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Archive for February, 2012

Part II of II. New Technology: Helping Businesses to Compete !

Tuesday, February 28th, 2012

In yesterday’s post, this author asked, “With so much new technology being introduced every day, how are you using it to help your business be more competitive?”  I now would  like to offer a little more detail relative to the following four areas you’re your consideration.

The Cloud  – There have literally been thousands of articles, an equal numbers of blogs, including ones on this site like this one about the benefits of cloud computing.  Cloud computing allows companies to have all of the advantages of an IT data infrastructure just like the Fortune 100 companies without the overhead of staff to support, equipment to run, software to manage it and worries of assuring it is always available.  These are all of the financial reasons why cloud computing makes sense for companies but the  feature advantages are equally important as companies with resources all over the world can more easily collaborate on projects through the virtual environment clouds create.

IP Phone Systems – On the heals of discussing what can be done with a “cloud” network structure it makes sense to bring up IP phone service companies.  Tens of thousands if not millions of dollars were typically required for a company to install a Private Branch eXchange (PBX) for their company.  The complexity of maintaining such a system either required a fulltime expert employee or high-priced consultants in the past.  Now companies can have all of the features of those PBXs at hugely reduced prices through companies like RingCentral and Windstream who tailor plans for businesses based on their needs and budgets to give them everything they want.

Dashboard Communication–  The days of HR departments running around answering phones and letters about benefits, providing forms, and printing expensive newsletters is quickly becoming a thing of the past as companies are beginning to understand how cost-effective internal portals and dashboards can be to handle all of this traffic.  Third party companies that offer HR portal solutions allow employees to service many of their own needs which frees up a typically overloaded HR staff to concentrate on the things that matter most to the business.

Virtual Staff–  All three of the above mentioned items are useful tools that aide in companies being able to employ more and more virtual employees.  The financial benefits of virtual employees have long been documented as have the added benefits of increased and quality work done by virtual employees who are allowed to better control the flow of their work day.  Advances in cloud technology and video and webinar offerings make employing virtual staff even more practical to do.  It is also important to note that when companies increase their virtual staff they instantly remove the geographical boundaries that sometimes prevent them from going after the best employees across the country. 

As small and medium companies increase their contribution toward our Nation’s economy, their ability to compete at cost-effective levels will become increasingly more important and technology will play a huge role in them getting there.  For more information on finding vendors in any of these four areas or in other areas that might help your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

Part I of II. New Technology: Helping Businesses to Compete !

Monday, February 27th, 2012

With so much new technology being introduced every day, how are you using it to help your business be more competitive?

Technology is not the only thing that makes businesses run: we all know that regardless of what our IT departments tell us.  Technology, however, does make it possible for businesses (especially small and medium-sized businesses) to do things for a few thousand dollars that would have cost millions just 10-15 years ago.

This two part post will focus on four specific areas where small businesses including startups can leverage newer technologies in ways that can help them be more competitive at a fraction of historical costs.

These areas are:

1. The Cloud
2. IP Phone Systems
3. Dashboard Communication
4. Virtual Staff

To learn more detail about these specific technologies and how SafeSourcing can help you find providers of these services for your company, check back with us tomorrow for Part II.

We look forward to and appreciate your comments.

What e-procurement KPI’s are on your dashboard?

Friday, February 24th, 2012

At a minimum the following data fields; start date, event date, award date, letter of intent date, contract date, initial delivery date, total low company quotes, total all low quotes, award of business quotes are the basis for e-procurement KPI’s that will help to measure how your procurement department is performing and progressing over time and where opportunity for additional savings exist.

Wit the above data you can measure the following daily by department and associate assigned to that project. You should be able to actually click on any of the KPI’s to drill down for further analysis and causal data.

1. Opportunity lost cost results
2. Timeline analysis of a project launch to event, letter of intent and contract
3. Low quote company versus all low quotes or missed savings
4. Average days to complete event
5. Average days to complete award
6. Average days to complete LOI
7. Analysis of supplier count and line tem count versus where savings were maximized.
8. Number of events occurring above and below average.
9. Average or mean performance by KPI
10. Deviation or the best and worst events by KPI

If you had these KPI’s on your desktop of mobile dashboard, how much easier would it be for you to manage your business? If you don’t have this data contact SafeSourcing to find out just how easy it is to retrieve.

We look forward to and appreciate your comments.

