Archive for September, 2010
Thursday, September 16th, 2010
Being comfortable is great. Sometimes however being to comfortable can also create complacency. We all know we have coworkers that come to work everyday and do what only what they perceive their job to be. Nothing extra is ever done, and few ideas come from these folks that are just comfortable with what they are doing and how they are doing it. They do a good job at it, but that’s it.
Let’s apply this type of complacency to knowledge workers in the supply chain. If we are being honest with ourselves; we see this situation all the time.
A buyer you know has a list of products or a category manager has a category that they are responsible for. There are only so many hours in the day and they have a job to do in order to get product to a distribution center, warehouse, store or some other location on time. They have done business with the same suppliers for a number of years. In fact the person in the job before them did business with these same suppliers and the person before that. So its easy to not rock the boat. It takes to much time to look for new sources of supply and after all one can only manage so many relationships anyway. Finally the buyer is comfortable with product quality and pricing has not gone up to much over time.
With the help of your e-procurement solution provider, this situation is easily rectified, but you need to be open to change. This is normally led from the top of the organization. The following is a partial list of what you can do to eliminate complacency and support the fact that you knowledge workers don’t have a lot of free time.
1. Provide your e-procurement company with a list of your suppliers by category.
2. Provide your e-procurement provider with a complete list of products carried by each supplier.
3. As your e-procurement provider to produce a list of new sources of supply located within a fifty mile radius of each distribution center or warehouse
4. Ask your e-procurement provider to provide data on each supplier’s including incumbent’s safety certifications such as GFSI and ISO.
5. Ask your e-procurement provider to provide supplier background information such as years in business and user references.
6. Select categories or products to source from your incumbents catalog and cross reference with new suppliers offerings.
The additional steps to this process can be provided by SafeSourcing as a part of our best practices deliverables which are included in our event pricing. The SafeSourceIt™ Supplier database includes over 360,000 global sources of supply that can be sorted by a variety of filters such as country, county, postal code or mileage from a particular location, plus many more.
We look forward to and appreciate your comments
Posted in B2b Supply Chain, Business Sourcing, E-supply Chain, Retail Supply Chain
Wednesday, September 15th, 2010
So what the heck is collaboration and what are collaborative partners or networks relative to the supply chain. One thing is for sure, these terms roll of everyone’s tongue like we all know what we are talking about. So this author took a look at Wikipedia hoping to gain some insight and clarity.
According to Wikipedia, Collaboration is a recursive process where two or more people or organizations work together toward an intersection of common goals, and
An aggregate is a collection of items that are gathered together to form a total quantity.
Since collaboration only means different groups or organizations working together towards the same goal, that term can apply to just about any business function. However when we combine it with the word aggregate to form the collective e- procurement term Collaborative Aggregation which was coined by this author in 2006; we arrive at something potentially meaningful.
Collective buying organizations and sometimes share groups often combine purchasing volumes of like products to drive better discounts. Large companies often aggregate their purchases among departments and are more often today doing the same thing across different operating group’s or companies within a larger organizations to drive economy of scale in purchasing.
The unfortunate truth is that not much out of the box thinking is going on in this process. We are so involved in the process that we can not see the forest for the trees.
As an example let’s take a look at a small regional supermarket chain. Today they buy their products mostly from regional or national wholesalers who are able to aggregate the volumes of many small to medium size companies in order to earn enough discounts to pass on reasonable pricing to this retailer that is slightly better than the small chain might earn on their own. The wholesaler also reserves a little for themselves in order to support their business. These products are normally for resale products. In the not for resale area or supplies, the regional retailer usually does business with local suppliers for a variety of supplies that can include everything from cleaning fluids to paper bags. The supplier normally does good job of managing these products against a number different cost structures to maintain a customer margin that is good for them. As an example if the price of oil is up and the resin market high, the supplier might be making less on plastic products such as plastic shopping bags, soup containers, trash can liners etc. The supplier may however also carry paper products and other supplies that can be mixed together to drive a total customer margin that is acceptable for their model. Retailers can do the same thing. Here’s a partial list of how collaborative aggregation can work.
