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Archive for September, 2011

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How is the e-procurement process different in a third world county?

Friday, September 30th, 2011

E-Procurement  has become a standard business process throughout many developed countries.  It is recognized as one of the most successful applications in the electronic commerce (e-commerce) field and has been used to identify cost savings, improve efficiency and control for many companies’ bottom lines.  This author wonders then, why is the practice of e-procurement not utilized in third world countries? 

As I have found out the answer is a bit complex and sadly unfortunate.  E-procurement has not worked as a reasonable business practice in third world countries because third world countries are partially characterized by low levels of industrialism, widespread illiteracy, poor infrastructure, unsophisticated technology, and poor living standards among their populations as a whole.

That being stated, it is not hopeless to think that a business in a third world country could not strive to make changes that would enable e-procurement as a regular business practice.  Some of the steps that would be needed would be:
  1.  Clearly define a strategic goal and solid reason for the change in the  business practices.
  2.  Progress through simple steps that deliver true value.
  3.  Find an e-procurement system or partner, such as SafeSourcing, that is easy to use and offers support to any participating vendors.
  4.  Understand the barriers and limitations of your own company as well as the economy, environment, and politics of the country you’re working in.
  5.  Appoint a Subject Matter Expert (SME) within your company that can clearly help you outline the items that can be sourced.  A strategic sourcing partner, such as SafeSourcing, can assist with this as well.
  6.  Start the procurement process in sectors of the business that are either most ready to adapt to the changes in process or that are in the greatest need for the change.
  7.  Work hard to share your procurement success within your local market to promote growth within your country’s local economy.

There are factors that make e-procurement risky in a third world county, but the economic benefits that would come from implementing this practice would outweigh the risks long term.  By implementing e-procurement practices for businesses in a third world country it would impact the level of industrialism, the economic infrastructure, and in time possibly help to strengthen the used and accepted technology.

We look forward to and appreciate your comments.

Posted in Business Sourcing

When developing your terms and conditions don’t forget the potential for BARTERING!

Thursday, September 29th, 2011

According to Wikipedia: Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when the currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.

There are a number of companies that primary business model is to use bartering in part as their engagement model. Although the model is slightly different at each organization, the general theme is that a company can trade excess inventory for just about any category and receive credits that can be used in part to buy or acquire other products and services that they need for their business. An example might be to consolidate and eliminate backroom stock in retailer’s stores in exchange for credits and use those credits to buy supplies that are regularly used such as paper or plastic bags etc. This process can also have a positive impact on shrink as well as preserving cash.

A unique use of this process that I recently read about in the Arkansas Democrat Gazette discussed a company agreeing to pay for building renovations if they had their current contract extended. The article by Debra Hale-Shelton titled UCA trustees call off audit of vendor bid. The legality of this transaction is in question, but it is in fact a form of Barter.

If you are going to consider barter as a payment or terms option, make sure you understand its use and that it is an above board part of negotiation that is well defined in your terms and conditions.

We appreciate and look forward to your comments.

Posted in Contract Management, Sourcing Strategy, Strategic Sourcing

When using e-procurement tools to source complex services make sure you have a well defined change of control process.

Wednesday, September 28th, 2011

Change happens. It can result from poorly designed specifications, terms and conditions, quoting instructions and other data related to a bid. The normal process for managing these changes is a change of control process which governs how any changes to the services being provided as identified in the actual bid.

The change of control is normally managed as a request that communicates the requested changes to the services deliverables. Normally the change request will describe the following at a minimum.

1. The change
2. The reason for the change
3. The effect the change may have on the existing Statement of Work.
4. Impact on cost or savings

In most cases a project manager or the associate with responsibility for managing the program deliverables will be required to submit a written change request to the contracted or warded supplier.  The supplier will then develop and return the response to the contracting company. 
 
The contracted supplier and the contracting company will then review the proposed change request and either approve it, modify it or reject it. When approved the contracting company as well as the contracted supplier must sign the change request in order to authorize the work as well as the implementation of the work and its potential impact on the existing project plan or project time line.

If you don’t want erosion inn your savings, make sure you spend the time to cover this process in your bid parameters.

We look forward to and appreciate your comments.

Posted in Contract Management, E-procurement, E-procurement Solutions, E-procurement Tools

Buyers, do you know how a price index plays into e-procurement practices?

Tuesday, September 27th, 2011

From a simplistic perspective an index is a system used to make finding information easier. There are any numbers of indexes or indices available to help procurement knowledge workers insure they are sourcing products at the best possible pricing. The key word here is price as what we will be discussing are specifically price indices.

According to Wikipedia a price index (plural: “price indices” or “price indexes”) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to measure the economy’s price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.

Normally an index reflects the current and historical price of a variety of commodities ranging from metals to grain. A common index used in sourcing petroleum products is OPIS or the Oil Price Information Service which you can learn more about by visiting www.opisnet.com.  However in order to drive the best possible fuel pricing there are other dependencies such as whether you are doing spot buys or bulk purchases and these strategies will determine what specific index you would want to review as well as it’s relation to other product information sources such as Platts or the Gulf Coast spot assessments.  This will put you in a better position to determine how to bid the product and also earn a discount relative to the lowest common denominator.

