Archive for October, 2015

So, you’re not using e-Procurement tools because of your team’s objections

Friday, October 30th, 2015

 

The following are the objections we hear all of the time after we have presented to a prospect that has not been exposed to e-procurement tools in the past.

1. I already get the best cost.
2. We’ve done business with this supplier for years.
3. I don’t have product specifications.
4. I don’t have time for this.
5. Switching costs will be too high.
6. I can’t insure the same quality.
7. We need to adhere to certain standards.

Now please review the dozen benefits below and realize that while you are trying to answer these objections that your competition is reducing their cost by as much as 20% across the board.

1. They would continue to source high quality products.
2. They would continue to have great supplier relationships.
3. They would free up time to do other tasks.
4. They would improve their company’s net earnings by up to 100%.
5. They would support our fragile environment.
6. They would support global food and product safety initiatives.
7. They would have a larger audience of piers to converse with daily.
8. They would have a single source of information about their profession.
9. They would be instantly alerted to product recalls.
10. They would support a traceable supply chain.
11. They would have an endless source of new suppliers to review easily.
12. They would have product specifications at their finger tips.

There are any number of additional benefits to retailers and other companies when using Strategic Sourcing tools such as reverse auctions, online RFI’s and RFP’s. Not the least of which is that if a retailer were seriously to assign just twenty percent of their above the gross margin line spend to these types of tools, they could increase their net earnings by up to 100%.

We look forward to and appreciate your comments.

Is it time to upgrade your television or televisions

Tuesday, October 27th, 2015

 

Today’s post is by Troy Lowe; Vice President of Development at SafeSourcing.

Sometimes personal sourcing requires the same skillset as corporate sourcing.

If you’ve been holding back on upgrading your television now might be the right time. 4K televisions have been available but were not practical because the highest resolution for content has been 1080P.  In recent months, content providers have been increasing their amount of 4K content.  Some of these providers are Netflix, Amazon, UltraFlix, YouTube and DirectTV.  Also, keep in mind that the 4K televisions can convert the lower resolutions to give you a higher quality image.  With the 4k content quickly becoming accessible, you may want to add this technology into your research.  Besides resolution there are many other things to factor into your decision.

Below are some other features to keep in mind when doing your research.

  • Refresh Rate
  • Display Types
  • Available Inputs
  • Available Applications
  • Size
  • Sound Quality

If you are planning on upgrading and would like some help, we can gather all the necessary information for you and help you decide which technology meets your needs. If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

 

We look forward to your comments.

 

 

 

What is a Third Party Procurement Company?

Thursday, October 22nd, 2015

 

Today’s post is written by Heather Powell, Director of the Customer Focus Team & Project Manager at SafeSourcing Inc.

What is a Third Party Procurement Company? The quick answer? We are our client’s right-hand man in procurement.

When speaking to suppliers, on a daily basis, we are asked who are you, why are you working on behalf of so and so, and what does third party mean?

The name third party procurement company has a couple of other names that mean the same thing, but are just as confusing, PSP or Procurement Service Provider.

According to Procurement Service Provider:

A Procurement Service Provider, or PSP, is a third party organization or consultant which is used to supplement internal procurement departments. PSP’s have their own staffing which assist in a variety of tasks for their clients. These tasks include: strategic planning, implementing best practices, supplier rationalization, and supplier collaboration, strategic sourcing and negotiation.

“Enterprises utilizing PSP’s have been able to improve spending coverage, reduce costs for goods and services, employ industry best practices, leverage the latest procurement technologies, and streamline source-to-pay processes – all without taking on the risks and assets required to achieve such results.” Aberdeen Group Research Abstract: You Will Outsource Procurement: Here’s Why and How – October 16, 2002.

SafeSourcing can assist you in exploring your procurement solutions for your business 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.

 

 

What is a stock out and what are some of its effects?

Wednesday, October 21st, 2015

 

Today’s post is by Tyler Walther; Account Manager at SafeSourcing.

