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Archive for December, 2009

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Monitor your supplier’s safety performance or else.

Wednesday, December 16th, 2009

When we think about safety and environmental standards in the supply chain, I honestly believe that retail buyers say quietly to themselves; how the hell are we supposed to monitor this stuff.

The issue becomes more complex when you consider that data is required  from your own organization relative to the historical performance of existing suppliers, data from the supplier as to their own assessment of their historical performance and finally external data that neither may have at their finger tips.

When we talk about safety and the environment, the questions that retailer buyers should ask suppliers is pretty simple. What certifications do you carry relative to food safety, product safety and environmental safety? Now ask your procurement solutions provider if they can provide that information from their supplier database without having to write an RFI to do it.  Let’s see who comes up with the answers first.

It may be easier for retailers to rely on their e-procurement solution providers for this type of data if the provider has it included in their supplier database. Pre-populated e-procurement templates can act as a form of scorecard for existing suppliers and potential news sources of supply. This is actually a type of automated RFI process which can save retailers a lot of work when trying to find additional sources of supply or when trying to drive cost down with existing suppliers. These data may also help to protect retailers from harmful litigation when products end up not being as safe as promised.

So where is the or else? Here you go. Or else your customers get sick. Or else the environment gets sicker. Or else someone gets hurt. Then we can pay the lawyers more and that’s a really big or else.
We look forward to and appreciate your comments.

Posted in Sourcing Safe Foods

Critical thinking relative to supplier selection and engagement is required if you want to host quality reverse auctions?

Tuesday, December 15th, 2009

A logical focal point for hosting a competitive reverse auction is to assemble your present suppliers that you hold in good standing for a particular category. These are suppliers from whom you have sourced products using traditional means in the past. In general the principal is the more suppliers that participate, the better your potential results will be. However this also requires some strategic thinking 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 type of continual compression that you are looking for. This is a significant reason why it is important to have access to the most robust supplier data possible. As an example; if you can only locate six local suppliers for a particular reverse auction, they will all most likely agree to participate the first time around. However consideration should be given as to what will encourage them to participate the next time and the time after that? Suppliers will almost never be the same size. As such the smaller vendors will most likely bid early during an event and then 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. Incumbent suppliers that re displaced as well as new suppliers that finish first or second in the bidding process will agree to participate again, but a lack of adequate competition will make the rerun auctions less successful.

The strategic questions should be; if we only have six suppliers available how many should we invite to participate? Should we invite them all? Every company will have differing opinions on this subject. When considering the future, do we want events or do we want continual process improvement that drives continuous savings? There are several possible scenarios you might consider. First, only invite four participants to the first event. This will create a competitive environment for your reverse auction. Let’s assume that in twelve months you want to repeat this auction and the two largest suppliers agree to return. You could now invite supplier’s number five and six that were not included in the original auction. 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.

Posted in B2b Reverse Auction

If it could kill you don’t use it. BPA!

Monday, December 14th, 2009

I was reading an article in the Health and Science section of the Arizona Republic on Sunday and the title intrigued me. Avoid BPA, safety chief advises.

As you all know this author has posted on BPA a number of times. What continues to frustrate me is that when the rest of the world has already made decisions about a chemical that is unsafe; the most advanced country in the world still can not come out and take an official position that does the same thing. The thing is that the leader of the organization that is studying BPA or Bisphenol A made the statement that people should avoid ingesting the chemical and that “There are plenty of reasonable alternatives”. Linda Birnbaum is Director of the National Institute of Environmental Health Sciences and Toxicology Program.

As we all know, the FDA ignored studies that found BPA caused harm and is late in completing its new determination originally scheduled for November 30th. Japan has stopped using the product and Canada has declared it toxic and not allowed for use in baby bottles. Come on FDA, let’s get it done.

For sourcing professionals we should be asking all of our suppliers whether or not they are still using BPA in their metal food and beverage cans and containers, when they will eliminate it and not buy products that contain it from suppliers until they have an alternative.

We look forward to and appreciate your comments.

Posted in Sourcing Safe Foods

What information should we know about our suppliers?

Friday, December 11th, 2009

The SafeSourceIt™ Supplier Database has grown to over 300,000 global suppliers. During the same timeframe the number of certifications we monitor for these suppliers has also grown. In the food space three standards that are regularly adhered to are ISO 22000, SQF and GFSI? So, what’s the difference?