All other commodities have similar sourcing issues dependant on what the highest cost item is in their product makeup. An example here might be the cost of grain in the feeding of cattle or poultry.

Ask you solution provider to explain these tools to you and to recommend how you might use them toward the best outcome.

We look forward to and appreciate your comments.

Posted in E-procurement, E-procurement Solutions, E-procurement Tools

Sourcing Loss Prevention Categories

Monday, September 26th, 2011

What are some of the ways to actively use sourcing tools to help reduce your company’s loss?”

The state of the world economy is not newsflash material for anyone at this point.  As governments and businesses actively pursue the steps to turn things around, issues within business, especially in retail, that were once concerns are now becoming major problems as they battle theft and loss both internally and externally.

In the course of dealing with “loss” head-on, many companies are looking to improvement their infrastructure, processes and coverage by researching companies that specialize in providing goods and services to help reduce loss.  Today we will be covering a few areas that sourcing departments or 3rd party sourcing partners can help you so that you know what is out there and to help make the best decision for your company to procure.

Enterprise Software – There are many companies that provide enterprise software for gathering and monitoring the data that flows through your business every day.  Hundreds of successful RFPs are run every year to gather the information necessary to compare these companies and offer you valuable insight into the solution that is best for you.  Make sure you have all of the facts to be able to compare the companies evenly.

Video Equipment – With literally hundreds of video manufacturers on the market offering DVRs, cameras and the software that goes with them, not to mention new technology that leverages IP devices and video analytics to intelligently monitor the video, it is a perfect time to review the current video condition of your company.  Begin to gather the details and competitive pricing from these vendors to upgrade or improve your company’s current video infrastructure.

Consulting Services – While enterprise loss analysis software and video capabilities are important for many companies, not all companies have the staff to monitor and deal with what is being provided out of these systems.  Due to this issue, many consulting companies have appeared with terrific loss prevention experience to help you use your tools to reduce your loss, whether that is reviewing exception based reports, video or handling the interviews of potential theft activity in your company.

Alarms & Safes – Alarms and safes are terrific categories to be looking at due to the fact that with so many companies selling them, there is a terrific common ground from which a company can evaluate the pricing from multiple companies easily.  Because the field can be so competitive on pricing it is also a good time for customers to get additional “value-add” from vendors that are offering more services in order to get the alarm or safe business.

Security Companies – Security and doo/fire alarm monitoring companies have been in existence for years and many offer similar services.  Now is a good time to look at your existing supplier and see what else they are doing that is new that you might be able to leverage.  While doing this process it is probably a good idea to take a look at some new companies and see if they are offering anything that may help your company reduce either your loss or your costs.

Whatever your Loss Prevention need is, the global environment is quickly demanding that companies begin to pay more attention to the amount of money and product they are losing and look for ways to reduce that loss and the above categories and suggested steps in examining what is right for your company are just a few of hundreds.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

Posted in Business Sourcing

Category Discovery is a critical step in building your e-negotiation strategy?

Friday, September 23rd, 2011

Category discovery is the basis of any quality implementation of an e-negotiation strategy. It is essential that this process be supported by the company’s executive management because they hold the key to unlocking access to data sources across the enterprise. This process will include working with all category managers, buyers, other procurement knowledge workers and anyone that participates in sourcing to uncover what you don’t know in support of your Requests for Information (RFI), Proposals (RFP) and Quotations (RFQ).

The first step in this process is the understanding of where the data is hiding and in most companies large and small it is. Here’s a list to get you started. Data discovery generally comes from two sources; Internal and external.

Examples of Internal and External Data Sources

  1. SLRP
  2. Budgets
  3. General Ledger
  4. Detailed P&L
  5. Purchase Orders
  6. Contracts
  7. Detailed Vendor Listing
  8. Product List by Vendor
  9. Invoices
10. Product cut sheets
11. Copies of orders
12. Brochures
13. Supplier Websites
14. Annual Reports

As always we look forward to and appreciate your comments

Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Eprocurement Auction

Are you developing sustainable strategies with your office supplies purchases?

Thursday, September 22nd, 2011

Toner products are a great example of an opportunity to use a sustainable resource. At present, you are probably just buying toner products because you need them. Have you actually taken the time to look at more environmentally focused toner solutions?  

It’s a safe bet that your company is using laser printers. You may even have a thoughtful blue paper recycling container near the copier or even near every printer. You may even use recycled paper. The next step is a logical one; use environmentally friendly soy based ink for your laser printers.

SafeSourcing’s opinion is that the two best environmental reasons to use soy based ink are as follows. One, soy ink does not emit VOCs or volatile organic compounds. Two, soy ink is not petroleum based.  In a nut shell, you will be replacing a product based on a non sustainable source with one that is.