A stock out, or out-of-stock (OOS) is defined as a term used in product manufacturing or distribution to describe an inventory shortfall arising from unexpected demand, ineffective inventory management, production delays or replenishment disruptions.” This leaves obvious undesired effects for both the business and the customer.

If merchandise is not available for a customer there may be many possibilities. Your customer may decide to wait to purchase the product. If the product is essential to the customer, then they may be prepared to wait. Even with the willingness to wait, there might be a considerable downturn to the customer’s satisfaction level.

The customer decides to purchase from another vendor or retailer. If the customer is able to obtain the product elsewhere or does not need the item immediately, this is the normal outcome. It is still possible that the customer will do business with you in the future, but this may be detrimental to their customer satisfaction level.

The customer is no longer a customer. This is the potential worst case scenario of a stock out. If a customer is unhappy being unable to immediately purchase the desired product then they may also be willing to permanently purchase or procure this product from another vendor or retailer.

We enjoy bringing this blog to you every week and hope you find value in it. We want to help keep your shelves stocked, with the products your customers need. 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.

 

 

 

Data Commodity

Tuesday, October 20th, 2015

 

Today’s blog is by Margaret Stewart, Executive Assistant at SafeSourcing.

Unfortunately, most of us have experienced this first hand. You may be looking for more information on a particular subject online and next thing you know you are giving that site your email address. In nearly no time, that company could have taken your information, categorized it, and sold it to other companies looking for leads. Your data just became a selling commodity.

The most surprising thing may be, however, that this selling of information has been going on for a long time and is perfectly legal. Even big internet sites, like Google and Facebook, allow your information to be shared, sold, or used by other companies. Luckily, much of the time, this sharing of information is strictly for target marketing, and won’t bog down your inbox. This kind of marketing can even be beneficial at times, like if you are researching local animal charities, you may suddenly see more animal charitable project ads pop up on the web pages you visit.  On the other hand, though, some sites do take all of your information and simply sell it to whoever will pay.

Before you worry too much about your information, keep in mind that the commonly used websites, like Facebook, take precautions so that your specific information isn’t just given to anyone. For example, they may share how many people like a particular restaurant without disclosing any specifics.

If you have comments, advice, want to share your own experiences with information online, or to find out more about SafeSourcing, our policy to never share information, our Risk Free trial program, or any of our free informational tools, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

 

The Politics of Procurement

Monday, October 19th, 2015

 

 

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

As a Project Manager within SafeSourcing, I am often tasked with beginning a sourcing project, as well as ending it. Mixed in with customer communication, there is also supplier communication.  We can learn vast amounts of information from the suppliers that we source products and services from.  We can find out current industry trends, as well as the forecast for the following year.  The possibilities are endless.

At SafeSourcing we are exposed to hundreds of suppliers on a weekly basis. Some suppliers shine brighter in some areas than others; however, we also run across suppliers who become unresponsive during the process of running an RFI, RFP, or an RFQ.  This is where the politics come into play.  When this happens, you “re-route” your approach.   Many times it becomes a simple solution by being redirected to another sales consultant, or perhaps a new department. Sometimes this approach is not conducive, and another strategy must be applied. At this point, the request becomes an escalated issue within the company. I normally ask whom the original contact’s boss is, “who makes decisions to participate?” More often than not, the company will want to know your credentials.  As a Project Manager who is intimately familiar with any project I take to market, I can accurately and confidently answer any questions or concerns.

At the end of the day, the politics in procurement is managing the supplier interactions from a sales individual all the way to the CEO.

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.

 

 

 

Shipping Lanes and the Fuel-In/Fuel-Out Debate!

Friday, October 16th, 2015

 

Today’s post is our SafeSourcing Archives

Managing your freight/shipping lanes is a complex process.  There are so many factors that must be taken into account.  Even then, when you have gone through all of the analysis and created projection models and spreadsheets you are still left at the mercy of weather, sales increases and declines and, of course, any possible factor that could influence the price of oil.

