Archive for May, 2010
Thursday, May 13th, 2010
This author generally begins discussing this subject with our customers and prospects during the discovery phase of our engagements. It helps to get us all on the same page and as such we get a lot of different definitions. Quite frankly we get almost as many as the number of people we discuss the subject with. Surprisingly the process which is quite simple as a definition is not any different from when I first learned it over 40 years ago in the U.S. Air Force other than its automation provided by modern procurement tools.
Typically procurement consists of seven (7) steps. Where the confusion generally enters is that each step can have a process of its own or be interrelated with another step in the process. An example would be the contract lifecycle that easily fits within the negotiation cycle and the renewal cycle. Another might be that information gathering which is the generally accepted first step in the process can apply to multiple issues such as information gathering for the related product or services such as specifications as well as the information gathering of prospective supplier data.
As such, the simple steps to the procurement lifecycle that most individuals generally agree upon are as follows.
1. Information gathering
2. Supplier contact
3. Background review
4. Negotiation
5. Fulfillment
6. Consumption
7. Renewal
Most times keeping this simple model in mind will allow retail procurement professionals to answer the question where are we in the process when a project gets stalled or off track.
We look forward to and appreciate your comments.
Posted in Business Sourcing, Procurement Company, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Retail Supply Chain, Sourcing Strategy, Strategic Sourcing, Supply Chain Procurement
Wednesday, May 12th, 2010
In the Monday May 10th issue of USA TODAY the Money Section carried an article titled “Suppliers can’t meet demand” by Paul Davidson. The article went on to discuss that the economic rebound has been so robust that manufacturers are struggling so much with demand that it is causing huge bottlenecks in the supply chain. The article also went on to discuss that companies are reluctant to hire to meet the demand because they are not totally convinced that the current rebound will last.
The retail supply chain is something that this author has posted on dozens of times from the importance of a robust retail supply chain to how to manage your relationships with current and new sources of supply. A significant part of that is to have secondary and tertiary sources of supply that you can rely upon. By example, during the most recent H1N1 flu outbreak, Safesourcing was able to provide multiple sources of surgical mask suppliers to one of our customers that had not been able to find them elsewhere for sales in their stores. They did not know of these suppliers. They are also a very large company. Although this particular issue was caused by panic buying, it is still a supply and demand problem and correlates very well to the USA TODAY article. The message here is, don’t wait until a time of panic or increased prosperity to work and plan for spikes in the supply chain that may cause your customers pain.
Following are five Safesourcing blog posts from 2008 that should provide some good base reading on this subject.
1. Is critical thinking in supplier selection a key to quality auctions? You bet!
2. Supplier Open Communication. A key to high quality e-procurement events.
3. Supplier-selection-this-may-be-the-most-important-decision-you-make
4. What is retail supply base management?
5. What is the benefit of a large retail supplier database and how do companies use the data to support growing their spend with reverse auctions?
The SafeSourceIt™ Retail Supplier Database contains over 380,000 vetted suppliers.
We look forward to and appreciate your comments
Posted in B2b Supply Chain, E-supply Chain, Retail Supply Chain, Supply Chain Procurement
Tuesday, May 11th, 2010
So just what is Contract Management or Contract Lifecycle Management? Are they the same?
According to Wikipedia Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees.
Contract management can include negotiating terms and conditions and ensuring compliance with those terms and conditions. Beyond these base functions contract management can also include documenting and agreeing on any changes that may occur during the implementation or execution of a contract.
We can think of contract management as a summary of the process of with which companies use a systematic approach to manage contracts through the process of creating, executing and analyzing contracts for the purpose of maximizing the financial and operational performance of contracts so as to mitigate risk.
A frequent buzz word in the industry today is that of Contract Lifecycle Management Solutions. This really means the same thing from a systems perspective that should include automating much of the following.
1. Authoring
2. Negotiating
3. Tracking
4. Alerting
5. Awareness management
6. Baseline moderation
7. Commitment moderations
8. Communication moderation
9. Contract visibility
10. Document management
11. Change management
12. Issue alerts
13. Service level agreement moderation
14. Total Transaction compliance
Ask you solution provider how they can help you in this area and how to integrate CLM with your e-procurement suite.
We look forward to and appreciate your comments.
Posted in Business Sourcing, E-procurement Solutions, E-procurement Tools, Procurement Tool, Sourcing Strategy, Strategic Sourcing
Monday, May 10th, 2010
When we placed our first post on May 8th of 2008 our goal was to make the blog a piece of an educational website (www.safesourcing.com) for procurement professionals where they could meet, discuss and research and find information on topics of importance to procurement professionals and knowledge workers. We also wanted to call attention to the sourcing of safe products and environmentally sound procurement practices.
