Archive for March, 2013

May the reason for Good Friday & Easter bring the world Peace!

Friday, March 29th, 2013

good friday photo: Good Friday good.jpg

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Trading with the European Union (EU) Countries.

Thursday, March 28th, 2013

Today’s post is by Ronald D. Southard, CEO at SafeSourcing.

I like to read a lot, most CEO’s do. Some studies say that CEO’s read a minimum of 50 books per year. That certainly does not count the amount of trade periodicals, news media, white papers, blog posts and leisure non book related material I know we also read. After all how else would we keep up with what’s going on in our industries and the world. All of this helps as a foundation to strategic thought that is critical to our company’s evolution.

During my reading, it is probably of no surprise to anyone that much negative has been and will continue to be written about the European Union or EU. There have even been those that question sourcing from EU companies based on the potential for risk.

I thought it might be helpful for those of you that are not aware of who the EU is and why they are such an important source of import to the United States and in fact all of North America

Much of the information below can be attributed to the EU Website.

The European Union is the world’s biggest trader (surprised?), accounting for 20% of global imports and exports. Free trade among its members was one of the founding principles of the EU, and it is committed to liberalizing world trade for the benefit of rich and poor countries alike. The EU simply is committed to free and fair trade

The European Union is made up of the following 27 countries, with some being members since as early as 1952. Another 10 countries are in the process of becoming EU members. The population of the EU is 503,663,601 and unemployment is 11.9% (and we think we had issues in the U.S.)

1. Austria
2. Belgium
3. Bulgaria
4. Cyprus
5. Czech Republic
6. Denmark
7. Estonia 
8. Finland 
9. France
10. Germany
11. Greece
12. Hungary 
13. Ireland 
14. Italy 
15. Latvia 
16. Lithuania 
17. Luxembourg 
18. Malta 
19. Netherlands
20. Poland 
21. Portugal 
22. Romania
23. Slovakia 
24. Slovenia 
25. Spain
26. Sweden
27. United Kingdom

The goal of the economy of the EU is the creation of the single market and the corresponding increase in trade and general economic activity which has transformed the EU into a major trading power. The EU is trying to sustain economic growth by investing in transport, energy and research, while also seeking to minimize the environmental impact of further economic development. Gross domestic product (GDP) a measure of the economic activity for the period of 2010-2014 is listed below as a percentage change over the previous year with (f) equaling forecast.

1. 2010 2.1% 

2. 2011 1.5% 

3. 2012 -0.3% 

4. 2013 0.1% forecast 

5. 2014 1.6% forecast

This author believes that any global sourcing initiatives should have in the past and should continue in the future to include strong companies with head offices in the EU. It is incumbent on your sourcing team and partners to provide the proper vetting.

If you’d like to learn more about using EU based companies in your sourcing strategies, please contact a SafeSourcing customer’s services account manager. And don’t worry; our applications are multi lingual and being used globally. We don’t have to just do currency conversion and source in U.S. English, the application supports 67 languages including double byte countries.

We look forward to and appreciate your comments

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Watch out that your Spend Cube does not overwhelm you!

Wednesday, March 20th, 2013

Today’s post is by Ronald D. Southard, CEO at SafeSourcing.

I’ve participated  in a lot of discussions lately about spend cubes, which can just as easily be called data cubes, because that is all they really are.

Just what is a spend cube?  In its most simple form it is a data set that includes information that when analyzed as a whole provides a better or more completed  picture of your spend universe such as the expense category.  Spend cubes help to identify opportunities within a broad category of products and services that may require more attention including going to market and ideally, when they should. Because  a spend cube includes vendor data, causal data,  and  other specifics such as commodity pressures relative to the related cost center being impacted, spend cubes by their nature are very complex.

Unfortunately good spend cubes as well as improperly built managed spend cubes can deteriorate over time based on a number of factors. Probably the primary reason is that the originating data was not complete to begin with or scrubbed properly in the first place. This is kind of a one bad apple can spoil the whole bunch issue or the wrong data bumping into the wrong data. Another reason may be that you don’t have all of the data that you need and therefore the result sets are compromised or left to conjecture that creates improperly built and executed sourcing strategies. Additionally there is the analyst’s interpretation of the data and to this author that is really the most important part once you get the data sources right (think ERP). This person or group of persons needs to know their stuff (industry and products) in order for the data to be interpreted properly. It’s pretty easy to read a GL and determine what suppliers you have been spending the most with. It’s an entirely different thing to understand what the market for a commodity that impacts that particular spend was doing during the last contract versus what it is doing now and how it is trending for the future. All of this has to be attached to specific sourcing unit activity. Think of it this way?  If your vendor does not invoice you at the unit level, where will you come up with corroborated unit spend from regardless as to whether it is a can of beans or a fork lift.