1. Take a good look at the total list of supplies offered from your primary supplier.
2. Compare that to what you are buying from them.
3. Ask your e-procurement provider for a list of suppliers within a 50 mile radius that can provide the same products or some of the same products.
4. Look at local businesses within a five mile radius of your area that are not in your industry but buy some of the same products such as trash can liners, cleaning fluids, paper products etc.
5. Call them and explain how collaborating might save you all money.
6. Ask for the name of their supplier as they might be different from yours.
7. Determine a test group of products to request bids on.
8. Develop a standard specification.
9. Develop standard terms and conditions.
10. Bundle all products into one group.
SafeSourcing has a best practices program for this type of collaborative aggregation that is included in our event fees. For a complete list or more information please contact us at www.safesourcing.com.
We appreciate and look forward to your comments
Posted in B2b Supply Chain, Product Procurement, Retail Supply Chain
Tuesday, September 14th, 2010
Compared to other industries, the retail industry has always suffered from low margins and resulting low profitability. With cost of goods generally between sixty five and eighty percent dependant on the sub vertical, the answer to what categories to source first should be all of them.
Unfortunately retail places much less of their spend under the management of these types of tools than any other industry. In fact in the mid to lower tier retail markets these tools are almost non existent.
Reality would dictate that retailers should keep an open mind and let a detailed discovery process determine the right categories and the timing. It may help to use a third party such as SafeSourcing to conduct the discovery in order to eliminate bias from the process. Bias is usually driven by an attitude of; we have always done things this way. Depending on whether the category of choice is expense related or in the cost of goods, it will have an impact on the bottom line providing all other lines of the P&L perform to plan. This author favors attacking above the line costs, but understands that certain below the line costs such as health care costs and all types of third party services can be very attractive targets.
The following categories all have attractive returns that have averaged over 22% for SafeSourcing customers during 2010 and should not be overlooked during the discovery process.
1. Seasonal Items
2. Private Label
3. Fuel
4. Equipment
5. General Mdse
6. Services
7. Dry Goods
8. Transportation
9. Seafood
10. Meat
11. Maintenance
12. Construction
13. Office Supplies
14. Pharmacy
15. Security
16. Floral
17. Packaging
18. Commodities
19. Hardware
A good way to begin is by asking your e-procurement solution provider how they would conduct the discovery process. They will let you know who they would like you to make available to them, what information they would like access to and finally how they would plan for a sustainable process moving forward.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
Monday, September 13th, 2010
The reason for the train ride analogy is that one area we look at when trying to track the economy is the transportation sector and it associated costs. A few of the areas worth looking at are.
1. The amount of product moved which is normally referred to as tonnage.
2. The amount of air cargo shipped in and out of major airports.
3. The amount of non travel volume increase rail shipments.
4. The increase in trucking volume.
Most of these indicators are up according to an article in the Sunday September 12th issue of the Arizona Republic titled “Economy on the Move” by Betty Beard.
Maybe before you look at the products you are shipping you should look at shipping itself. Some questions to ask that might lead in the direction a decision.
1. Are you doing all of your shipping using a 3PL?
2. Are you leasing warehouse space?
3. Do you have your own fleet of trucks?
4. What are your current diesel costs?
5. How old are the trucks in your fleet?
6. Do you own or lease your warehouse equipment.
The good news is that once companies start to build their volumes again they also begin to look more aggressively for new business. All of the above areas are open for negotiation and have been sourced by SafeSourcing using low cost e-procurement tools during the last 12 months at great savings for our customers. Maybe you should get on the train. Maybe you should have already been on it.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
Friday, September 10th, 2010
On demand software or SaaS (Software as a Service) by its nature is an internet based application and as such is accessible from wherever you happen to be as long as you have a network connection. With today’s broad band offerings that literally means anywhere. So the first rule of thumb is that it provides easy access. In addition, since most of the newest versions of SaaS applications are native web based applications, they integrate very nicely with most office infrastructures. With Microsoft being the most deployed environment, data is easily exported or imported to formats that comply with their standards. In many cases these tools can also be made 100% available to you within days of contract signature
Most of us have horror stories about when our PC, Network, Application etc. went down and we were not able to complete tasks at work. When we call our internal service department, the response is normally less than what we would like or hurry up and wait. With a hosted software application, it is the responsibility of the SaaS provider to maintain the application. They know up front that if they don’t do a superior job of support and availability, that you the customer can go somewhere else to find a provider that will. This is not the case with internally installed corporate applications.
