Archive for December, 2010

Here are some talking points for developing procurement goals for the New Year.

Wednesday, December 29th, 2010

Companies with a few customers and companies with thousands of customers are often looking at the same types of issues. The process and the results are very similar regardless of scale and as such require the same careful focus to drive targeted results. If we were to white board what should be included in our procurement goals many of the following areas would be included.

1. Lower costs
2. Consistent and improved quality
3. Products that guarantee safety for your customers
4. Smooth transition to new supplier relationships
5. Quality product specifications
6. Unlimited new sources of supply
7. Well thought out internal and external collaboration and aggregation
8. Support for environmentally focused products
9. Support of CSR Initiatives.
10. Evaluation of low cost technology solutions
11. Joining and collaborating with share groups or GPO’s
12. Review of Incumbent suppliers
13. E-Sourcing or e-procurement training.
14. Existing procurement tool evaluation
15. Existing contracts evaluation
16. Detailed spend visibility and evaluation
17. Off or Near Shore sourcing opportunities
18. Sourcing and Supply Chain Knowledge transfer
19. For resale sustainable practices review
20. Perfecting The expense category

As your organization develops their list similar to the one above, prioritization and elimination sessions will lead you to a best few focus areas from which you can refine your e-procurement goals for 2011. Please use the above guidelines as a framework for your thinking. Remember that simple goals written down are the most achievable.
 
We appreciate and look forward to your comments

As you plan for the year ahead; here’s a little Sourcing Auld Lang Syne.

Tuesday, December 28th, 2010

 “Auld Lang Syne” is a Scottish poem written by Robert Burns in 1788 and then set to the tune of a traditional folk song. Roughly translated auld lang syne literally means old long since but can be paraphrased into statements such as long long ago, the olden days, for old time’s sake or the good old days.

However, pining to much for the old days can have a negative effect on your planning for the days, weeks and years ahead. I’m sure as this author has, many of you have heard sourcing individuals say things such as “we’ve always done things this way” or “that won’t work for us”. In today’s world with all of its economic and global pressures, this is particularly dangerous way of thinking for sourcing professionals. The good news is that we still have some time before the New Year and we should use it reflectively to build our resolutions for the upcoming year that should then drive our sourcing business goals.

Although a number of strategies can be used for this thinking for both individuals and groups. The most important thing is to capture the data in its most raw form and then refine it from there. This may occur in group open discussions and white board sessions with a moderator or in private free thinking session where you personally write down all of your own random thoughts. The important thing is to write them down. Statistically people who write down their goals have over an 80% higher success rate of achieving them. Research tells us that of those people that do make New Years Resolutions only 75% make it past the first week of the year and the numbers drop dramatically from there.

We will be discussing our thoughts on e-sourcing and e-procurement resolutions for the New Year over the next few days in order to provide our readers with a base from which to draw for their own refinement.

Best of luck with your goals and we  look forward to and appreciate your comments.

What are your e-procurement goals for the 2011?

Monday, December 27th, 2010

1. Lower costs.
2. Drive improved quality.
3. Insure that products are guaranteed safe.
4. Build and maintain high quality product specifications.
5. Find a source of unlimited new sources of supply.
6. Aggregate your purchases.
7. Look at ways to use new technology.
8. Take advantage of software as a service applications to avoid large license fees.
9. Make procurement education and training a priority.
10. Review all of your existing suppliers.
11. Collaborate with other businesses to increase savings.

Remember that simple goals written down are the most achievable.

We look forward to and appreciate your comments.

Merry Christmas to all of you.

Saturday, December 25th, 2010

On the twelfth day of Christmas our e-procurement service provider gave to us, a sustainable e-procurement process and improved corporate net earnings.

Do you want your sourcing to be more environmentally friendly in 2011?

Friday, December 24th, 2010

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  look forward to  and appreciate ayour comments.

The holidays are a great time to refocus your companies green sourcing efforts

Thursday, December 23rd, 2010

What does it mean to go Green?  And we do not mean Grinch Green. I was rereading an Aberdeen white paper Building a Green Supply Chain from last year and believe they may in a concise format have the best glossary of definitions as to the meaning of and impact on what it means to be Green. Their short but effective green glossary defines the following terms.

1. Corporate Social Responsibility (CSR) posits that companies have a responsibility to be social and environmental stewards and that having a positive impact on society and the planet is as important as profit.
2. Green refers to practices, processes and products that have a minimal impact on the health of the ecosystem. The emphasis is on non hazardous recyclable, reusable, and energy efficient products and processes.
3. Sustainability ensures the ability to meet present needs and profits, today, without compromising the ability to meet them tomorrow.
4. Triple Bottom Line (TBL) determines that business has positive impacts on the three P’s: people, profit and planet and is a standard framework for CSR agendas.

It might be interesting to ask your CEO if he or she agree with these definitions. Many probably do. The next question would be are you as a company measuring any of them and their impact on your companies performance. The answers would be a good indicator of  your company’s commitment to being Green and not just caught up in green wash and web slogans.

We look forward to and appreciate you comments.

My supplier tells me the cost of paper is going up; what should I do?

Wednesday, December 22nd, 2010

The question this begs, is the statement true? The answer is more complicated than just saying the cost of pulp is going up or down because there area variety of pulps and the same pulp is not used for making copy or print quality paper as is made for making paper grocery bags or paper wraps. The type of pulp used for making copy or print quality paper is hardwood pulp. Hardwood fibers are suited for producing smooth papers for printing and writing. They also can achieve good stiffness and bulking ability, but this depends on the tree species and refining conditions.