Ask your solutions provider where your data should come from, who will be interpreting your data and what data they will be interpreting. Also thinks start small.

If you’d like to learn more about how to optimize your spend data, contact SafeSouricng.

We look forward to and appreciate your comments.

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Congratulations to our SafeSourcing 2013 SDCE “Pros to Know” award winners

Tuesday, March 19th, 2013

According to Supply and Demand Chain Executive, Honoring the supply chain’s best and brightest, Supply & Demand Chain Executive’s “Pros to Know” include professionals proactively working to improve their business’s functions in a number of categories—including manufacturing and production output; procurement; logistics; risk mitigation strategies; sourcing; financial operations; packaging and distribution; transportation; and much more.

Now in its 13th year, the Supply & Demand Chain Executive “Pros to Know” awards recognize both ends of the supply chain. This includes honoring the “providers,” which includes individuals from software firms, service providers, consultancies or academia who helped their supply chain clients or the supply chain community prepare to meet industry challenges. This also includes honoring the “practitioners,” e.g., those supply chain executives who demonstrated leadership by managing risk in the supply chain; provided competitive advantage; and delivered value to the bottom line.

SafeSourcing winners include the following.

  1. Ronald D. Southard, Chief Executive Officer
  2. Mark  A. Davis, Sr. Vice President and COO
  3. Deborah H. Wilcox, Vice President of Marketing and Professional Services
  4. Ryan J. Melowic,  Assistant Vice President  Procurement Center Of Expertise

We are very proud of our team’s award winners for 2013 and endeavor every day to provide the type of service our customers deserve that results in such awards.

To speak with one of our pros please contact a SafeSourcing customer services account manager.

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Companies can have continuing success when re-running prior e-procurement events.

Monday, March 18th, 2013

Today’s post is by Ron Southard CEO at SafeSourcing Inc..

There are creative techniques that can insure the sustainability of your strategic sourcing or reverse auction events after your first successful run. Since you have already conducted or should have conducted your detailed discovery and analysis, a robust supplier database such as the SafeSourceIt™ Global Supplier Database should permit you to do the following.

Conduct a detailed supplier discovery
Rank suppliers
Size
Experience
References
Environmental certifications
Safety Certifications
Coverage area
Develop a three year supplier game plan
Develop a three year time line  for all categories
Identify suppliers for each event over the three years
Develop a three year supplier rotation schedule for those suppliers.
Role play internally  each year supplier scenario for each category
Ask the following questions
Who will you invite and why
Keep in mind the unique benefits of distributors and manufacturers
Discuss award the business strategies such a multi-vendor or regional
Review alternative scenarios
Review impact on non-awarded suppliers
Determine which suppliers will be invited back and why such as prior incumbents, recent winners and  strong regionals
Determine what new suppliers from your database search will be invited for the next rotation.
Don’t invite too many, don’t invite to few.

If you’d like to learn more about creative strategies to keep your supplier participation fresh, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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Why are there so many people saying there are no savings available today when using reverse auctions tools?

Thursday, March 14th, 2013

Today’s post is from Ronald D. Southard, CEO at SafeSourcing

The following are just a few examples of some recent savings:

1.  29%   Computer Equipment

2.  24%   Landscaping

3.  44%   Payroll Processing

4.  21%   Packaging

5.  34%   Office Furniture

6.  25%   Bottled Water

7.  44%   Drug Tests

8.  22%   Shipping Supplies

9.  41%   Background Checks

10. 25%   Handheld Scanners

11. 24%   POS Hardware Maintenance

Here’s a little bit more about SafeSourcing.

SafeSourcing is an eProcurement company offering a complete Procure to Pay suite of applications. The heart of our family of products is our popular SafeSourceIt™ reverse auction technology. We can help you reduce cost, improve efficiency and extend the reach of your procurement team with results that can be referenced by executive suite contacts typically generating an ROI of greater than 10X that is immediately measureable in the current financial quarter.

