Archive for April, 2014

What is Collaboration? Part II of III.

Wednesday, April 30th, 2014

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

This post is an excerpt from Ron’s most current White Paper titled The Art of Collaboration

Retail collective buyer organizations and consortiums have evolved primarily in order to compete with the mega retailers and category killers in support of independent retailers.

These business structures have been around for a long time. Many have evolved to use cutting edge negotiation and procurement tools. Their retailer members are also benefiting from the use of these tools in order to reduce their net landed costs in many different ways.

These types of organizations can go by many different names, such as wholesaler, collective buyer, consortium, cooperative, share groups, and more. Even large Private Equity Companies that control very large portfolios of vastly disparate companies have adopted these methods and they all have one thing in common; they endeavor to consolidate purchasing volumes for a wide array of business structures to try and compress or contain cost in order to improve financial performance.

In the retail vertical, companies may actually belong to several different buying groups because their primary group does not offer expertise in a certain area or category. Examples can come from direct or indirect spend and can be as specialized as safety equipment and technology or a wide variety of specialized sectors like legal services.

Buying groups and consortiums are also evolving and beginning to focus on mixed markets where it makes sense. Historically, these groups tended to be vertically focused, such as a drug industry consortium with the members generally representing the drug industry only.  Some consortiums are beginning to market themselves outside of their vertical to retailers or other companies who want to take advantage of learned expertise in the categories that are common across more than their own vertical and offer increased volumes. An example of this might be drug stores sourcing very similar products that health care organizations such as hospitals source. Although this may seem like a stretch for most, it is now very common within retail for non-vertical specific players to work together.

Today’s advanced e-negotiation or e-procurement tools, such as the SafeSourceIt™ eProcurement family of products, make it much easier to accomplish collective buying and aggregating outside of a consortium’s initial area of expertise. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers through the use of supplier databases, like the SafeSourceIt™ Global Supplier Database, while also coordinating and participating in collaborative events from hundreds, if not thousands, of miles away. Suppliers now have an opportunity to earn business they did not know about and could not have competed for in the past.

All companies should ask their respective collective buyer organizations how they plan to make use of today’s advanced procurement tools, many of which are cloud based and offered in the form of Software as a Service (SaaS), which means they can be deployed almost immediately with no IT involvement and with extremely attractive ROI’s.  They should also ask what the GPO has to offer in terms of introductions to other companies beyond their current group for increased collaborative aggregation volume. This is also a significant benefit that eProcurement solution providers like SafeSourcing Inc. can assist with.

If you’re serious about reducing your cost of goods and services please contact a SafeSourcing Customer Services Account Manager and ask about our risk free trial

We look forward to and appreciate your comments

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What is Collaboration Part I of III?

Tuesday, April 29th, 2014

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

This post is a excerpt from Ron’s most current White Paper titled The Art of Collaboration

The fact is neither internal nor external aggregate collaboration is happening on a large scale in many companies and collective organizations. This is especially true in mid-tier or loosely organized larger national and multinational organizations.

The terms collaboration, collaborative partners, collaborative supply chains, collaborative commerce, and collaborative networks are often used when discussing procurement. It rolls off the tongue like everyone knows what they are talking about. According to Wikipedia, “Collaboration is a recursive process where two or more people or organizations work together toward an intersection of common goals,” and, “an aggregate is a collection of items that are gathered together to form a total quantity.”

Since collaboration can happen with groups or organizations of any size working together toward the same goal, it can also apply to virtually any business function. When we combine it with the word “aggregate” to form the collective eProcurement term “Collaborative Aggregation”, however, we arrive at something potentially meaningful.

Collective buying organizations and share groups often combine purchasing volumes of similar products and services in order to drive better discounts. Large companies often aggregate their purchases among departments and are doing the same thing across different operating groups or companies within a larger organization in order to drive economy of scale in purchasing.

The unfortunate truth is that not much out-of-the-box thinking or art is going on in this process. They are so involved in the process (weeds) that they cannot see the forest for the trees.