The trick with the above scenario is that depending on the tracts lumber companies are harvesting there may or may not be a robust availability or supply of hardwood pulp at any given time. And as such we enter the entire supply versus demand equation.

So is it possible to conduct your own research to qualify the statements of your supplier? It is depending on how far you want to go in doing what commodity traders do every day of the week in order to time their investment with market movement.

CME Group is a good site that would allow you to follow futures on a variety of products. The following link will take you to the hardwood pulp futures market which at the moment is trending down.

Let information be your friend, and if you don’t have time call your e-procurement solutions provider.

We look forward to and appreciate your comments.

Corporate Social Responsibility and the procurement process

Tuesday, December 21st, 2010

The following is taken directly from a great website “The CPO Agenda” and specifically from an old article  titled “How the Stars Shine Brighter”.

The entire article is a great read as to the positive impact that best in class procurement companies can have on their company’s results even during these tough economic times. The specific information I found interesting was a sub section that relates directly to yesterdays post on supplier score cards and is titled.

Sustainability and corporate responsibility.

These have emerged as significant issues for the procurement function and are now factored into most companies’ corporate goals. However, there is still a long way to go until these goals are formally embedded into procurement strategies. Finding the right balance between economic viability, environmental awareness and social well-being is a significant challenge, but a competitive advantage can be gained by companies that locate intersection points for all three.
 
For Wal-Mart, sustainability has broad economic and social components, including healthcare, economic opportunity and the quality of life of the people who make the products it stocks. The company’s commitment to sustainability centers on three aggressive goals: to be supplied 100 per cent by renewable energy, to create zero waste, and to sell products that sustain natural resources and the environment. The key focus areas for its sustainability efforts include paper, packaging, textiles, jeweler, electronics and chemical-based products – categories selected based on a combination of consumption and the volume of product sold.
 
Wal-Mart helps its suppliers to develop goals and set expectations, assist with knowledge around sustainability practices, and evaluate and manage results. Suppliers are expected to “do right” by workers and the environment, examine the entire product lifecycle in order to develop sustainable merchandise and significantly increase energy efficiency throughout the supply chain, especially in the area of logistics and shipping.
 
Key scorecard metrics include greenhouse gas emissions produced during manufacturing, the product-to-packaging ratio, packing cube utilization, recycled material usage, renewable energy use at supplier facilities and raw material recovery rates. The involvement and commitment of the world’s largest retailer toward sustainability practices throughout the supply chain will accelerate the rate at which many companies come to adopt sustainability-focused practices.

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

On the twelve days of e-procurement Christmas.

Monday, December 20th, 2010

1.On the first day of Christmas our e-procurement service provider gave to us, a streamlined procurement process.
2. On the second day of Christmas our e-procurement service provider gave to us, more suppliers to source our goods from.
3. On the third day of Christmas our e-procurement service provider gave to us, pricing that works for smallest categories..
4. On the fourth day of Christmas our e-procurement service provider gave to us, consistent and customized product specifications.
5. On the fifth day of Christmas our e-procurement service supplier gave to us, more time for other priorities.
6. On the sixth day of Christmas our e-procurement service provider gave to us, improved quality in our products.
7. On the seventh day of Christmas our e-procurement service supplier gave to us, better supplier education.
8. On the eighth day of Christmas our e-procurement service provider gave to us, a simple award of business process.
9. On the ninth day of Christmas our e-procurement service provider gave to us, support for a better carbon footprint.
10. On the tenth day of Christmas our e-procurement service supplier gave to us, total category e-procurement.
11. On the eleventh day of Christmas our e-procurement service provider gave to us, safer products for our customers and planet.
12. On the twelfth day of Christmas our e-procurement service provider gave to us, a sustainable e-procurement process and improved corporate net earnings.

Now, ask yourself if all of these goals are accomplished on your company’s behalf by your present e-procurement service provider.

We look forward to and appreciate your comments. Happy Holidays.

What exactly is spend analysis? And at what cost?

Friday, December 17th, 2010

For as many simple yes answers I get, I gave also give you a handful of tools that do a lot of analysis and at the end of the day that is what you have. Simply put, spend analysis is designed to provide companies detailed information about the entire companies purchasing data. The cost to get at that data is astronomical.

At the surface this seems to be pretty simple. In fact it is anything but. If we just look at the retail space, spend analysis relies on data from a number of disparate systems. Most retail organizations to this day do not have a single source of information or an enterprise data warehouse where data is available in one location for use by many applications. In mid tier retailers this is almost universal.

In fact in many retail organizations the following systems would require access in order to gain all spend data necessary for analysis by advanced real time analytics and workflow management systems.

1. Retail ERPS Systems
2. Retail Planning Systems
3. Merchandise Management Systems
4. Supply Chain Management and Execution Systems
5. Store Operation Systems
6. Corporate Administration systems

Certainly, if access to this data is available benefits such as instant access to information and better decision making are certain benefits that can be derived from these types of solutions.

The question for most however is how much time is required to conduct this integration. Would retailers be required to create another data repository and is a data mart of this sort really required to drive savings to the bottom line the shortest amount of time?

For many organizations, there are e-negotiation solution providers that offer these same analytics in the form of a professional service that is embedded in their event pricing. This may result in a more expeditious time to market and savings that can impact the organizations bottom line in the present reporting period.

All solutions do not fit all industries and there are generally alternatives worth exploring that may fit your needs more closely at a more economical price point.

We appreciate and look forward to your comments