Archive for December, 2011

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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Unbundling the Bundle

Monday, December 5th, 2011

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

As I was watching football this weekend I paid special attention to a commercial by a leading Voice-Over-IP company who showed a couple getting robbed of everything including the kitchen sink to symbolize the hidden charges they were getting hit with from their current phone company ?bundle?. With a message asking why consumers don?t unbundle their services, the same question could be asked of companies across the globe on why they continue to receive invoices for thousands of dollars with only one line item to go with it and no detail into what that bundle consists of.

Today we will be taking a look at some of the disadvantages when taking the ?bundled? approach with any of your services.?

Unknown charges ? One of the biggest problems with bundles is that you don?t know exactly what you are paying for.? Vendors often state the benefit of the bundle is that you get discounts for buying more features or services together.? In reality, changes to any aspect of your bundle are at the mercy of your vendors because of the lack of detail you are seeing.? Anything about your bundle that could save you money due to vendor improvements or process changes are difficult to recognize due to the lack of your visibility into what you are paying.

Comparing vendors ? As inevitably happens in the sourcing world, the time will come when vendor offerings need to be compared against the market to ensure competitive pricing.? Bundles make this difficult to do because of the lack vision into what is being paid for everything.? Without these details there is no vision into where the incumbent is hirer or lower than other vendors on the market making your negotiations on those pieces almost impossible.?

Multi-Award issues ? Not every procurement project will lend itself to being awarded to more than one vendor (i.e. services vs. equipment), but without the breakdown of what is being paid for in a ?bundle?, the potential to award pieces to more than one vendor, and in the process getting greater savings, becomes extremely difficult.? Whether or not multiple vendors are used, having the vision into what each piece of your bundle costs is an important decision-making tool for the procurement team to have.?

Most bundles are designed and presented in a way to save money for the customer, but the danger is when that bundle is actually being used to hide fees, charges and potential savings under a one line item payment.? For more information on the bundles you are paying for and ways to examine whether unbundling those services is right for your company, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.?

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If you?re a seafood buyer I?m sure you are aware of BAP or at least you should be

Friday, December 2nd, 2011

Today?s post is by Ryan Melowic Director of Customer Services at SafeSourcing.

To sponsor responsible practices through the aquaculture industry, the Global Aquaculture Alliance organizes the development of Best Aquaculture Practices (BAP) certification standards for farms, processing facilities, feed mills and hatcheries.

This certification for seafood means the facilities that raised and/or processed the seafood adhere to the Best Aquaculture Practices standards for responsible aquaculture.? BAP standards cover the environment, social responsibility, animal welfare, food safety and traceability.

The BAP mark currently appears on packages of frozen and prepared tilapia, shrimp and channel catfish.? The mark contains one to four stars, which represent the level of program participation.? In addition, a certification number is on the right side of the mark indicates where the product was processed.
Best Aquaculture Practices certification has been adopted by major companies in the global food market at the wholesale and retail levels. Top Companies have required Best Aquaculture Practices certification for their shrimp suppliers. Additional companies in the United States, Canada and other countries support BAP in various ways.

For more information on companies that hold this certification, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

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We plan to launch a procurement department. Now What?

Thursday, December 1st, 2011

The following twenty bullet points are certainly not a complete list, but are areas that should be considered for any supply chain re-structuring including what is needed to drive success. These points should help frame your thought process and get you headed in the right direction.

1. Request CEO and CFO support.
2. Empower the Department.
3. Structure and staff the department for success. Not just one person.
4. Plan a detailed review of all contracts.
5. Plan a detailed review of all suppliers.?
6. Improve the performance of all suppliers or replace them.
7. Find a way to gain access to additional sources of supply.
8. Improve your view of all spend categories. Technology, Technology,? Technology.
9. Review any off shore and near shore sourcing.
10. Meet with all departments that controlled historical spend.
11. Review all sourcing methods being used by others today.
12. Review all Environmental strategies
13. Review all Product Safety strategies
14. Collect or create a product specification library
15. Conduct detailed category discovery session
16. Review lower cost SaaS oriented solutions that can ramp up quickly.
17. Develop and education plan.
18. Outline a plan of where you will be in 90 days, Six months and a Year.
19. Develop short and long terms goals that support your plan.
20. Build a department that delivers zero incremental cost to the organization.

As you use the above list and grow it, it is important to remember that the job of a procurement management leader is to think outside of the box and educate while looking for innovative ways to do things better, faster and at a lower cost. And to hopefully create an environment that will inspire co-workers while doing that.

We look forward to and appreciate your comments.

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