If you’re serious about reducing your cost of goods and services please contact a SafeSourcing Customer Services Account manager and ask about our risk free trial

We look forward to and appreciate your comments

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The Curse of the Comfort Zone!

Monday, April 28th, 2014

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

It never ceases to amaze me that as human beings we spend our entire lives searching for prizes, concepts, and goals only to achieve them and then find, much to our chagrin, what they promised only leads to new and sometimes bigger problems.  I believe that the concept of comfort is one of those sensitive areas whose very definition proves alluring and yet in practice can create problems for individuals and companies alike.

Let’s look at Merriam-Webster’s definition of comfort. 

“Comfort – a state or situation in which you are relaxed and do not have any physically unpleasant feelings caused by pain, heat, cold, etc.”

While this definition focuses more on the physical well being, I believe the definition of comfort stretches to the intellectual and emotional areas as well.  Let’s be honest though, reading this definition, who wouldn’t want comfort?  Taken to the next step, once achieved, who wouldn’t want to do whatever it took to stay in comfort, to keep in a “state or situation in which you are relaxed”?

Therein lies the trap of comfort because people begin to make decisions, overlook opportunities that involve risk, and shy from the “new” because they are afraid of losing the security of  the comfort zone.  When this happens the enticing nature of the benefits of comfort will create much bigger problems than the person or company ever faced before they became comfortable.

Does this mean comfort is a bad thing?  Definitely, not; it can bring a much needed break from an otherwise chaotic world if you are lucky enough to find it even briefly.  What is dangerous is when comfort slips into complacency and the mind starts looking at the risks associated with an opportunity with fear and mistrust rather than excitement and optimism.  Companies need to continue to look for the opportunities that will help them grow and get to new heights.  They need to examine longstanding vendor relationships they have grown “comfortable” with.  They need to investigate new technologies that could make them stronger.  They need to evaluate the mindsets they have when making decisions for the future to ensure they are not too entrenched in the “comfort” zone.

The comfort zone is nice and can be hard to break free of, but by moving on from a brief stay in this zone and into unchartered territories, the benefits will lead to stronger employees and business relationships and provide a stronger long term environment for your company based on weighing each risk and opportunity instead of investing that time trying to figure out how to maintain the comfort of the status quo.

For more information on how SafeSourcing can assist you  to break out of the “comfort zone” or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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A Brief History Lesson in 9/10 of cent for Gasoline

Friday, April 25th, 2014

Today’s post is written by Heather Powell, Manager of the COE Department & Project Manager at SafeSourcing Inc.

heather

 We have to go way back, approximately 1930, to when the oil companies were selling gas for, let’s say, 15 cents, and then the state and federal boards decided they wanted a piece of that to keep the roads going, so they added 3/10 of a cent. And the oil companies said, ‘Well, we’re not going to eat that,’ so they passed that on to the public.

Raising prices a penny would have been disastrous when gas only cost 15 cents. But why did it stick around?

They found out that if you priced your gas 1/10 of a cent below a break point, let’s say 40 cents a gallon, ‘.399’ just looked to the public like 39 cents…

You won’t find tenths of a cent on your credit card bill. Or even on the pump. But if you buy 15 gallons of gas at $3.299, you’re paying 13 cents more than at just $3.29. Since Americans buy 178 million gallons of gas a day, that’s a half-billion dollars more per year.

These types of details and hidden fees are what eat at the bottom line of companies. At SafeSourcing, Inc.  we find and bring out these levels of details for our customers when doing analysis for running Request for Proposals and Request for Quotes. For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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Who are we? Who are you?

Thursday, April 24th, 2014

Today’s post is by Alyson Usserman, Account Manager at SafeSourcing.

