Archive for December, 2011

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Here’s a Light bulb Christmas Gift from congress. Or not.

Tuesday, December 20th, 2011

If you were to base your business decisions on what congress told you to do, you could make some big mistakes. Mistakes like carrying to much of one inventory item versus not enough of another. Mistakes like moving your CSR focused green initiatives up based on legislation even though they will cost you more money this year as opposed to spreading your transition out over a couple of years.

Well congress as usual is at it again with another hide and seek item within a huge spending bill.

According to a Washington Post article by Stephen Dinan titled Congress overturns incandescent light bulb ban, Congressional negotiators struck a deal Thursday that overturns the new rules that were to have banned sales of traditional incandescent light bulbs beginning next year.

That agreement is tucked inside the massive 1,200-page spending bill that funds the government through the rest of this fiscal year, and which both houses of Congress will vote on Friday. Mr. Obama is expected to sign the bill, which heads off a looming government shutdown.

Congressional Republicans dropped almost all of the policy restrictions they tried to attach to the bill, but won inclusion of the light bulb provision, which prevents the Obama administration from carrying through a 2007 law that would have set energy efficiency standards that effectively made the traditional light bulb obsolete.

Any thoughts as to what lobby caused this action to happen? Will it protect jobs? Will it slow growth? Do what you do because it’s good for you.

All of your opinions are welcome and appreciated

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Here?s a Light bulb Christmas Gift from congress. Or not.

Tuesday, December 20th, 2011

If you were to base your business decisions on what congress told you to do, you could make some big mistakes. Mistakes like carrying to much of one inventory item versus not enough of another. Mistakes like moving your CSR focused green initiatives up based on legislation even though they will cost you more money this year as opposed to spreading your transition out over a couple of years.

Well congress as usual is at it again with another hide and seek item within a huge spending bill.

According to a Washington Post article by Stephen Dinan titled Congress overturns incandescent light bulb ban, Congressional negotiators struck a deal Thursday that overturns the new rules that were to have banned sales of traditional incandescent light bulbs beginning next year.

That agreement is tucked inside the massive 1,200-page spending bill that funds the government through the rest of this fiscal year, and which both houses of Congress will vote on Friday. Mr. Obama is expected to sign the bill, which heads off a looming government shutdown.

Congressional Republicans dropped almost all of the policy restrictions they tried to attach to the bill, but won inclusion of the light bulb provision, which prevents the Obama administration from carrying through a 2007 law that would have set energy efficiency standards that effectively made the traditional light bulb obsolete.

Any thoughts as to what lobby caused this action to happen? Will it protect jobs? Will it slow growth? Do what you do because it?s good for you.

All of your opinions are welcome and appreciated

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Social Media and a New Year

Monday, December 19th, 2011

Todays post is by Mark Davis Vice President of Operations and CTO at SafeSourcing.

With the influence of social media like Twitter, Facebook and LinkeIn? continuing to grow, how do you plan on using them for your business in 2012?

This past year has seen many new and sometimes alarming trends worldwide at every level and in every industry.? Few of those trends saw the impact and influence that social media channels had in 2011.

As with any new technology or tool, misuse can cause harm as we saw with some Twitter and Facebook mishaps, however those same tools, when used as designed, can create a benefit that can far outweigh the potential downside.? For many businesses the use of these tools would be embraced if they just understood more about them and the potential benefits.?

Today?s blog will take a look at a few of the aspects of social media and how they can be leveraged to help your business.

What?s Happening NOW? ? It used to be that there were very traditional methods that worked for decades to communicate what is happening with your company.? Press releases were the strongest methods because they told the story in a way that made it news, and so the story respected.? With time the process for making this happen, making it ?news? and getting it picked up by a newspaper or magazine began to transition into easier regular updates to a company website or possibly a blast email.?

With today?s social media tools such as Facebook or more fittingly Twitter, quick, snapshot, text-message updates can be sent at any time, about anything the company does in a way that can be instantly ?followed? by thousands of people immediately.? The challenge is having a staff or partner that is current enough with the new channels to make the messages short enough to be digested but relevant enough to valuable.? The more frequently the messages are produced, the greater following you will develop.?

Who?s Talking About Us ? Instant feedback is another valuable characteristic of the social media channels.? Whether by Blog, by Tweet or by Status Update the whole social network world has the capability to instantly let you know what it thinks of your message, product, service or company.? Having this feedback is terrific when it validates you are heading in the right direction, but even more importantly, it lets you know when you are NOT, quickly enough in most cases to change your course.? Knowing what people have to say about your company can be some of the most valuable information these channels can provide.

?Like? Us? ? ?Like? and ?unlike? are words that in the past few years have hit the mainstream spotlight in ways they never have before.? These seemingly simple concepts made popular by Facebook for people to connect to businesses, people or concepts that they like is the one of the most important features of virtually all social media channels; FOCUS.? No longer are you blasting your messages out to groups of people you ?think? will find your message valuable.? Now you have the peace of mind to know that your messages are going to people that are interested in what you have to say.? Those people are connected to other people who are also likely to have interest in your company, product or service and as a result will also hear what you have to say.? This connectivity; these links; this network is why the technology has become so powerful.