If you’d like to learn more about reducing your costs, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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The ebb and flow of business and the impact on your supply chain!

Wednesday, March 13th, 2013

Today’s  guest post is from Steve Schwerin and account manager at SafeSourcing

Have you ever noticed how members of our media often only start to form consensus on current events when it is too late to do anything about them?  You will see an article here or there about a topic until all of the sudden the topic is everywhere.   The fact is that the chattering class is not forecasting or managing risk for your business; you are.  The burden of forming a coherent picture out of fragmented information falls on you and your team including your procurement professional.

I came across a few articles recently that caused my mind to wander onto how sourcing strategy continues to evolve.  While the subjects of the articles in question varied, they spoke to the need of forward thinking in business.

One article from the New York Times contrasted just-in-case vs. just-in-time supply chains, another from the Economist was about how growth in India is heavily government subsidized, while Bloomberg reported that Ford is reshoring some of its engine work to a plant near Cleveland, Ohio.  All spoke to reasons why business is constantly in flux.

Labor costs approaching threshold:  Low-cost labor in China and India has been the rage for at least two decades now.  Will this continue indefinitely?  If you merely take what you read at face value, you might be led to believe this.  That being said, as over-seas labor costs rise, what is the threshold where labor savings no longer offset the extra hassle and overhead?

Uncertain growth:  Sure, China and India have grown rapidly.  Does this mean they will continue to grow at the same pace indefinitely?  Again, if you take much of the news over the past few years at face value, this is what you might think.  One risk is that the economies of China and India are heavily subsidized; this certainly cannot last forever.  No one wants to be left holding the bag when this ride comes to an end with no manufacturing or vendor footprint in the U.S.

Turnaround Time:  Manufacturing overseas means slower turnaround time.  For some products, this does not matter.  For many, though, time sensitivity is a very competitive issue.  Will this apply to more and more products in the future?

Transportation costs and time:  Transportation does not just include fuel costs, though fuel costs do continue to rise.  Transportation costs also include labor, machinery, taxes, fees and time.

The time has come where businesses like Ford are responding to these changing costs and risks.  Of course, Ford is not making its facilities or procurement department available to you.  There are other resources available to you these days, however.  Why not work with procurement professionals to negotiate better service or lower prices from suppliers here in North America?  The nominal price might not be quite as low as something from India or China, but what is the overall value?  I’m sure you already believe that any successful procurement strategy is not built on media consensus.  We can help you act on that belief.

If you’d like help with your sourcing needs, please contact a SafeSourcing customer services representative.

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The high cost of choice

Friday, March 8th, 2013

Please enjoy today’s guest post from Michael Figueroa and account manager at SafeSourcing.

If you live in the USA, you are probably accustomed to having an extremely high level of autonomy in how you shape your daily existence with the choices you make. Our entire culture has great emphasis on freedom, and not just in the areas of life, liberty and the pursuit of happiness. Peripherally, we sometimes grandfather this concept into the areas of freedom to choose user experiences, social networks, flavors, styles, displays, and information inputs. Living in the information age has left us more options to choose from than we often know what to do with. There is so much information available in fact, that Google, Microsoft and others, some of the biggest companies in the world, afford their existence off of our need for someone to help us aggregate our information.

There are many opinions about what will come after the information age, though a common theme around most of them is prioritization, organization, and clean-up.  Theories about this “clean-up age” revolve around the recognition that our extreme availability of choices can have high costs for those who haven’t been given the tools to manage it. We have no shortage of problems or information about them, but have not necessarily been taught the logic skills to understand, given the algorithms to sort and identify, or focused on the vision necessary to prioritize.

This overflow of options and lack of direction creates a situation in which we have high opportunity cost. When we only have one choice, we don’t have the opportunity to be disappointed with our choice because there was no better alternative. But sometimes we make decisions and realize after the fact that there was a better alternative. Sometimes the array of options is so huge and complex it is overwhelming, and the decision making process itself is costly, especially when decisions are made out of exasperation instead of deliberation. The more opportunities we have, the greater potential we have to achieve satisfaction, and conversely, the most potential to feel unsatisfied with the choices we make after the fact.