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 and appreciate your comments.

Posted in Retail Supply Chain

I loved school lunches.

Thursday, December 10th, 2009

When we left for school in the morning we took a brown bag or lunch box that my mother had prepared for us or a quarter for our school lunch. At twenty five cents the lunch was still a bargain because you got a protein, a starch, a vegetable, milk and a desert. The cost is probably a lot higher today and a lot more of the lunches are subsidized by the government. However I’m willing to bet that our lunches were much safer to eat.

From a pure sourcing perspective, the question is are our schools just buying what the government has to sell in terms of commodities or are they actually asking questions as to where the products came from, how they were grown and what standards the growers and processors are beings held accountable to.

I don’t eat a whole lot of fast food today. Even if I could get by the thick fried coating many of the chicken products are processed and just does not taste like chicken to this author. So I exercise my right to not eat it. With that said, it would seem ludicrous to eat something that was even below the standard of these products. In a USA TODAY article I read this morning titled School meals lag fast-food standards; by Peter Eisler, Blake Morrison and Anthony DeBarros  it stated that the USDA has provided thousands of tons of chickens to schools that might otherwise go to compost or pet food. You have to be kidding me, I would not give something to my dog (best friend) that was called spent hens and certainly do not want my grandchildren to eat it.

In yesterdays post  Food Safety requires a community effort President Obama was quoted as saying “There are certain things only a government can do. And one of those things is ensuring that the foods we eat are safe and do not cause us harm.” Well this author believes it is high time the government did so. It is also about time that school system procurement leaders ask a few more questions about the safety of the products they are buying for our children.

If my granddaughter asks me to go to lunch with her at school, I will obviously say yes, but I will be bringing our lunch in a brown bag because I’d hate to see her eat what is being bought for the schools.

We look forward to and appreciate your comments

Posted in Sourcing Safe Foods

Food Safety requires a community effort.

Wednesday, December 9th, 2009

There is so much to food safety that I thought this time of year would be a great time to update everyone on the risk associated with food borne illness. During these holidays, we are exposed to so much more food than any other time of the year making it even more difficult than ever to trace outbreaks beyond historical one forward one back tracking.

So here goes, foodborne illness which can also be called food poisoning is any illness that results from eating contaminated food regardless of how it was contaminated. Harmful bacteria are the most common cause of food poisoning, but other causes include viruses, parasites, toxins and contaminants. The bacteria and viruses most frequently associated with food poisoning cases in the United States are Salmonella, Botulism, Norovirus,Vibrio Infections, Listeria, Hepatitis A, B.cereus, E.coli and Campylobacter.

A couple of great places to keep track of alerts and other up to date information is FoodSafety.gov  and USFOODSAFETY.COM. You can also visit the SafeSourcing wiki and our website www.safesourcing.com where alerts are covered from over a dozen organizations including other types of product safety. All of the above can be followed on Twitter.

President Obama said it best “There are certain things only a government can do. And one of those things is ensuring that the foods we eat are safe and do not cause us harm.”

With a community of help we can all make the government’s job easier.

We look forward to and appreciate your comments.

Posted in Sourcing Safe Foods

Here is a Food Safety basic for retailers. “To thine own self be true.”

Tuesday, December 8th, 2009

When food safety for your customers is at stake, can procurement professionals rely on a myriad of disparate organizations to insure their customer’s safety? Or should they follow Shakespeare’s Polonius and “to thine own self be true.”

These celebrated words were spoken in William Shakespeare’s Hamlet by Polonius to his son Laertes as he prepared him for travel abroad. “This above all: to thine own self be true, and it must follow, as the night the day, Thou canst not then be false to any man.”

This was great advice during the sixteenth century, and is equally great advice today when it comes to anyone involved in food safety programs. Here are two questions retailers should ask themselves.

1. Are you doing enough to insure the safety of your customers, associates and stakeholders?
2. Is it enough that trade organizations focus on food safety? Or, is there more that as companies and individuals that we can all do.

This author believes there is. The first thing we can do is to make sure that the proper questions are being asked of our supply chain. This is more than asking manufacturers, suppliers, brokers and other for their certifications and affiliations. Begin by coming up with the list of questions you personally would like answers for from your supply chain partners. As an example, do the bottles you sell us contain BPA? That is a pretty straight forward question. You can follow on from there. A next step would be to review with your e-procurement solutions provider what they have in place to insure supplier accountability. How do they check for certifications and that they are being kept up to date? What certifications do they check for? What safety questions do they ask? How does their list compare with yours? Does a merged list from the both of you look better and allow you to sleep better at night?