This just barely scratches the surface of what can be achieved with these new channels of communicating to your current and potential customers but hopefully is still a useful beginning of seeing where the value lies.

For more information finding companies that can help you with developing your strategy for social media, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

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Part III of III. There are all types of reverse auctions.

Friday, December 16th, 2011

I like these types of words. Vickrey has a certain ring to it doesn?t it? In fact there are so many types of reverse auctions that we can?t deal with them all in a single blog. Some of the other types beyond the reserve price auction we have already discussed in this series and the Vickrey we will discuss today are English Auctions Yankee Auctions, Dutch Auctions and many more. Each type of auction evolved to be used for different type of purchasing.

I like the premise behind the Vickrey auction because of the gaming discipline that psychologically encourages bidders to keep fishing or playing. To this author what is important in today?s e-procurement platforms is that all features of all auction types ought to be available for use within a single event. By this, I mean we should be able to use all features of any auction type within a single event. An example might be using deciles, market baskets and units as a framework for a single event and have the flexibility to apply any feature such as reserves, ranking, indices, extensions and any other feature to each as well as each line item within an area. This flexibility drives the best possible savings for the host within one event.

Now back to the Vickrey.

According to Wiktionary the Vickrey reverse auction is named after a Canadian professor of economics named William Vickrey (1914-1996) who was also a Nobel laureate.? Vickrey’s paper, Counterspeculation, auctions and competitive sealed tenders, was the first of its kind using the tools of game theory to explain the dynamics of auctions. Any one that truly understand the magic of a reverse auction understands that the same type of psychology that drives gaming in a Casino drives the dynamics of a reverse auction.

Because there are so many types of reverse auctions it is important to develop an individual strategy for each category that you decide to take to market. Specifically to the opening question, a Vickrey auction allows for selling single items where the lowest bidder sells the item at the price offered by the second lowest bidder.

Now try and figure out how you would implement this strategy. Would you use ranking? If so, what impact might it have?

We look forward to and appreciate your comments.

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Part II of III. There are all types of Reverse Auctions.

Thursday, December 15th, 2011

In a reserve price reverse auction, the buyer establishes a ?reserve price?, the maximum amount the buyer will pay for the goods or services being auctioned. This is also sometimes called the desired price, or a ?qualification price?. Careful thought is required on the part of the retailer in determining their reserve price. I personally have seen retailers try to just use their existing price from their last contract. This type of practice may set unreasonable expectations, particularly if the market has changed dramatically in an upward direction since the last award of business. In today?s market, fuel would be a great example of something that you would not set a reserve price based on a previous contract if you wanted incumbent or new suppliers to take you seriously.

Traditionally, if the bidding does not reach the ?reserve price?, the buyer is not obligated to award the business based on the results of the reverse auction. However once the reserve price is met, the buyer is obligated to award the business to a participating supplier or group suppliers based on previously published auction rules.

Additional pricing considerations can be given to adding other price points or qualifiers in a reserve price reverse auction such as entering a market price. In the case of fuel, this may be from a price index such as OPIS. This information can be visible or blind to the supplier, but let?s the retailer compare a suppliers mark up strategies. This also offers a nice opportunity to calculate cost avoidance during an up market.

We look forward to and appreciate your comments

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Reverse and Forward Auctions are getting more attention now than any time in the last ten years.

Wednesday, December 14th, 2011

I was reading the Wall Street Journal yesterday by Francesco Guerrera titled Facebook?s $10B Question which was about their planned IPO. The article went on to discuss the possibility of using a Dutch auction for the IPO versus building a traditional book like most IPO?s. Quite franking I found it an intriguing approach and it has been used before for this purpose. I?m just not sure I would use the Dutch auction approach.

However that is for another discussion. The point of this post is that most companies using reverse and forward auctions are not even aware of the number of auction types available or how to use them for achieving specific purchasing goals. A couple of years ago I posted about the variety of auctions types and their use. I?m not even sure that most e-procurement companies could answer your question if you asked them to define the specific types and how you might use them for different situations.

There are all types of Reverse Auctions. If you check back tomorrow we?ll discuss a Reserve Price Reverse Auction which is one of the most common and how to use it.

If you can?t wait, contact a SafeSourcing Customer Services representative and they?ll be glad to discuss it with you.

We look forward to and appreciate your comments.

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The Source of Internal Fear for Sourcing Projects

Tuesday, December 13th, 2011

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

Fear is the anticipation of the unknown yet assumed negative action that is about to occur.?

As it relates to sourcing, there are two very important pieces to this definition that can begin to unlock why some sourcing projects fail internally before they ever begin: the ?unknown? and the ?assumed negative.?? Today?s blog is going to focus on these two items as you begin to think about your 2012 projects.