The traffic our blog enjoys supports the fact that procurement professionals find our post to be a useful part of their procurement tool belt. Since inception our post has been visited by professionals from eighty nine (89) countries. We are regularly visited by other procurement solution providers and from the best blogs in our space.
Our goal going forward is to continue to focus on the retail vertical and pass on useful information as our learning continues so that others may benefit.
Please tell others about us if you find our information useful. We certainly thank you for and appreciate your patronage.
Comments Welcome.
Posted in E-procurement, Sourcing Safe Foods, Sourcing Safe Products, Sourcing Strategy, Strategic Sourcing
Friday, May 7th, 2010
It hardly seems possible that we launched our company two years ago. At the time there were indicators for those paying attention of trouble in the global economy but know one had any idea just how bad it was going to get. In hindsight what a time to launch a company. When customers and business partners asked me why, my response was if you are doing what you believe in and the results you promise are true, then there really is no bad time to launch a business.
Our promise has been the same from day one, to reduce the cost of goods and services regardless of a company’s size or the size of the category being sourced. And, while doing so improve quality, safety and environmental focus. Today, two years later our customers will attest to the fact that we have held true to that promise.
Following is a short list of accomplishments that we are very proud of.
1. Over 700 educational blog posts relative to e-procurement issues of importance.
2. Over 1500 useful procurement related wiki terms and definitions.
3. Added an average of more than one new customer for every month in business.
4. Grew our supplier data base to greater than 380,000 retail suppliers
5. Sourced 100’s of categories from commodities to finished goods and services.
6. Sourced categories as small as $5K with savings > 30%.
7. Sourced categories as high as $80M.
8. Never held an e-negotiation event that did not result in savings.
9. Conducted every process in e-procurement including RFI, RFP and RFQ.
10. Installed our product in Asia in a multi lingual implementation.
11. Averaged over 24% savings over two years.
12. Developed a unique process for sourcing small spends for the retail mid market.
13. Grew our database to over a terabyte of data.
14. Helped companies source with environmental and social consciousness
15. Today released SafeContract™ a fully featured hosted Contract Management System.
To our customers thank you for your support. We endeavor to earn your business every day. To our business partners thank you for your guidance during a tough economic period. To the retail industry our goal is to be your best vehicle for reducing costs and improving earnings with an increased focus on corporate social responsibility.
Thank You.
Posted in B2b Reverse Auction, B2b Supply Chain, Business Sourcing, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Global E-procurement, Green eProcurement Practices, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Company, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Retail Supply Chain, Reverse Auction, Reverse Auction Procurement, Sourcing Safe Foods, Sourcing Safe Products, Sourcing Strategy, Strategic Sourcing, Supply Chain Procurement
Thursday, May 6th, 2010
Retailers should have continuing success when running prior e-procurement events over again, one area of commonality that has historically made this difficult is a lack of new suppliers.
There is a proper way to insure the sustainability of your reverse auctions going forward. Since you have already conducted or should have conducted your detailed discovery and analysis a robust retail supplier database will allow you to do the following.
1. Conduct a detailed supplier discovery
a. Rank suppliers
i. Size
ii. Experience
iii. References
iv. Environmental certifications
v. Safety Certifications
2. Develop a three year supplier game plan
a. Develop a three year time line for all categories
b. Identify suppliers for each event over the three years
c. Develop a three year rotation schedule for the selected suppliers.
3. Role Play internally each year for a test category
a. Ask the following questions
i. Who will you invite and why
ii. Keep in mind the unique benefits of distributors and manufacturers
iii. Discuss award the business strategies
iv. Review alternate scenarios
v. Review impact on non awarded suppliers
vi. Determine which suppliers will be invited back
vii. Determine what new suppliers from your database search will be invited next year
If you only have the same list you originally used to conduct your historical events, don’t expect savings the 2nd and 3rd time around if market conditions are similar. Or, you could call Safesourcing.
We look forward to and appreciate your comments.
Posted in E-supply Chain, Retail Supply Chain, Sourcing Strategy, Strategic Sourcing, Supply Chain Procurement
Wednesday, May 5th, 2010
The first part of the answer is that you have to be a student of the database industry to understand what may be available to you without having to do a lot of work. At the end of the day a database is a list albeit a sophisticated list with lots of tables and joins and other database features that allow for the combination and use of data.
As an example, when looking to build a retail supplier database there is certain information you require in order for the data to be believable. UDDI (Yu-di) is an open industry initiative, sponsored by the Organization for the Advancement of Structured Information Standards (OASIS), enabling businesses to publish service listings and discover each other and define how the services or software applications interact over the Internet. These service listings can take a number of different forms such as business registrations, for UDDI they are in the following formats.