“Reduce (All) Spend”

Thursday, February 23rd, 2012

Maximizing potential savings requires that all spend be considered as part of your strategic sourcing initiative. While you may think that some of your categories are too small to qualify for inclusion, I would like to point out that these categories can and SHOULD be included.

Combining individual items with lower spend totals is a great way to both maximize savings potential and streamline your purchasing. If you would like to be able to consider more of your spend for inclusion in your strategic sourcing initiatives, your first step should be to talk to your sourcing partner.

You might find that you are looking broadly at a category and that many of the items you purchase are in smaller quantities or otherwise represent a small amount of spend annually. While these opportunities are often overlooked or passed over in favor of higher spend opportunities, an effective purchasing leader understands that every opportunity must be considered to truly maximize savings. In these cases, historical RFx data can be used to recommend similar or overlapping purchase items that might not have initially been considered. It may be that this data forces you to look beyond the typical restraints of accounting categorization, department or even vendor.

Once you have taken the step to find these similar items, you will see your average savings increase as vendors are given an opportunity to compete for larger volumes of new business.

Additionally, combining these items may also have the effect of streamlining your purchasing. As you have now offered more items to vendors in one RFx event, you may find that it is more favorable to award the purchases to fewer vendors. The ripple effect of efficiency will continue throughout your organization.

We look forward to and appreciate your comments.

Is the economy finally bouncing back?

Wednesday, February 22nd, 2012

Today’s post is from Danielle Begley Account Manager at SafeSourcing Inc.

The past few years have proven to be quite a struggle as the US economy battles recession.  Nearly four years later, there appears to finally be a small glimmer of hope.  The Dow is continuing to rise and has almost edged past a high that hasn’t been reached since May of 2008.  In addition to the rising financial markets, the job market is beginning to become revitalized.  As a major culprit of fear and justified doubt over the past few years, the catastrophic economy of Greece and downturn economies of neighboring EU countries may see the light as a bailout deal appears to provide pseudo salvation to the global economy.

What could an upturn economy mean for your company; Increased purchases?  New Hires? Have you discussed new projects with your strategic sourcing partner in order to benefit most efficiently from a potential rising economy? If not, now is the right time to implement a plan to initiate new category expenditures, and evaluate if your service providers are providing the best value for the cost. 

A resolution in the EU coupled with continued evidence of an economy on the rise may be the jumpstart the US has awaited to bounce back from recession.  Planning in advance will greatly increase your ability to succeed in a thriving economy.

For more information on strategic planning please contact a SafeSourcing  Customer Service Representative for more information.

We look forward to and appreciate your comments.

Twenty steps to running high quality e-procurement events.

Tuesday, February 21st, 2012

E-Procurement events have been around since the late 1990’s and are commonly referred to as reverse auctions or events. These sessions can from time to time also run as forward auctions in order to reduce over stock conditions and reduce shrink. Regardless of the naming convention used there are certain rules which if followed will create higher quality events for the retailer and the supplier? This will result in creating better savings opportunities or cost avoidance in a tough market. The importance of focusing on a clear process will increase event participation. This focus on quality will be recognized by your existing trading partners and potential new sources of supply, and will keep them coming back in the future to compete fairly for your business.

1. Executive sponsorship is mandatory
     a. This is required at the CEO, CFO, CPO, CLO or head of the supply chain.
2. Get the entire buying organization together for a kickoff session.
3. Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4. Discuss and agree on success criteria.
5. Every event is not a homerun. Singles and doubles score runs.
6. Create a fun environment.
7. Consider prizes for the most creative use of an auction.
8. Use scorecards by department with percent of savings.
9. Discuss the meaning and importance of corporate aggregation.
10. Hand out E-RFX templates to gather existing product specifications.
11. Put a time requirement on data collection.
12. Gather an accurate list of your present suppliers.
13. Work with your sourcing company to identify a top 100 list of events.
14. Calendar the events.
15. Prioritize by dollar value, date and strategic value.
16. Conduct department level discovery meetings of 30 minutes to an hour.
17. Investigate existing contract language.
18. Look for auto renewal (evergreen) language roadblocks.
19. Determine alternate sources of supply with your sourcing company.
20. Develop an E-RFX rules and instruction template and post with each event.

Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.
 
We look forward to and appreciate your comments.

Environmentally Preferable Purchasing (EPP)

Monday, February 20th, 2012

This post is for her and a good place to get started before her customers find out.