Decision-Making Control ? One of the greatest fears procurement departments encounter from their internal customers is the fear that they will lose control of the decision making process and that price will end up being the only thing used to evaluate the final decision.? The important thing here is a kickoff meeting to discuss the project and reassure the team that every aspect of the project from the layout, to the participants, to the actual award decision will be reviewed and approved by the business owners.? Showing the clear checkpoints for evaluation will help ease the unknown of what is to come.?

Strong vendor relationships ? Vendor relationships can be the cornerstone of many companies and one that initially can create apprehension for some sourcing projects.? The key at this stage, no matter what approach is being taken (RFI, RFP, RFQ, etc.) is that the team understands that the overall goal of the project is to collect the information needed to make the decision defined in the scope.? In the process of doing this, the business must continue to operate so establishing that communication with vendors (particularly incumbents) will be handled with the upmost care..?

Sourcing something new? ? The biggest unknown and thus a big source of potential fear is the sourcing of a new item or service.? It is natural for an organization to run into some road-bumps when sourcing something new, especially a new service.? They important key here is to budget the time necessary to understand the service or item and the companies that offer it.? Many times the flow for a project like this will collect internal information through a survey, move into an RFI or RFP and if applicable wrapping up with final pricing collection.? Take it slow and you will see that new projects can actually present faster timelines and quicker final decisions.

As with any project there will always be objections and concerns from members of your organization.? Taking the time to communicate the objectives with the organization, showing them specific milestones where they will be intimately involved is the key for success as well as taking the time to gather all of the details necessary to make a final decision.? For more information on overcoming internal objections of your upcoming 2012 sourcing projects, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

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You practice, I practice, and we all practice. And practice does not necessarily make perfect.

Monday, December 12th, 2011

However, what this author does know is that perfect practice does make perfect.

According to Wikpedia a best practice asserts that there is a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome than any other technique, method or process. So who determines that it is the best practice is open to conjecture. If my results are better than my competitor, it seems as though my practices would be the best. So maybe you should just begin by asking for examples of results and references.

I don?t believe that best practice is just following a standard way of doing things that can be carried out in the same way by multiple organizations. A best practice is a life long process that must evolve over time as the tools, business conditions, expertise and current processes require.

If one uses best practices, should not the result be an ideal state that a person or an organization set out to achieve in the first place. In fact if the process used is actually a best practice shouldn?t all of a companies customers use the same process. I?m not sure that this is ever a question one asks when looking for a referral about a companies service offerings. Please tell me about these companies? best practices. Are they consistent and carried out each and every time at each an every customer to the desired result. You know the answer to that as well as I do, it?s NO.

One way to ensure good quality results is to provide templates that evolve with use and can then be used over and over again and are reevaluated at the completion of each practice and changed again when need dictates. This then requires passing the practice on to other customers in order to insure integrity and validity of the most current process. This elevates the actual process beyond just a buzzword and moves a particular process in the direction of becoming a best practice that drives similar results on a consistent basis.

I will continue to call our services offerings high quality process techniques focused on continuous improvement that deliver anticipated results. Our customers, supplier participants and business partners will determine if they are best practices for them.

We look forward to and appreciate your comments.

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What came first the chicken or the egg?

Thursday, December 8th, 2011

According to Wikipedia the chicken or the egg causality dilemma is commonly stated as “which came first, the chicken or the egg?? To ancient philosophers, the question about the first chicken or egg also evoked the questions of how life and the universe in general began. One might add today that it evokes how we might protect and preserve it .

I received a call today with a question relative to yesterdays post, asking if we had any additional sources on humane treatment of farm animals. We discussed a few suggestions or areas where they might look in order to begin to understand and develop humane sourcing procedures.

We actually discussed the subject in some length. At least in more detail than I can cover in this post, but I suggested for starters that they visit www.americanhumane.org. American Humane Certified protects farm animals by working with producers through the groundbreaking American Humane Certified? farm animal program (formerly known as the Free Farmed program). American Humane Certified guarantees consumers that the products they select are from animals that were raised and treated humanely.

This site goes well beyond the humane treatment of just farm animals and is a great educational resource for procurement professionals and other associates as well that are interested in humane treatment in general.

We look forward to and appreciate your comments.

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Did you know that chickens used to wear sun glasses?

Wednesday, December 7th, 2011

A lot has evolved in animal safety, and chickens don?t wear sunglasses any more, but go back three quarters of a century when my grandfather owned one the largest chicken farms in the northeast and they did and it was also to keep them safe.

According to the Optical Vision Site. – Sunglasses for Chickens! They were invented in 1939 to control cannibalistic behavior of chickens. According to blame it on the voices the sunglasses were held on the chicken?s beak with a cotter pin through the nostrils of the bird.? Chickens are provoked by the sight of blood and will peck at each other, eventually killing off much of the flock. These red lenses prevented chickens from seeing the red blood and calmed their behavior. These have not been manufactured for many years and we do not have any available for sale. These glasses are now considered a collector?s item.

If you want to learn more about the Good Egg Project please visit their website.

We look forward to and appreciate your comments.

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