider how they can help with these processes during the hosting of e-negotiation events.

We look forward to and appreciate your comments.

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Yesterday we learned a little about the Marine Stewardship Council, but failed to mention their Gold Star for Sea Food logo which indicates that the product meets their certification standard. Please visit their website in order to learn more about earning their certification.

A few other focal points that will let your consumers no you are thinking about them during the sourcing process are as follows.

1. Country of origin labeling: This can be found on the bottom of the can normally on the reverse side. This let’s you know where the seafood was caught and harvested. As an example, the United States label would say caught in the United States and be followed by a picture of the U.S.A Flag.

2. Method of Catch: A type of indication you might find on the back of the label below the product description would say something like Pole/Troll hand line caught.

3. Dolphin and Turtle Safe: This indication tells the buyer and the consumer that the catch method used had minimal harm to other sea animals. Long lines which can snare other sea animals are not used.

The SafeSourceIt™ Global Retail Supplier Database supports traceability beyond one forward one back and our best practices hold all suppliers accountable to this standard.

We look forward to and appreciate your comments.

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The Marine Stewardship Council runs an exciting and ambitious program, working with partners to transform the world’s seafood markets and promote sustainable fishing practices. MSC’s credible standards for sustainable fishing and seafood traceability seek to increase the availability of certified sustainable seafood and their distinctive blue ecolabel makes it easy for everyone to take part.

The Marine Stewardship Council or MSC has developed standards for sustainable fishing and seafood traceability. Both standards are based on independent third-party assessments by accredited certifiers. They meet the world’s toughest best practice criteria and are helping to transform global seafood markets.

Safesourcing supports all efforts taken by the MSC as it supports traceability to the source for fifty three (53) fisheries. To this authors understanding, there is no other organization in the world that supports traceability to this level for any product.

We continue to support traceability beyond one forward one back while holding suppliers that participate in our e-negotiation events accountable to that standard in order to support our customer’s Corporate Social Responsibility or CSR initiatives as such promoting consumer safety as it relates to food borne illness outbreaks and tracking.

We look forward to and appreciate your comments.

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Speaking ill of the competition is not something this author does. I have always been an advocate of deserving business from my customers by providing the best products and services at the best possible ROI. Whether a company is new or evolving from a prior way of doing things should not matter. Where was Microsoft 30 years ago? Had anyone ever heard of Whole Foods? What was Intel? There has always been next generation companies made of leaders that are, thinkers and visionaries that do the same things we’ve done every day in very different ways. The goal of these companies is to drive increases in productivity, create new jobs, better work environments and focus on making the world a better place for those that follow. There have always been early adopters, and there have always been followers. One has to choose their own path.

Today, there is an epidemic in our world as a result of unsafe products. Not enough is being done about it. The global supply chain is growing larger every day and traceability which does not exist is critically important. As consumers we have become far too familiar with terms like listeria, salmonella, ecoli, botulism, noroviros and staphylococcus aureos etc. There are additional issues with non consumable products such as lead in toys, BPH, flammable liquid issues and other hazardous materials to name a few.

Our environment is also suffering. We can do something about it. By us, I mean our collective sourcing community of retailers, suppliers, brokers, growers, manufactures and others. Every day conversation includes terms such as global warming, recycling, biodegradable, alternative fuels, pollution, conservation, green living and dozens of others eco focused phrases.

When you look at a company name, look at the statement it makes. Is it clear what the company stands for? Visit the company’s website and see if its message is clear and supports the brand image they espouse. If you meet with the company insure that their messaging supports at a detailed level what their brand indicates because it is their promise.

Our company is SafeSourcing. We absolutely do things that other companies do such as e-negotiation events. However we do it in a far different way. We have streamlined the process with new technology, and added intelligent functionality. We have added a critical focus on safety and the environment with the largest retail supplier databases in the world which also supports a traceable history beyond one forward one back. And, we do it less expensively because our technology allows us to.

What’s in a logo? Ours is SafeSourcing..

We look forward to and appreciate your comments.

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Social responsibility and the environment

Another blogger on the supply-chain front is Ron Southard, who started SafeSourcing
last year. It’s a company based in Scottsdale, Ariz., geared for retailers who need
help in procuring merchandise and want supply-chain advice, focusing on environmental
and social-responsibility practices as well as other issues.

Southard said there has been an increased focus on supply-chain management because
of the added profit it can generate for businesses if they take cost-effective steps and
use the chain wisely. “It is a well-known fact that the supply-chain section hasn’t been the most highly respected profession in retail.

Operations, loss prevention and marketing have always gotten more attention,” Southard said. “If you are going to have an impact on your profitability, this is certainly an area that should get attention.”

The company’s blog, published Mondays to Fridays, discusses a number of topics, from how to improve your corporate social responsibility to handling the logistics of shipping products and dealing with U.S.Customs’ 10 + 2 rule.

SafeSourcing has a database with 300,000 suppliers that support the retail community. The company’s Web site, at www.safesourcing.com, also has its own Wiki, named after the online encyclopedia Wikipedia. It defines terms commonly used in the supply chain industry.

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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 hosted e-negotiation 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 creative sourcing professionals to look for alternative sources of supply and place a larger percentage of spend their under management. This is an area in which Retail lags all industries.

In a study released last year 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 in retail 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% which is well below e-negotiation averages, 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 or SaaS implementation that they almost do not impact the financial model listed above. Remember in the Aberdeen report, best practices companies assigned 56% of their available spend. Their cost models may differ based on the Industry. In retail, what in the world are we waiting for? Most of your suppliers are using these tools to reduce their costs.

We appreciate and look forward to your comments.

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A good friend of mine that works in retail procurement recently had safety and green initiatives added to his list of responsibilities. We discussed some of what that entails and other thoughts as to how designing a program that supports safer and more eco-friendly procurement.

1. Be pro-active in driving not for resale and for resale product safety within your company, and also supporting eco-standards in the procurement process.
2. Pay it forward with all of your trading partners by sharing what you are doing, and asking what they do to support yours or similar initiatives.
3. Educate your employees and trading partners about common safety standards and guidelines such as the SQF Certificate www.sqfi.com and the Global Food Safety Initiative www.ciesnet.com.
4. Educate your employees and trading partners about common eco-standards such as Green- Energy National Standard www.green-e.org or EcoLogo www.ecologo.org.
5. Point associates and trading partners to free educational websites such as www.safesourcing.com to use their free SafeSourcing Wiki or the Sourcebook professional social network for procurement professionals.
6. Only use trading partners that follow your lead.
7. Train your team to understand and use all available tools that insure supply chain safety such the free daily safety in sourcing blog at www.safesourcing.com or the low cost SafeSourceIt Supplier Database and Reverse Auction Tools.
8. Impose a system of measures and controls to monitor performance against clearly defined goals.
9. Start at the top and engage all levels of your company.

We appreciate and look forward to your comments.

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