If you still need more reasons to switch? Assuming that you are already recycling paper, you will be glad to learn that soy based ink is said to make recycling the paper quicker and easier. Also, this option opens you up to new sources of supply. The next time you run an e-procurement event for toner, you will have more options, greater price compression and another notch in your environmentally friendly tool belt.

Once done with this project, you need to brag about it so that other companies take notice and follow your lead. If you have implemented the full array of green printing mentioned in this blog, you have earned the right. Your customers will be happy to hear that you have made the right choices.

If you would like to learn more about environmentally friendly practices for your business, please visit www.SafeSourcing.com and check out our blog archives and our sourcing wiki both full of useful information. 

We look forward to and appreciate your comments.

Posted in Sourcing Safe Foods, Sourcing Safe Products

Very complex e-negotiation events are not difficult to host.

Tuesday, September 20th, 2011

 

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as MRO or Fleet Maintenance in the distribution space or raw materials used to manufacture components that require special handling, shipping and standards adherence. The amounts of the total spend for an event really has nothing to do with the complexity of the event. The complexity is determined by the data points requiring management in order to drive the best possible value to the buyer and the supplier.

This author would suggest that any event including multiple market baskets, thousands  of  SKU’s all with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity. This can be further complicated by trying to determine the correct decile based sourcing strategies for the event and including product affinities where they make sense.

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support  complex events, your e-procurement provider needs to have an understanding of the specific market place and practices and processes in place that allow them to drive these activities and bring complex events to market  in the shortest period of time. Generally this should occur within less than two or three weeks from event notification to event completion.

Last year, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who’s the customer and who’s the supplier
9. Sales People
10. Third Party Providers
11. Collaboration complexity.

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.

We appreciate and look forward to your comments.

Posted in E-procurement, E-procurement Solutions, E-procurement Tools

What you should know about sourcing Cloud Computing Alternatives

Monday, September 19th, 2011

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.

One of today’s industry buzzword / concepts is that of “cloud computing”.  Cloud computing is a generic labeling that has been applied to just about any hosted service that is accessed via the internet. It is one of the most rapidly growing technology areas in all business sectors today savings promises associated with a reduction in computer hardware  needs andn the related manpower associated with the same versus a company doing everything internally.

Today we are going to be focusing on three main categories of cloud computing that are available and the types of services that can be procured for your company in each one.

Software-as-a-Service (SaaS) – The most common category of cloud computing is the Software-as-a-Service model.  In this category are software packages that are physically hosted by another vendor in their environment, on their hardware, and supported by their resources.  The obvious advantage of this approach is having full-time support of an application that is maintained and upgraded by a staff you do not have to employ.  These models are usually priced on an as used basis making the ROI much easier to measure.  Examples of this model would be Retail Loss Prevention, POS and Pricebook applications such as those offered by companies like Retail Anywhere.

Platform-as-a-Service(PaaS) – For those who are a bit more advanced and have some internal development resources  in their IT department, the Platform-as-a-Service model provides them the capability to design, test and deploy their own software applications in an environment over the internet.  With database, design studio and web engine license fees being so expensive in order to stay current , this provides a way for companies to develop and stay current with their tools without bearing the exorbitant fees required to do it internally.  Currently the Google Application engine is one example of successful offering using this model.

Infrastructure-as-a-Service(IaaS) – The final category of cloud computing is Infrastructure-as-a-service delivering all of the hardware, network components, memory, hard drive space and processing power for a business and as such, effectively becoming the major component of an organization’s IT infrastructure.  The advantage of this approach is the capability to quickly and easily scale the model to fit a company’s needs without the major investment in the equipment and software.  This model can be as simple as providing data centers for your company or as complex as being responsible for almost everything an IT department represents in a company.  Amazon Web Services is one of the larger and more well-known offerings in this space.

With an ever increasing competitive landscape for many businesses where the call for reducing expenses is constant, these types of services will continue to gain increased favor while providing great value to those companies that can determine the best ways to leverage their collective or individual power. 

For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

Posted in Business Sourcing, Sourcing Strategy

How do your buyers and category managers keep up with all of the product and safety recalls?

Friday, September 16th, 2011

The amount of information we are all required to be aware of today is simply mind boggling. As such a simple and effective tool that looks at the many sites providing this information and consolidating it in one location is your best bet to event try and stays aware of this information.

Most organizations like the USDA, FDA, EcoLogo, Kosher Council and the Consumer Product Safety Commission all offer RSS feeds of their most recent recalls and alerts. At SafeSourcing we consolidate over 50 of those companies so that you don’t have to. When you reach our site, the RSS fed alerts and recall section is located in the top right hand corner of the page. If you had been logged on to our system today you would already know that the listeria outbreak associated with cantaloupes has already killed four people and has spread to multiple states. What is listeria you ask? Visit the SafeSourcing Wiki to learn about many procurement related terms.

Are you aware of the Tylenol recall?

We look forward to and appreciate your comments.

Posted in E-supply Chain, Sourcing Safe Foods, Sourcing Safe Products

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