Archive for November, 2010

Twenty-one reasons why all retailers should use E-Procurement tools.

Monday, November 15th, 2010

?These are certainly not all of the benefits that retailers can drive from the use of e-procurement tools, but it is a good starting point.

Our list is not ranked in order of importance although many might argue that not much is more important than improved earnings.

1.?Guaranteed to improve net earnings
2.?Guaranteed to improve safety
3.?Guaranteed to improve Corporate Social Responsibility.
4.?Guaranteed new sources of supply
5.?Retail has less spend assigned than any other industry
6.?Streamlines the? procurement process
7.?Holds suppliers accountable to your standards.
8.?Improves quality
9.?Cost avoidance in a volatile market
10.?Creates a competitive environment
11.?Drives reliable market pricing
12.?Maintains a reliable history for future comparison
13.?Educates suppliers as to how retailers wish to procure products
14.?Supplier training eliminates questions
15.?Improved and consistent product specifications
16.?Improved negotiation.
17.?Improve carbon footprint
18.?Simple award of business process
19.?Frees up time for other tasks
20.?Works for procurement of all product categories
21.?Provides a detailed audit trail.

This author is not sure why a derivative of this list could not become the mission statement for any procurement department.

We appreciate and look for ward to your comments.

A timeless repost titled Twenty steps to running high quality e-procurement events.

Monday, November 15th, 2010

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 format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.

We look forward to and appreciate your comments.

Retailers, how many of your e-procurement contracts contain evergreen language?

Friday, November 12th, 2010

In this case your supplier wins because your contract contains evergreen language. Some retailer?s think this is a good thing and it could be. Paired with other language that might identify escalator or de-escalator language that protects both the supplier and the buyer against abnormal commodity increases this could be win-win. The bigger issue is who is responsible for monitoring the dates and how will you be alerted if the adjustments don?t take place?

This begs the question; just what are are evergreen clauses within a contract and what do you need to do to be careful with them.

According to Black?s Law Dictionary an Evergreen contract is a contract that renews itself from one term to the next in the absence of contrary notice by one of the parties?

The potential problem with an ?evergreen? clause in your contract is that this type of contract automatically renews at the end of the contract term, unless one of the parties notifies the other party that it does not want to renew the contract.? This notice normally must be given within a specified time period such as 60 to 90 days prior to the end of the current contract term. This takes us back to who is going to monitor this time frame and alert you to the fact that something is required?

A significant step in conducting quality e-negotiation events is to understand the contracts you are wishing to negotiate.

We look forward to and appreciate your comments.

When should Retailers use a Request for Information or RFI?

Thursday, November 11th, 2010

As we have discussed in a prior posts, a Request for Information or “RFI” is in its most simple form a document distributed to new sources of supply prior to inviting them to participate in a Request for Quote or RFQ. The process assists you in your decision as to whether or not you wish to invite new suppliers to participate.The document lets potential suppliers know the information you require in order for them to be considered for participation. This is also a great way to update the information for your incumbent suppliers. This is particularly important in light of our recent economic woes.
Some of the information contained in an RFI can include but certainly is not limited to the following.

1.?General education relative to your procurement process.
2.?Certification requirements such as safety or environmental.
3.?Rules of engagement
4.?Supplier general information.
5.?Sourcing tree information.
6.?Country of Origin Information.
7.?Near Shore or Off Shore Practices
8.?Financial Information?
?

A Request for Information is a great tool that when used properly enables retailers to evaluate potential new sources of supply while also holding their incumbent suppliers accountable to the same standards they would of new suppliers. Although most often used in complex sourcing events, RFI?s are very helpful in almost all e-negotiation events.

Sourcing prescription drugs gets a little simpler all of the time.

Wednesday, November 10th, 2010

This was the case years ago, but with the advent of many of the internet based prescription drug sites such as RXlist, Drugs.com and many retailers sites, it is easy to find lists, formulations, directions, dictionaries and generic equivalents. What more could a Pharma buyer ask for. Now all you need to do is use your e-procurement solutions provider to drive your costs down.

According to RXlist, the top twenty prescription drugs in the U.S. are as follows.

1.?Lipitor
2.?Hydrocodone / Acetaminophen??
3.?Hydrocodone / Acetaminophen??
4.?Levothyroxine sodium??
5.?Amoxicillin??
6.?Lisinopril??
7.?Nexium??
8.?Synthroid??
9.?Lexapro
10.?Singulair
11.?Plavix
12.?Simvastatin
13.?Hydrochlorothiazide
14.?Amlodipine besylate
15.?Azithromycin
16.?Warfarin sodium
17.?Furosemide
18.?Azithromycin
19.?Levothyroxine sodium
20.?Advair Diskus

Let’s hope this? information helps you to?drive down your costs.

We look forward to and appreciate your comments

What’ll ya have? Oh, I dunno, give me some recalled eggs over easy and some of that BPA stuff.

Tuesday, November 9th, 2010

Maybe we all need to be nine feet tall and have three eyes and four ears in order for the government to get up to speed and take food safety more seriously, or execute more effectively.