I started at SafeSourcing on February 17th. I had interviewed multiple times, and came in ready to learn. Whenever anyone is hired on for a job, friends, family, and random people ask, “What will you be doing?” Well, for some, that could be a potentially tricky question to answer. I found this question particularly cumbersome because, at the time, I knew what I would be doing, but I didn’t know. I didn’t know that this business is actually pretty tricky. For instance, when you say, “live reverse auction,” people have one of two reactions. Either they have no idea what you’re talking about, or they absolutely hate them because of prejudgment or a bad prior experience.

While having a conversation last night with Arbonne’s CEO, Kay Napier, she asked me how I currently supported my family. I told her that I work for a procurement company in Dayton, Ohio. She seemed shocked while saying to me, “I dislike things like that.” It’s a little daunting to have a CEO of a major company stand there and say that she dislikes your job. Talking with her more, I discovered that a past procurement company had promised more than they could provide in savings, a “fool proof system” that didn’t work, and overall poor customer service. She too, told me that she was shocked after talking with me, and informed me that I was a great saleswoman.

Sometimes, people prejudge a process before actually knowing anything about it. In procurement that is one of the main obstacles I deal with every day. I will call a supplier to see if they have a particular product and then I am asked, “What company is that, what do you do?” and they become focused on what we do when I am trying to ask questions of them, and their company.

SafeSourcing is a procurement party that is trying to help companies, not hinder them. For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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The importance of keeping your company’s e-procurement efforts consistent throughout the year.

Wednesday, April 23rd, 2014

Today’s Bog is by Ryan Melowic Vice President of Customer Services at SafeSourcing.

Every year we see it as  summer vacations and holidays approach, activity for sourcing events slows down quite a bit.  It is unfortunate to see because; there are so many lost savings opportunities.   What procurement departments need during vacation season is someone to fill in for their staff that is out of the office. 

SafeSourcing does the heavy lifting on e-procurement events.   The heavy lifting consists of the following:

1. Providing category knowledge to our customers that help them better understand the trends in the particular markets.
2. Identifying suppliers that are the right fit for each event category.
3. Delivering consistent communications to the vendors.
4. Consolidating and responding to questions during the project.
5. Training for event participants.
6. Support for the participants throughout the live event.
7. Detailed reporting on the e-procurement event.

With all this valuable support, the SafeSourcing team can be your company’s fill in during vacation season.  And, with a fill in, your company’s e-procurement will not slow down during vacation season and maximum savings potentials can be realized.

For further information how SafeSourcing can help your company realize savings twelve months a year, please contact a SafeSourcing Customer Service Representative to assist you today.

We look forward to and appreciate your comments

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The Art of Supplier Selection!

Tuesday, April 22nd, 2014

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

Each year companies spend millions of dollars researching markets and categories, and the suppliers that support them.  Some of this work is done internally and some of this work is performed by 3rd party strategic sourcing and research companies like Gartner or Forrester.  The goal of the research is always to understand who the players are, where they are strong, where they are weak and how they compare to other players in the space.  These results eventually help companies make decisions and are the basis by which presentations are requested and who should be invited to submit proposals for business.

The National Suppliers – National Suppliers are essential for almost any sourcing project, especially for those companies with a nationwide presence.  National players are usually the leaders in the industry and have a better handle on trends from coast to coast as well as the experience to lead big projects.  The downside to National players is that they are not always right for “niche” projects that need a very focused tool or service.  National players are also situated within the market and their customer base in a way that they are not always as hungry from a pricing perspective as some of their smaller competitors.  While National players can come with a higher price point, however, their experience and coverage usually make up for it.

The Regional/Sub-Category Suppliers – The next tier of suppliers is one that contains large regional companies or companies who focus on a big portion of an overall category.  An example of the latter would be if a company was looking at Maintenance, Repairs and Operation spend and wanted to include some companies that specialized in only a few products that made up a large portion of the spend but nothing else.  Everyone wants to go with a single award supplier because it is easier to manage but the reality is that single supplier awards don’t always make as much sense as splitting the business geographically or categorically between 2-3 vendors.  This creates a great opportunity for this tier of suppliers to feel they have a legitimate shot at winning business and keeps them aggressive in their proposals.