Your data at a SaaS provider is also often more secured than the data at your corporate office. Since this is the core business of a SaaS provider, the architecture of the application normally has multiple levels of redundancy, failover recovery and is backed up regularly.
Typically, SaaS applications are easier to change than traditionally installed corporate applications. There are not as many feature upgrade charges with every point release in a SaaS environment because the provider needs to provide these features to continue to attract new customers and to keep up with the pace of the industry.
Finally, the total cost of ownership is much quicker in a SaaS environment than traditional application software installations. Often as much as 100% faster. In fact there are many stories of breakeven ROI’s with your first series of e-procurement events. The biggest question you have to ask of your future provider is are you a true SaaS environment with the newest technologies available or are you a reengineered ASP provider. I’ll comment more on that later.
We look forward to and appreciate your comments.
Ron
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Online Procurement, Online Reverse Auction
Thursday, September 9th, 2010
Many of our supermarket chains and other retailers that sell fresh eggs are huge companies with thousands of locations. In order to support their customers their perishable inventory turnover has to be fast and efficient and come from multiple sources. Tracing the product to the original sources is one thing. It is entirely another thing to ensure safety and to understand not only where the product comes from but how that source conducts their business. This can and should include supplier visits and audits as well as a well structured set of questions that a farmer or distributor should be required to answer before a product goes on your shelf.
If you can’t answer some of the questions listed below, you are not being fair to your consumer or your company.
1. What type of egg farm do your eggs come from?
2. What’s the hen population of each farm?
3. What are hen living conditions such as size of cage?
4. What’s the average laying life of the hens at your source?
5. How much living space does each hen have?
6. How and what are the hens fed?
7. Do you know where the feed comes from to its original source?
8. What safety tests are conducted regularly as part of the farms business?
9. Are tests for multiple strains of salmonella conducted?
10. Has one of your supplier’s farms ever tested positive for salmonella?
11. What happens when a positive test occurs?
12. How does your farm monitor or ensure air quality for their hen population?
13. How long does it take from the time an egg is laid until it reaches the supermarket shelf?
14. How long are eggs stored prior to shipping and at what temperature?
15. What cleaning processes are used once eggs are laid?
16. Are hens caged or cage free?
17. How many inspections are conducted at the farm annually, and by whom?
18. Have any of your farms ever failed an inspection? If so why?
19. What is done to keep hens’ disease free?
20. What type of waste removal system does the farm employ?
21. Does the farm have any bio control practices in place?
22. Has the farm or farms that you source from won any awards?
23. Do the farms you source from maintain any regularly reviewed certifications?
These questions can be reworked for just about any farming environment and retail buyers that source these products should be able to do it with very little help. How much better would your company feel if they had positive responses to these questions on record for each farm in your supply chain that was regularly updated?
We look forward to and appreciate your comments.
Posted in Sourcing Safe Foods, Sourcing Safe Products
Wednesday, September 8th, 2010
The reason I post on these issues is because whatever the industry or the government is doing or more than likely not doing has to be fixed. We and by we I mean the procurement professionals of the world can fix it, but we have to hold suppliers accountable along all aspects of the supply chain. That means from raw materials, feeds and so on until the consumer uses the product safely.
How do I know that we are not learning and not applying tools that are available or asking for tools that should be available? It’s pretty simple.
Here’s an example. E.coli outbreak in beef puts focus on tougher oversight. That title comes from the September 4th 2010 edition of the Arizona Republic by Matiga Lohn of the United Press. On June 16th of 2008 this author published the following post.What’s your risk associated with the sale of tainted food? Who’s Culpable? That post e began with I was reading the Sunday June 15th 2008 issue of The Arizona Republic and found a short article in the week in review section titled Girl’s tainted-food death brings $13 mil settlement.