I was reading a local news paper on Sunday and found an article titled Study: ‘Quantifiable levels of Bisphenol A found in food by Ervin Brown of the Los Angeles Times. The article went on to say that last week a study was announced that was conducted by a research team that measured 105 foods from grocery stores in the Dallas area. In this research they detected quantifiable levels of BPA in sixty three of them. The products named were those of major brands.

Today I was browsing the internet and came across an item titled Eggs in Texas recalled after salmonella found at Ohio farm by Associated Press and www.khou.com. Didn’t we just have this problem a couple of months ago?

As they say on ESPN, COME ON MAN!

We look forward to and appreciate your comments.

What?ll ya have? Oh, I dunno, give me some recalled eggs over easy and some of that BPA stuff.

Tuesday, November 9th, 2010

Maybe we all need to be nine feet tall and have three eyes and four ears in order for the government to get up to speed and take food safety more seriously, or execute more effectively.

I was reading a local news paper on Sunday and found an article titled Study: ?Quantifiable levels of Bisphenol A found in food by Ervin Brown of the Los Angeles Times. The article went on to say that last week a study was announced that was conducted by a research team that measured 105 foods from grocery stores in the Dallas area. In this research they detected quantifiable levels of BPA in sixty three of them. The products named were those of major brands.

Today I was browsing the internet and came across an item titled Eggs in Texas recalled after salmonella found at Ohio farm by Associated Press and www.khou.com. Didn?t we just have this problem a couple of months ago?

As they say on ESPN, COME ON MAN!

We look forward to and appreciate your comments.

Scottsdale Arizona’s SafeSourcing Inc. releases outstanding Q3 2010 results.

Monday, November 8th, 2010

Despite the continuing economic condition SafeSourcing Inc. reported significant 3rd quarter 2010 revenue growth of 42.45% versus the same period of 2009.Safesourcing has also continued to significantly grow its customer base with wins across all retail verticals as well as other new industries. SafeSourcing also recorded significant net income for the same period.

According to Ron Southard SafeSourcing CEO, We continue to honor the commitment we made to the retail market when we launched this company of being able to address all spends regardless of size. During 2010 we have sourced products for companies with 1000’s of stores and for companies with only a single location. SafeSourcing has run hundreds of millions of dollars through our system this year for all RFX types and provided new sources of supply, a focus on companies CSR inititives and significant savings across all categories. Southard continued by saying that they could not be more pleased with the faith that their customers have placed in SafeSourcing during a very challenging economic climate.

To learn more about SafeSourcing please visit our website www.safesourcing.com.

We look forward to and appreciate your comments.

Scottsdale Arizona?s SafeSourcing Inc. releases outstanding Q3 2010 results.

Monday, November 8th, 2010

Despite the continuing economic condition SafeSourcing Inc. reported significant 3rd quarter 2010 revenue growth of 42.45% versus the same period of 2009.Safesourcing has also continued to significantly grow its customer base with wins across all retail verticals as well as other new industries. SafeSourcing also recorded significant net income for the same period.

According to Ron Southard SafeSourcing CEO, We continue to honor the commitment we made to the retail market when we launched this company of being able to address all spends regardless of size. During 2010 we have sourced products for companies with 1000?s of stores and for companies with only a single location. SafeSourcing has run hundreds of millions of dollars through our system this year for all RFX types and provided new sources of supply, a focus on companies CSR inititives and significant savings across all categories. Southard continued by saying that they could not be more pleased with the faith that their customers have placed in SafeSourcing during a very challenging economic climate.

To learn more about SafeSourcing please visit our website www.safesourcing.com.

We look forward to and appreciate your comments.

For retailers it’s really pretty simple; just look at your gross profit.

Friday, November 5th, 2010

How many times do we hear all of the reasons for a retail company’s performance being off? It’s the cost of doing business over seas, the economy, the cost of fuel, heath care costs etc. How often do we hear, that we are doing better than the same period a year ago or we are exceeding plan. All of that is nice stuff, but the bottom line is your bottom line. If you top line sales are up and your net profit is up it does not necessarily mean that you have all of your procurement issues under control.

Let’s start with some numbers you might wan to look at. Don’t just assume that profit is a good thing because profit could be caused by an imbalance in your category margins.

Here are a few good questions to ask yourself.
.
1. How do your cost of goods compare to the rest of the industry for a chain of your size?
2. How do your operating expenses compare to other chains of your size?
3. How do your gross margins compare to other chains your size?

All of the above can be good indicators of overall company health and certainly procurement health. If your cost of goods is higher than industry averages for a chain of your size, why is that? Is there a specific category that is causing the issue? Do you know how to isolate the problem and then eliminate it?

If you don’t have or know this information, you should ask your e-procurement provider if they have it.

As an example, here is a look at U.S. based convenience store chains targets for non fuel.
1. Cost of Goods Sold should run somewhere around 71% or 72%
2. Gross Profit should run around 28% to 30%
3. Operating Expenses should run around 26% to 29%
4. Net Operating Income around 2%

If you are way out of balance with these numbers and want to understand how to rebalance them, call SafeSourcing.

We look forward to and appreciate your comments