The Local/Niche Suppliers – Many people would believe that after the first two groups of suppliers, that it does not make much sense to include the smaller local or niche vendors.  This assumption would be wrong.  Procurement projects, especially those for large National companies, often see that huge portions of the spend can be found in only 2 or 3 locations.  In these cases, a local supplier may already be supporting the company very well and should be included in any sourcing project.  Also, in the case above with MRO example, if a company only wanted to focus on a section of parts like filters, they would likely start with being focused on niche suppliers but would also invite large regional and National players as potential secondary suppliers.  This process allows a company to leverage a potential existing deal with a National or Regional player while keeping a local incumbent honest.

For more information on how SafeSourcing can assist with helping you business find the right mix of suppliers to include in your next sourcing event please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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BOSTON STRONG!

Monday, April 21st, 2014

To all of my running brothers and sisters that have endured this historical endeavor, CONGRATULATIONS! To all of  my running brothers and sisters that will run this race today and in the future, CONGRATULATONS. To all of those that have in the past and will in the future support us, THANK YOU!

Perhaps Winston Churchill said it best in 1941.  “Never give in, never give in, never, never, never, never-in nothing, great or small, large or petty – never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.”

Boston78

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Let us eat LETTUCE!

Friday, April 18th, 2014

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

I was doing some morning reading today and noticed an article attributed to Paul Davidson of USA TODAY titled “RISING FOOD PRICES PINCH CONSUMERS”. It’s unfortunate we cannot survive on the lowest cost foods because that is exactly what Lettuce was with a -16.9% change in price over the last twelve months based on the governments Consumer Price Index for March from the Bureau of Labor Statistics. Any guess as to what was the highest? Have you tried to buy Limes lately? If so you might have guessed Citrus Fruits which are up +17%. I’m not sure one could survive on limes alone either, but I am sure this author might do a pretty good job on Key Lime Pie (Yum!).

Here are some of the other categories.

1. Eggs +9.9%
2. Uncooked Ground Beef +6.8%
3. Pork + 5.3%
4. Peanut Butter  – 3.6%
5. Apples -3.0%

The question this author always has is what retailers are doing in order to compress and contain pricing in order to pass the lowest possible cost on to their consumers.  SafeSourcing has tools that help companies accomplish this and 99.9% of all sourcing projects in the last 6 years have returned savings or cost avoidance. Ask your retailer how they are doing this and if they are getting a better than 10X ROI from their procurement solution provider?

If you’d like to learn more how SafeSourcing can help your company reduce product and service realted costs so they are measureable in the current quarter, please contact a SafeSourcing customer services account manager.

We look forward to and appreciate your comments. HAPPY EASTER.

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Decision maker fatigue

Thursday, April 17th, 2014

Today’s post is by Mike Figueroa, Account Manager at SafeSourcing:

As a procurement professional operating under other managers or engaging vendor executives, Having the decision making power change hands in the middle of a procurement project can be disruptive, but you can still keep things on track if you can keep a few key points in mind:

  1. Keep a running history of how the project got to its current stage, so that you can get the new manager up to speed quickly. If you can show your reasoning through the process to make sense, they will be more likely to get on board.
  2. Gauge his/her buy-in and be ready to head off objections before they’re even brought up. Show authoritatively that you know the project intimately to instill confidence in its handling, but give the manager the sense that they are in charge, and that they will get the big win out of the project.
  3. Avoid discussing legacy decisions. If the new manager’s predecessor made poor decisions the new manager could use that as an excuse to scrap a legitimate project, or worse, they could be looking for a scapegoat to blame past failures on.
  4. Find out the new manager’s goals (and potential hidden agendas). Let the new manager drop clues about his knowledge of the project’s history. You may find out about some of what lead to the previous manager’s departure that can help you avoid future pitfalls.

For more information on how SafeSourcing can assist your team with your procurement projects or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments

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