Here’s the deal, I may have found this in the same newspaper some 27 months a part, but the companies involved in both cases are subsidiaries of the same conglomerate. The new article says that this incident is prompting a fresh look at tougher regulations to protect the nation’s meat supply and the undersecretary of the USDA has signaled interest in expanding federal oversight of meat beyond the most prevalent strain of e.coli. She goes on to say that our policies need to evolve to address a broader range of these pathogens. Come on. The Same Company is involved, both are similar issues and the government response is the same. So hindsight is not 20/20.
If this was an employee, it would be simple. You are fired. You did not learn from your last mistake. Please remember we have elections in the fall and a supplier that does not do their job properly can also be fired.
We look forward to and appreciate your comments.
Posted in Sourcing Safe Foods, Sourcing Safe Products
Tuesday, September 7th, 2010
This author has posted recently regarding the issue of food safety in particular as it regards the recent egg recall for Salmonella outbreak. A much larger question we need ot begin asking is if we can’t control eggs in our own country how in the world we can control something as potentially dangerous as drugs. Many of these counterfeit drugs have the wrong ingredients, not enough ingredients, or are just outright fakes and tracking and tracing them from the manufacturer to the pharmacy is incredibly difficult
In the U.S. Counterfeit drugs are being intermingled with the legitimate drugs According to the World Health Organization as much as 30 percent of prescription drugs in developing countries are counterfeit and, in developed countries, counterfeit drugs make up as much as 1 percent of the market.
As more of these products enter our market the tracking and tracing of them has to become a priority of the FDA.
There are a number of tools being considered in the area of packing alternatives inspection alternatives and RFID tagging.
As much as we pressure the FDA to do their job, and they have received additional funding for inspectors over the last several years, manufacturers also have to implement significant tracking and tracing of their products as the move along the supply chain down to the unit or container level.
We look forward to and appreciate your comments.
Posted in Sourcing Safe Foods, Sourcing Safe Products
Friday, September 3rd, 2010
We’ve all known for a while that our seat partners look over our shoulders to see who we are and what we do. I told him I was reading an Aberdeen business brief and who and what they do. I went on to explain that our company was focused on e-procurement tools for the retailers. He introduced him self as a private business owner with his two brothers and that he had experience biding in reverse auctions with Ariba and Free Markets.
We discussed SafeSourcing’s offerings and ultimately came around to what made e-procurement events successful for his company in the past as a prospective supplier and what would encourage them to participate again even if they did not happen to be awarded the business in a particular event. His take was that this was initially an educational process for their company and ultimately would become a way to do old things in a new way. He also suggested the following
1. Openly communicate with prospective suppliers
2. Make sure they understand everything and comfortable
3. Make sure they have no open questions.
With that as an understanding I offer the following list of sample questions one might consider when inviting a supplier as a new participant.
1. Does the supplier understand that there is no cost to them to participate?
2. Do they understand they will be trained at know charge?
3. Do they understand event timing and requirements?
4. Does the supplier understand the terms being used and how they apply to an e-procurement event such as? In fact, do they understand what a reverse or forward auction is?
a. Reserve Price
b. Proxy Volumes
c. Low Quote
d. Proxy quote
e. Funds
f. Terms
g. Notes
h. Extensions
i. Matching quotes
j. Event rules
k. Product specifications
l. Samples
m. Award of business
At the heart of it, it comes down to something we all know but don’t always practice and as such negatively impacts the sustainability of processes that just make good sense. And that is that the supplier is your customer too and the customer comes first and should be treated the way you would like to be treated.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Retail Supply Chain, Reverse Auction Procurement, Strategic Sourcing
Thursday, September 2nd, 2010
I was reading a blog post from the Doctor over at Sourcing Innovation today titled “A Hitchhiker’s Guide to e-Procurement: Terminology” and I thought it was great as well as very timely.
Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.
This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Reverse Auction, Reverse Auction Procurement, Supply Chain Procurement