Because this last item represents up to 35% of a carriers charge to you, it is one that many companies take very seriously and invest great amounts of time and money in order to help them control.  Some companies take the approach of locking a fuel rate into their cost for as long as they can to help protect against increases.  Many other companies have negotiated their base rates and keep the fluctuations of fuel separate, with controls placed around the formula used to calculate it. Today we will be looking at the pros and cons of both the Fuel-In and Fuel-Out methods.

Fuel-In – Fuel-In strategies are founded on having a final complete rate inclusive of fuel costs.  This is nice for companies who want a fuel cost method that is easy to manage, because the cost of each shipment for the negotiated period should always be the same.  Typically this method will either be re-negotiated at pre-fined intervals, or tied to an oil/fuel related index with language to cap how much the rate can increase or decrease.

While this strategy can be used to help protect a company during periods of time when fuel prices are rapidly increasing, it usually leads to higher overall rates for each negotiated period.  Without the flexibility to adjust with the average cost of fuel, vendors will generally error on the side that protects themselves and deliver higher than normal rates in their proposal.

Fuel-Out – Fuel-Out methods usually include a fuel surcharge that is based on some pre-defined fuel index such as the commonly used U.S. Department of Energy National Fuel Average price.  Using the agreed upon price, most formulas will subject a “trigger” amount which is the rate of fuel above which carriers begin to include the surcharge.  Typically this rate will be between $1.20 and $1.25 per gallon.  This amount is subtracted from the average fuel price and then divided by an agreed upon Miles Per Gallon rate (usually 5 or 6 MPG) which leaves the surcharge per mile charged.

Although this means that the price of shipments can fluctuate more often and that companies aren’t protected against a dramatic increase in fuel like the Fuel-In method, they will be able to take advantage of decreases in fuel that the method above doesn’t always allow.  The other advantage with this method is that it allows companies to get much more competitive base rates from carriers who know their fuel costs will be allowed to adjust the changing costs of fuel.

For more information about how we can assist with sourcing your freight lanes, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

Resetting the Rules

Tuesday, October 13th, 2015

 

Today’s post is  from our SafeSourcing Archives.

I was in a casino recently and overheard this conversation after an explanation of how one of the games worked:

Person 1:

“Well it seems like there are more ways to lose then there are to win.”

Person 2:

“Sure the House makes the rules.”

Person 1:

 “That doesn’t seem very fair.”

Person 2:

“Yeah, but you don’t think they build a new casino here every year because they LOSE money do you?”

Unfortunately many companies move along playing by their vendor rules, paying for services and items that aren’t as favorable as they could be.  Today’s blog will look at a few ways that you can turn that around and begin setting the rules for your benefit.

Price Model Consolidation – One of the common things that happen throughout the course of any Request for Proposal is the aspect of collecting the proposed pricing.  As will happen in almost any request for proposal, the vendors will have slightly different pricing models and fees that they offer you with rarely any two being the same.  Use the results of the RFP to choose the pricing model pieces that suit your company the best and create a strategy that you can then have the suppliers offer a “best and final” proposal before you make your final decision that will allow you to compare each vendor on price as well as value offering.

RFQ Terms & Conditions – One of the areas where companies frequently miss out, is the opportunity to set the foundation of the Terms and Conditions you want before you invite them to submit a proposal.  By determining in advance the terms you expect the awarded vendor to offer you will eliminate vendors who can’t or refuse to meet you terms in advance, saving you time in the end.  If they have an amendment to the terms and conditions you specify you can always allow they submit that requested modification to you in advance so that you can determine if you would still like to see a proposal from them.