Some of the major considerations we make at SafeSourcing when analyzing purchasing data are;

• What are the client’s objectives

• What are the common denominators

• What is the baseline

This allows us to provide information in a format that is relevant to the project, establish commonalities for side by side comparison, and understand where that takes us in comparison to our starting point. The result is changing information from being paralyzing, to information that is actionable. We take the costly array of choices you have from being dangerously unknown, to understandable for what sourcing choices can be Safe.

To learn more about sourcing safer products and services please contact a SafeSourcing customer services account manager.

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The stalemate in Washington resulting in spending cuts could literally make you SICK!

Thursday, March 7th, 2013

Today’s rant is by Ronald D. Southard, CEO at SafeSourcing!

We (I am positive that I am speaking for almost everyone) are all extremely tired of the partisan politics that are playing themselves out in Washington D.C. We are all inundated daily with related information which is more focused on a group of adults trying to get along, than doing what it is we elected them to do. We see this play out daily on TV, in newspapers, on the internet and if we manage to turn on the radio in our car between appointments, we hear it there too. This in and of itself can make one sick.

However, I am writing about another type of sickness, one that can make the general population extremely ill (food borne illness) and in severe cases can result in death. You might be asking at this point what the heck does this have to do with procurement. The answer is a lot, think food safety programs; which are part of most companies corporate social responsibility initiatives (CSR) and driven by the Global Food Safety Initiative (GFSI) and Safe Quality Foods (SQF). For retail companies that sell repackaged foods, and for hospitality organizations  that prepare and serve food to the general public from quick service to fine dining establishments as well as  the suppliers and distributors that source it and provide it to them for use. This process is a huge undertaking for these companies and requires government support.

I was checking out Reuters earlier today and came across a piece by  Charles Abbott titled USDA chief says meat inspector furloughs still months away” What’s scary is that  Agriculture Secretary Tom Vilsack said the furloughs to take place later this year might only be 11-12 days for meat inspectors. The Obama administration says it could be as many as 15 days. If this were to include all 8400 inspectors, that would be up to 126,000 days or 345 man years.  That’s a lot of work inspecting or reporting on inspections that is not going to be done at a time of the year consumption trends up because of the upcoming holidays. The numbers sound a lot scarier when you look at them this way. So here’s to our collective health.

If you’d like to learn more about how SafeSourcing supports safety in the procurement process, please contact a SafeSourcing customer services account manager.

We look forward to and appreciate your support.

 

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Offshore, Nearshore, Reshore, Backshore. Fore Sure!

Wednesday, March 6th, 2013

This post is from Ronald D. Southard CEO at SafeSourcing.

I have posted a number of times over the last five years on the supposed benefits of Offshoring, Nearshoring and now Reshoring or Backshoring. I’ve even taken a look at the environmental impact of offshore tonnage being shipped via ocean bound freight and the resulting impact to our collective carbon footprint from that freight and the diesel they use. Interestingly, it is greater than the damage from all of the emissions of all the cars in the U.S. combined. I have even discussed the creative use of containers that were no longer being used at one point because of the cost to reship them. In fact some of them have become creative housing projects while others were just melted down.

I like detail, and I’m not sure if we looked at all related costs of offshoring in the first place would have made as much sense if in retrospect we had all of the information available to us today (Big  Data; UH!).

So now  companies are pursuing reshoring or backshoring because the cost of producing products  in places like the Asia Pacific region are going up substantially as the emerging middle classes in those areas are demanding better wages, benefits and work conditions.

I was reading a survey  in the USA TODAY MONEY section attributed to  Schneider Associates that indicated that the statement “Made in USA” being the most influential attribute when buying a new product had increase from 48% to 62% during the period of 2008 to 2012. That’s a 29% increase in 4 years. And, it indicates that almost 2/3 of the respondents agree. That is a big number as companies try to increase their wallet share from their top decile customers. Quite frankly, we do not have companies ask us very often any more if we can bring in suppliers from off shore to participate in eRFX events for products and raw materials. This can only mean that these companies are in fact reading their tea leaves (customer data) and doing as their customers ask. The answer is BUY AMERICAN! And that should include Mexico and Canada which after all are part of America and benefit with the U.S.  from our NAFTA arrangement.

If you’d like to learn more about how SafeSourcing can help you find sources of supply in North America that you may not be aware of, please contact a SafeSourcing customer services representative or visit our SafeSourceIt™ Supplier data base query tool.

We look forward to and appreciate your comments.

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