1. White Pages — address, contact, and known identifiers;
2. Yellow Pages — industrial categorizations based on standard taxonomies;
3. Green Pages — technical information about services exposed by the business.
Combining these data which is readily available from a variety of sources provides a great start. From there the challenge to add other attributes that are important to you such as certifications, sic codes, detailed company descriptions, sales figures, products carried, experience, ratings etc.
This author has always believed that reinventing the wheel is a misguided way to accomplish development initiatives and with all of the open source available on the market today and the cost of IT talent as high as it is we have to explore these alternatives to core development if time to market is a critical success factor.
So there you have it, my thinking and process for building our database. The next question is how we keep it fresh an updated. And that my friends are a trade secret.
We look forward to and appreciate your comments.
Posted in E-supply Chain, Retail Supply Chain, Supply Chain Procurement
Tuesday, May 4th, 2010
This author has been asked on numerous occasions why I am so concerned with evergreen contracts. First, let’s discuss what an evergreen contract is. A simple definition is that it is a contract or an agreement between two parties (you and your supplier) that is automatically renewed or rolled over after each completion period which is typically a year, until canceled by the either party.
This does not sound so bad at first glance, particularly if the current terms of the contract such as price, performance, quality, service or service level are all being met and are to your advantage when they automatically renew. However this is not normally the case, particularly with contracts that are driven by commodity markets such as oil, chemicals, resins, pulp, steel and many others. In addition you can bet if the advantage is in your favor in the initial contract that your current supplier will notify you in writing within the specified period which is usually 60 days that they are going to let the contract expire or want to renegotiate.
In the retail trade where there is very few sophisticated contract management solutions deployed, the cost to the industry annually runs in the billions of dollars. This is because the original contract normally has language that includes price increases above the current contract when it auto renews and the auto renewal is normally for a year if the supplier is not notified in writing prior to the anniversary date. Once renewed you are stuck. This happens because most buyers or executives think they will remember in time to notify your supplier when in fact this almost never is the case. As most retail companies have thousands of contracts in the place the amount of data requiring review is unmanageable.
Contract management solutions that offer alert subsystems based on contracts Meta data are the best solution to this problem and typically provide near immediate ROI based solely on the cost avoidance associated with evergreen contracts.
SafeSourcing offers an easy to use solution called SafeContract™ to help our customers with this problem. Ask you solution provider how they can help you.
We look forward to and appreciate your comments.
Posted in Business Sourcing, E-procurement Solutions, E-procurement Tools, Global E-procurement, Procurement Solutions, Procurement Tool, Retail Supply Chain, Sourcing Strategy, Strategic Sourcing
Monday, May 3rd, 2010
I have been in many meetings numbers of retail companies where charts that reflect savings from recent e-negotiation events of other retailers with similar formats are reviewed. As real as these results are, it is still difficult for most retailers to pull the trigger in order to give a new process a try. We just seem to get in our own way because we always have more important things to do.
We just have the ability to make things to difficult for ourselves. Relative to e-negotiation, let’s assume that the CEO directs that he or she would like the cost of goods reduced. The project is then assigned to the Senior Vice President of Supply Chain or Chief Logistics Officer or Chief Procurement Officer or other senior executive. This is further assigned to the Vice President of Purchasing who in turn assigns it to the director of supply purchases. The director convenes a meeting of the buyers or category managers responsible for a variety of supply categories. In degrees of separation this is about 5 or 6 degrees from the person initiating the project. And now the excuses (delays) begin.
1. We can’t damage our relationship with our incumbent suppliers.
2. We get the best price in the industry right now.
3. These guys don’t know what they are talking about.
4. Don’t we have a tool that does this in our ERP system?
5. We’ll sacrifice quality.
6. We don’t have time for this.
7. I’ll get back to you.
8. Let’s create a cross functional team.
9. I’m not going to be first.
If we go back to the CEO and explain what the situation is, one is likely to get a reply that says to the team JUST DO IT! Unfortunately that needs to be followed by; DO IT NOW!
From start to finish, an e-negotiation event such as a reverse auction should take no more than two weeks to run. This includes the entire process including an RFI if required from the day a retailer says go to the actual award of business. There are several requirements necessary to accomplish this that will eliminate the worry and mitigate the risk.
1. A robust supplier database with safety and environmental focus.
2. A robust event template library.
3. An intuitive or intelligent tool for building an event quickly.
4. An automated reporting tool to provide immediate event detail for review.
If you are really interested in improving your bottom line now, you are less than two weeks away from immediate measureable results.
We appreciate and look forward to your comments.
Posted in E-procurement Solutions, Procurement Purchasing, Procurement Solutions, Strategic Sourcing, Supply Chain Procurement
