Archive for March, 2011

A significant storm hit retail procurement years ago?

Wednesday, March 16th, 2011

The reason you are reading this paragraph at all is that bad news and weather sell. Bad news about the weather sells better. We see it at the grocery, convenience or drug store checkouts every time we make a purchase. How often do the news channels lead in with Good Samaritan stories? Everyone wants to follow the bad news. Men in particular like to follow news of bad weather. My wife says I can tell you the temperature and elevation at any time of the day as well of the impact of one on the other.

So what do you do in case of a storm? What is your information source?

From a procurement perspective we have had a nor’easter circling for years. And that is the worst kind of storm because it just keeps hitting you over and over again. This storm and it’s based on a lack of easily accessible information, we can be faced with any of the following on any given day.

1. Natural Disasters
2. The loss of a source of supply
3. Damaged goods
4. Product recalls
5. Product safety issues
6. Food borne illness issues
7. Environmental impact issues
8. Poor product specifications
9. Lack of adequate information when we need it
10. No way to openly collaborate with other procurement professionals
11. Transferred or promoted resources that leave a procurement brain drain

The question is how do you deal with this? There are a variety of portals, search engines and websites that may or may not contain what you are looking for.

What’s your answer? Where do you turn when it’s time to take shelter? Let’s hope it’s not just any port (al) in a storm.

Check back tomorrow and we’ll provide a preparedness kit for your use.

Social Media for the Supply Chain?

Tuesday, March 15th, 2011

We don’t think so, because there already is one with a lot of members.

It’s called Sourcebook. Welcome to Sourcebook the procurement industries first professional social network. Enter your profile, choose an avatar, participate or lead threaded conversations with your peers.

We appreciate your comments.

Communicating the Good eAuction News

Monday, March 14th, 2011

While the answer is probably not going to be “I’m going to Disneyland,” the answer from some of the biggest companies in the world, actually because they are the biggest companies in the world, is more surprising than you think.

Companies invest hundreds of hours gathering specifications and employing 3rd party partners to hold RFIs, RFPs, RFQs, and reverse auctions so that, at the end of the day, they can be assured of reducing their costs on the items that they purchase.

Unfortunately, great prices are only good if the rest of the company knows that they should all be ordering from the vendor that guaranteed and was contracted to deliver those low prices.

By not doing so, your company can actually lose money twice; once for the lost savings you could have received but didn’t because the company ordered from other, more expensive companies, and twice because many of these great deals are made on the premise that a certain volume of purchases will be made from that supplier.  If that level is not met, worst case scenario is that there will be financial penalties associated with the lack of activity, but you are at least looking at a situation where that vendor will not offer those same discounts again.

Communicating this information is not as difficult of a task as it may seem, so make sure you have a channel for everyone to go to that will let them know what items are affected by these contracts and who they should be purchasing the items from. 

Many times a company will have an intranet that can be used for this purpose.  In other cases you may choose to employ a third party to host this information securely for your company.  If the latter is of interest to you, contact a SafeSourcing Customer Service representative today to speak about the options available to you in this area.

We look forward to and appreciate your comments.

Why does retail lag other industries in the percent of spend assigned to e-procurement tools.

Friday, March 11th, 2011

I have heard everything from we don’t do things this way at our company to we’ve already attacked most of the low hanging fruit and our buyers are telling us there are no additional savings to be had from these categories.

I’m not trying to suggest that retail is adverse to driving change, or in fact being early adopters of technology. After all, retail was the original user of the cash register which evolved to electronic point of sale systems, sophisticated scanning systems and ultimately today’s self checkout systems. Retail has been a leader in the use of all types of technology driving advanced products such as electronic shelf labels and other RF technology. So why does there seem to be a reluctance to driving more spend with e-procurement tools.

I believe the answer lies in the tools themselves. E-procurement tools such as reverse auctions have a rich history of board room proof of concepts attended by CEO’s and CFO’s with astounding savings sometimes as high as 30% to 40%. This to the delight of the presenting vendor when the attending executive says we should be doing all of our buying this way.

As a result the retail company assigns resources and moves ahead with passion and vigor. Slowly however they seem to lose steam and both the number of events and the savings either stabilize or drop off.

The following issues lead to low utilization but are certainly not the only issues resulting in lack of transition to more spend being assigned.

1. Proper Executive sponsorship with resulting corporate policy changes are not in place and reviewed for compliance regularly.
2. Proper discovery of every category with all buyers is not conducted
3. Stores, offices and distribution centers are not walked and reviewed as part of the discovery process.
4. Products within categories are not weighted, calendarized and prioritized.
5. Tools are not easy enough to use so that retailers can host there own events after they run successfully the first time.
6. Vendors direct retailers to not run events that may have limited financial success.
7. Proper discussion is not held to review strategy like the use of and RFI versus an RFQ or how to use both successfully within the same category.
8. Pricing for an event that drove large savings the first time is the same the second and third time the event is run.
9. Due to the complexity of the tools, options for self service and assisted service are not available without staff increases if at all.
10. Databases with adequate sources of supply are not readily available to bring new suppliers and their resulting energy to events over an extended period.
11. An overall business plan is not developed with savings targets, percent of spend, reward systems and other milestones necessary to drive corporate wide utilization.