Sample Legal Documents – Another area that can really help with the eventual contract that will provide your company the greatest value is to get and receive samples of the legal documents that the agreement will eventually be based around.  This means that getting Letters of Intent or Sample Contracts from your legal department to event participants so that they will know what will eventually be expected of them or collecting Service Level Agreements from the vendor so you know what the scope of what they will offer you can be critical in identifying and overcoming hurdles before they ever start.  It also means that you can work with you suppliers to determine details in advance that provide your company the greatest offering.

For more information how you can begin to start setting your own Procurement Rules, please contact a SafeSourcing Project Manager.

We look forward to your comments.

Are you monitoring your Contract Leakage? Can You?

Monday, October 12th, 2015

 

Todays post is by Ron Southard, CEO at SafeSourcing Inc.

The answer is probably not or you would not have any and 80% of all companies not only have contract leakage, but because of it they often do not realize the hard earned savings the negotiated with their new e-procurement tools.

However congratulations are in order, you have used your new e-procurement tools effectively and awarded the business to a new supplier. You may have also offer a Letter of Intent or LOI to get things moving while the contract is being completed. With that assumption in place, how does your organization ensure that the award of business is implemented or delivered as awarded so that you indeed receive all of your savings?

This is probably the most difficult part of the entire procurement lifecycle. The first step is to understand your data and where it is kept, that includes understanding what constitutes contract leakage so that you know what you are looking for. This data needs to be looked at on a regular basis in order to insure leakage is not occurring. This should be at least monthly depending on specific contract language (Meta data). Most contract management systems have alerts that can be triggered as frequently as required against this data.

The following list although not all inclusive speaks too many of areas in which contract leakage can occur. This happens in all companies large and small. If you are aware of them, capture them and report on them regularly there is a good possibility of controlling them.

1.  Award Date
2.  LOI Date
3.  Contract Date
4.  Delivery Dates
5.  Quality specifications variances
6.  Making payments at a prices different from the contract
7.  SOW creep
8.  Rebate misses
9.  Escalator Misses
10.  Invoice discrepancies
11.  Missed volume discounts
12.  Insurance discrepancies
13.  Shipping discrepancies
14.  Expiration dates
15.  Expiration Notification Dates
16.  Auto Renewals & Evergreening

Don’t work hard to drive benefits from your procurement organization and then lose much of what you have gained to contract leakage. If you’d like to learn more about SaaS based Contract Management offerings, contact your SafeSourcing customer services representative and ask how they can help.

We look forward to and appreciate your comments.

The Value of Data

Friday, October 9th, 2015

 

Todays post is from our SafeSourcing Archive

Data has a way of sneaking into every aspect of our life. In an article in the Wall Street Journal from 1/14/2012 titled “How Google & Co. Will Rule Your Rep” by Holly Finn, the uses of personal data as it relates to one’s reputation are described. Soon, it seems, data will be carefully analyzed at even the most personal or intangible aspects of life.

With that in mind, it is my belief that as you approach your procurement process, this rings true as ever. Too often in procurement, a purchase decision must be made when there is either no historical data to support the decision or the historical data available is insubstantial.

In these cases, it may seem as though there are no valid options that would help make a purchase decision beyond the data at hand.

In most cases, however, there are more options available. In an example where you do not have adequate historical data to make a sound purchasing decision based on pricing, you may find that it is possible to move forward in your decision with the confidence that you have received the best pricing possible. Ask your strategic sourcing partner to work with you to review your project. In most cases, an RFP can be created and managed in such a way that will provide you with the data that you might not have otherwise. Once completed, a live RFQ can be managed as needed to provide the compressed prices that you seek.

With your new data in hand, you can make your decision with confidence and with the metrics to back it up.

Just think, it used to be enough to want to share an opinion. But now, as we write this, we are hoping that it will be worthy of online comment and reaction so to boost my (quantifiable) reputation.

Please contact a SafeSourcing Customer Services Representative to learn how we can help with your sourcing data needs. You might be very surprised at what we know about you based on what we have learned from others.

We look forward to and appreciate your comments.