Begin by thinking “To thine own self be true.” It is in fact the best protection of all and is the same way your trading partners should already be thinking.

We appreciate and look forward to your comments.

Posted in Sourcing Safe Foods, Uncategorized

Just what can’t companies source using reverse auctions?

Monday, December 7th, 2009

We were speaking with a consultant this morning that asked us a group of questions from a company he was in the process of introducing us to. Two of the questions were related and are as follows.

1. Does it make sense to reverse auction any of our core items?
2. Does it ever make sense not to reverse auction?

Obviously our first conversation centered on what were considered to be core items for this company. This can change from company to company based on the specific industry they serve and understanding frequently used buzz words for that particular industry.

In the retail industry, products are generally broken down into two major groups or classifications which are products for resale and products not for resale. Core items can exist in both categories. An example of a not for resale product/category that a large retailer may consider to be core might be fuel. This is a regular annual expense item that is driven overall by the price of a barrel of oil that can vary widely and be purchased as part of an annual contract that can be tied to a price index such as OPIS. Additionally, fuel can be purchased using spot buys that can be made periodically during the year and are also tied to the same index. Both types of buys lend themselves very nicely to the reverse auction process.

For a manufacturer, a core product might include the raw materials used to manufacture their end user products. This might include metals, plastics, resins etc. All of these core products are also tied closely to a variety of indexes.

The key to using reverse auctions to source any product/category is the quality and availability of the products specification, the availability of alternative or new sources of supply wanting to bid for the business and the quality of the new product compared to what is being used today.

With the above issues covered and understanding that all other data normally considered during the standard procurement process are generally features of most quality e- negotiation tools; companies can be comfortable that any product or service that they use can be sourced using a reverse auction.

Typically when using a reveres auction element of an RFX suite, companies can save time, review more bids and compress pricing or avoid costs in an up market.

We appreciate and look forward to your comments.

Posted in B2b Reverse Auction

Who’s managing your suppliers?

Friday, December 4th, 2009

Supply base management is the next major addition to strategic sourcing suites. All vendors do not offer this functionality today; in fact some have trouble describing what it is. Although elements of this functionality exist within a variety of surround type service offerings, no one vendor offers complete functionality in this area today. A significant reason for this is the suppliers concern with the thought of being managed in the first place. Additionally, retailers, suppliers nor e-procurement solution providers have agreed as to what the correct Key Performance Indicators (KPI’s) should be. As these tools are developed, the most successful supply base management tools will be those that can manage the largest supplier database to the continual benefit of both retailers and suppliers that participate in their events. In a best case scenario, high quality suppliers will get invited to more events, earn incremental business and save retailers both money and time on a continuous basis while also supporting other retail areas of interest such as safety and green initiatives.

This author believes that the most probable result of this process will be a set of automated robust supplier scorecards that monitor and report on supplier performance versus a range of KPI’S that are applied against well known quality guidelines such as Total Quality Management (TQM), Six Sigma etc. resulting in continuous improvement in e-procurement events and growth in the amount of spend under management by retailers.

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

Posted in B2b Supply Chain

Something may be rotten next year!

Thursday, December 3rd, 2009

Product safety efforts can sometimes be confounding when related security issues have an overriding priority. In this case we are talking about product spoilage because of a 2007 freight screening law for bombs prior to the freight being allowed on aircraft. If enough spoilage takes place to perishable products shipped to the U.S. from around the world, not only could we have a shortage of products such as fruits and vegetables, but prices could also rise significantly based on a shortage of the products. For the products that do make it to market in sellable shape there is also an increased risk of food borne illness due to a lack of sanitary inspection techniques for raw consumables such as produce at air cargo facilities.

The cost issue may be something we have to bare regardless of the security issues because the only way around it for supply chain members is to impose more strict security processes on their own that meet the proper guidelines and there is a cost associated with that too. Suppliers, producers and wholesalers have all know about this for more than two years so there has been adequate time to prepare.

However if you find a shortage next year of what you are looking for on your perishable shopping list or you see a sudden rise the cost of airline tickets. The answer just might be that your government is just trying to keep us safe.

We look forward to and appreciate your comments.

Posted in Sourcing Safe Foods

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