We look forward to  and appreciate your comments.

Sustainable success with your e-procurement program is not just based on financial results!

Thursday, March 10th, 2011

More than once I have heard; “did we hit a home run?” Unfortunately less emphasis is placed on cost avoidance and sustainability and as such can often lead to less spend be assigned to these very effective tools.

In order to ensure that e-procurement results are sustainable; the strategies for all targeted categories require a consistent deployment or Standard Operating Procedure (SOP) across all departments of the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier research and selection, and a solid category strategy that is well understood by all buyers and category managers through negotiation and award of business.

After a quality specification is completed and terms and conditions agreed upon, supplier selection and management is the most critical stage and requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone with the procurement organization could negatively impact the potential results of an e-procurement event whether and RFI, RFP or RFQ. Historical long term relationships that drive behind the scene comments like; “don’t worry we’ll be fine” to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your new e-procurement program, and may even have potential legal implications.

If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tools, it may be time to ask your provider why?

We look forward to and appreciate your comments

What are you doing to include green strategies in your procurement process?

Wednesday, March 9th, 2011

A first step for companies is to develop an SOP that includes evaluating your existing and potential new sources supply. A good way to begin this process is to author a GREEN RFI prior to all e-negotiation events. Eliminate the suppliers that don’t seem to have any SOP’s in place based on their RFI responses.  Upon event completion hold low bid suppliers accountable by visiting those suppliers’ facilities prior to the actual award of business and base your final decision on RFI result confirmation. During the RFI process make insure that the following types of questions are included with which to evaluate your existing and new sources supply.

1. Please list all of your companies CSR initiatives.
2. Does your company support TBL reporting?
3. What environmental permits and certifications are in place?
4. Do you have readily available audit results? 
5. Please list all of your pollution prevention controls.
6. What are your hazardous materials handling process.
7. What is your waste management plan?
8. What do you do to insure clean air emissions?
9. Does your company maintain product formulas and content traceability?
10. Please list your product safety plans and certifications.
11. Do construction projects follow LEED?

Once suppliers have been retained or selected, offer to train them as to how to include this process with their own sources of supply and other business partners. This may include offering how your trace the overall benefits of being a green company to your bottom line (TBL) as well as other initiatives you have taken internally with associates and other stake holders to support your internal CSR initiatives.

We look forward to and appreciate your comments.

What are ISO environmental standards?

Wednesday, March 2nd, 2011

ISO has published a brochure providing a basic introduction, as its title indicates, to Environmental management – The ISO 14000 family of International Standards. The 12-page, color brochure is the most current edition of a successful publication first released in 1998, two years after the launching of the first standards in the ISO 14000 family

The International Organization for Standardization widely known as ISO, is an international standard -setting body composed of representatives from various national standards organizations. Founded on February 23, 1947, the organization promulgates world-wide industrial and commercial standards. It is headquartered in Geneva, Switzerland. While ISO defines itself as a non – governmental, its ability to set standards that often become law, either through treaties or national standards makes it more powerful than most non-governmental organizations. In practice, ISO acts as a consortium with strong links to governments.

The SafeSourceIt™ Supplier Database holds it suppliers accountable to many ISO standards including 14000, 7002, 9001 and 22000.

How do you hold your suppliers accountable?

We look forward to and appreciate your comments

Collaborative Procurement: No Need to Wait to Buy

Tuesday, March 1st, 2011

Collaborative purchasing and co-op enterprises are concepts that are not new to the business world. 

For decades manufacturers, retailers and consumers have organized associations that allow their members to take advantage of lower pricing than they could normally get on their own due to the increase in the overall purchase amounts made by the collective group.

While this is a great advantage for smaller businesses and retailers, many companies think this is the only way to take advantage of this type of spend. 
Many businesses think that the amount of inventory they want to purchase is just too small to think about purchasing like this and so they wait for a period of time until they think they can justify the amount, all the while losing out on money they could have saved on the product they are currently purchasing.

Luckily for these companies, neither of these situations has to be true for them.   We are conducting regularly scheduled collaborative events, weekly, and are just waiting for these companies to join.  As with any collaborative spend, the more participants involved the better the savings will be and the bigger the opportunity for the suppliers involved.

We are routinely saving customers 10-20% on spends they had previously thought were too small for any type of reverse auction due to the fact we were able to include them in one of these collaborative events.

Call a SafeSourcing Customer Service representative today to see if any of your upcoming spends have associated collaborative events scheduled for the month of March.

We look forward to and appreciate your comments.