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.)
5. Czech Republic
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
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.
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.
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
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.
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.
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.
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.
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.
We look forward to and appreciate your support.
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.
Today’s rant is from Ronald D. Southard, CEO at SafeSourcing
I’ve been reading a lot lately about the fact that overall cost reduction is dead and that maintaining cost or cost containment is where companies should be focused. The logic behind this conclusion is that many of the indictors of the potential for savings such as inflation, crop availability and demand that drives current pricing models will never be what they were in recent history. While I review this data on a daily basis and the premise for the argument has merit, over all I don’t buy it and if I did I would not be as passionate about what it is that we do for a living at SafeSourcing.
The reason I disagree, is that so many companies do not or have not used the type of advanced eProcurement tools that are available to them today in order to compress current pricing. While many best in class procurement practitioners that use the most current generation of eProcurement tools may have squeezed or compressed pricing within their supply chain, the fact is that many have not. Additionally, many of these companies have not renegotiated their contracts for years in order to take advantage of the prices that may have been available to them. Although there supplier may claim to have shrinking margins, the question that needs to be asked of the supplier is what is my margin to you compared to other customers that you service. Another issue that flies in the face of this opinion is that there are suppliers out there that may want a company’s business and as such are willing to take at a lower margin with the hope of growing their wallet share with this customer over time. The fact is if you don’t ask or have never asked, you will never know.
I have always believed that it is possible to improve earnings dramatically though the use of modern eProcurement tools that continue to regress in price as a result of advanced technologies. In the retail segment I have posted examples that show how companies can improve earnings by greater than 50% by just focusing on 20% of their total cost of goods. This process will improve gross margins and net earnings. The issue that is not generally discussed is how to prove this.
The simple fact is that the P&L from a company’s prior year never quite looks like the P&L from the current year, as companies continue to evolve their programs for customer acquisition and growth. Examples could be new marketing programs, branding initiatives, new formats, new product strategies and mix as well as a host of other initiatives. Unfortunately, these programs are not always tightly linked throughout an organization so that what a procurement department is focused on directly reflects itself in a side by side P&L comparison year over year. An example of this might be special board driven capital programs for millions of dollars that negatively impacts earnings, when the procurement department can demonstrate in a very real way that they took millions of dollars out of the cost of goods resulting in direct cost reductions. If the capital program which was board approved is 3 times the size of the savings generated by cost reduction, guess what earnings will look like if revenue did not grow dramatically. The answer is negative earnings. The fact is that the procurement department may have exceeded their plan for the year and in fact been paid their annual bonus. But, because the entire organizations goals and alignment are not tightly linked the savings get lost in the data. Unfortunately this is not an uncommon issue.
I have not even discussed the expense area in this post.
If you’d like to learn how to address this issue within your organization, please contact a SafeSourcing customer’s services representative.
We look forward to and appreciate your comments.