For guidance with your green purchasing practices, look no further than to our federal governments Environmental Protection Agency or EPA.

The United States Environmental Protection Agency (EPA) has a number of programs that as a result of government use offer companies a great opportunity to educate themselves in support of their social responsibility initiatives.

One of those programs, the Environmentally Preferable Purchasing (EPP) helps the federal government “buy green,” and in doing so, uses the federal government’s enormous buying power to stimulate market demand for green products and services. Geared first to help federal purchasers, this site can help green vendors, businesses large and small — and consumers. Use the easy index to:
 
• Find and evaluate information about green products and services;
• Identify federal green buying requirements;
• Calculate the costs and benefits of purchasing choices;
• Manage green purchasing processes.

The U.S. EPA website www.epa.gov contains a wealth of information relative to finding and evaluating green products in any number of categories from construction to office supplies. If you truly review and evaluate the green portion of your company or individual social consciousness regularly the  U.S. EPA site is a great place to start.

We look forward to and appreciate your comments.

How do you define full service reverse auction?

Friday, February 17th, 2012

I’m sure that every solution provider one would ask might have a slightly different definition.

From my perspective, a full service solution provider should be able to create, execute and support all auction activity including but not limited to the following.
1. Assistance in selecting Auction categories
2. Market insight
3. Determine the timing of category auction
4. Identification of potential quality suppliers in addition to existing
5. Building on-line auctions
6. Supplier contacts and training
7. Execution of live bids
8. Trouble shooting during live bids
9. Compiling and communicating reports within 24 hours
10. Award and Non-Award notifications to Suppliers
11. Providing ongoing customer support
12. Monitoring Supplier performance
13. Feedback from Retailers/Suppliers
14. Analyze the quality of each auction

The above deliverables if not executed in a full service program will result in less than maximum results and potentially failure of your program.

We look forward to and appreciate your comments.

Are reverse auctions a good tool to use with the retail distribution channel cost plus model?

Thursday, February 16th, 2012

According to Wikipedia Cost-plus pricing is a pricing method used by companies. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that one first calculates the cost of the product, and then includes an additional amount to represent profit. It is a way for companies to calculate how much profit they will make. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.

Once unit level cost has been established for the distribution of products it’s easy to turn that into a percentage and add it to the price of a product coming up with a distributed unit price or category price. The most important part of this pricing exercise for the distributor is to get the distribution costs correct. This can include price of storage, freight, length of travel, driver cost and any number of other costs. This is an area where a distributor can lose a lot of money if they are not very careful

So, are revere auctions a tool that can help distribution companies? The answer is a clear yes both above and below the gross margin line. If you like to know more please contact me at ronsouthard@safesourcing.com.

Who knows, if you partner correctly you might be able to improve your costs and your distributors margins as well.

We look forward to and appreciate your comments.

How does your organization ensure that every award of business is implemented or delivered as awarded?

Wednesday, February 15th, 2012

Stopping contract leakage is one of the most difficult tasks in the entire procurement lifecycle. To begin with, you need to understand where the data to be measured is kept. Good luck if you do not have a contract management solution. Once you have a clear idea as to the location of the data, it needs to be looked at on a regular basis in order to insure leakage is not occurring. The question here is what constitutes leakage and how often it should be reviewed such as monthly depending on contract language. Most contract management systems have alerts that can be triggered as frequently as required.

If you had a contract management system, most of the following list speaks too many of areas in which contract leakage can occur and can also be measured. These discrepancies happen in all companies large and small. If you are aware of them, capture them and report on them there is a reasonable possibility of controlling them. Again, you can’t do it without a contract management system

1. Buying without a contract. 
2. Expensing something outside of a contract
3. Having multiple contracts in place:
4. Executing a new agreement when one is already in place
5. Paying a price different from the contract
6. Delivery variances
7. Quality specifications variances
8. Making payments at a prices different from the contract
9. Scope creep of the product or service purchased without change control
10. Resulting Invoice discrepancies
11. Missed volume discounts  
12. Insurance discrepancies
13. Shipping discrepancies 
14. Expired contracts resulting in price uplift (evergreening)
15. Overtime Violations
16. Material discrepancies
17. Sub Contractor discrepancies

Don’t work hard to drive benefits from your procurement organization and then lose much of what you have gained due to contract leakage. Ask your e-procurement solutions provider how they can help.

We look forward to and appreciate your comments.