Archive for August, 2018

Effective Problem Solving

Friday, August 31st, 2018

 

Today’s post is from our  SafeSourcing Archives

When first seeing a complex problem our intuition is to try to take it all in at once, but this often leads to feeling overwhelmed by the size and complexity of the information and not knowing where to begin. It’s easy to get so focused on the substance of a problem, that we pay inadequate attention to the analytical process. The instinctive reaction to problem solving is to start going in a direction, any direction because we just want to get started, and see what turns up.

Starting an analysis without an appropriate analytical structure in mind can lead to a critical failure in your conclusions by:

• Using processes where data is corrupted by incorrect manipulation
• Allowing bias into your analysis by looking for data that supports your assumed conclusion
• Answering questions that were the wrong questions to begin with
• Missing clues in the information that could have informed your process early on

Below we offer a basic outline to approaching a problem that involves a large data set. Keep in mind, this is just a starting point, but one that may help prevent you from going too far down a wrong path:

1.   Identify the goal: This helps us identify our angle of attack, our strategy for how to break down the data. Not to be confused with identifying the answer. The goal may be “to identify the spend in X category”, but cannot assume what the results will be until the data speaks for itself.
2.   Identify the constraints: Not all data sets will contain the information required to perform an analysis. Some problems require some back and forth from your source before you will have all of the variables needed to solve. Does the data contain relevant information to our goal?
3.   Identify the correct method for attacking the problem: The methodology chosen must be appropriate to the puzzle you are trying to solve. Do transactions need to be re-categorized? Do we need to prove the data is inclusive of all fees attached to each PO? Does it need consolidated and normalized?
4.   Break down the problem into its constituent parts: The more complex the problem, the smaller “chunks” you will want to break the problem into and solve individually before regrouping and piecing any broad conclusions.
5.   Tell the story: Once you have problem broken down into manageable chunks, establish patterns that tell the story behind the data with as specific of information and numbers as possible.

For more information on how SafeSourcing can assist your team this process 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.

Could YOUR Company be saving more money?

Wednesday, August 29th, 2018

 

Today’s post is our SafeSourcing Archives

What prevents a business from reducing costs by engaging in eProcurement best practices? The most common obstacle we see is simply a limitation in mindset, or the lack of will to change practices that maintain the status-quo. eProcurement practices have been around for as long as the internet has, and yet we still find businesses that aren’t aware of the most up to date tools for sourcing, and for whom suggesting a change in practice is akin to blasphemy. What is the barrier to change, and how can you overcome internal objections to improving procurement practices within your organization?

A concept that has come back into the spotlight this election cycle is The Overton Window. This concept is sometimes called “the window of discourse”, and signifies the range of ideas that your audience will accept. Though typically applied to political ideas, it simply relates to what ideas a group of people is willing to consider, and not willing to consider. However, the effort to enact any type of change within an organization will come up against this concept, and will require that The Overton Window be widened. Once the window is widened/the range of concepts willing to be considered has grown in scope, you can begin to garner buy-in of improved processes. So how can we accomplish this in the procurement space? Here are a few recommendations:

  •  Let the results speak for themselves: We run risk-free pilot events for new customers to demonstrate what can be accomplished with eProcurement practices. We routinely saving upwards of 20% on spends in excess of a million dollars using our process. Seeing one category save hundreds of thousands of dollars can quickly get your team to see the possibilities open to them for other categories across the business.
  • Implement cost reduction goals: If you create goals that can’t be accomplished by maintaining the status-quo, your team will have to open their expectations to considering new possibilities. “Necessity is the mother of all invention” as they say.
  • Find examples of being overcharged: We often do analysis of a company’s spend categories and uncover situations where companies are being charged 50% more for products/services than other clients of ours being charged. The only difference is that they’ve never addressed that spend and taken it out to market. If your boss isn’t interested in eProcurement, find a spend he’s losing money on that a category RFP has high historical savings in to demonstrate how much money is being left on the table with current purchasing practices.

For more information on how SafeSourcing can assist your team with this process 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.

Salad from a Gas Station? Sushi from a Truck Stop? Part 1 of 2

Tuesday, August 28th, 2018

 

Today’s post is written by Heather Powell, Manager of Major Accounts and Special Projects at SafeSourcing Inc.

Salad from a Gas Station? Sushi from a Truck Stop? Both of these questions may seem odd to us in 2018 and there are two parts to inquire about within these questions. First is getting food typically not found within these establishments and second is the common name of the establishments. For today’s blog, I will focus on the food selections found in today’s market.

Many consumers used to think that the only food you could purchase at a gas station or convenience store was a hot dog, nachos, chips, and candy. While many truck stops or travel centers offered the same as convenience store, they would typically have a diner attached or associated within them.

Today, pay at the pump options make it easier for drivers to fill up and go, but do not entice them to enter the store given the past food options available. The convenience stores have had to re-think how to get drivers in their doors and various things have changed over the years to do just that, from larger and cleaner restrooms to multiple food options.

Food especially has changed and is ever evolving within the convenience store business. Consumers and drivers want something fresh, quick, and yes, even healthy.

  • Consumers care what’s in their food today – they want to know when it was made, how it was prepared and what ingredients they’re about to eat. Enter the fresh trend, fresh made, fresh ingredients, and fresh foods.
  • It’s no secret that health has been a growing concern of consumers for the last decade. With folks becoming more aware of the effects certain foods have on their health, it’s becoming increasingly important to include healthy options in your food lineup.  Whether it’s a customer stopping in to grab a water before a gym session or someone just looking to lose a pound or two. Stores are looking at healthy side of things; don’t just think about obvious choices like salad and fruit. They are thinking about clean foods, snacks with fewer than four ingredients, and healthy alternatives as fan favorites. They can easily make a chicken sandwich healthier when switching from fried to baked, mayonnaise to avocado, and a white roll to a wrap.1
  • Unfortunately, or fortunately depending on how you look at it, consumers want things faster than ever. People don’t have time to wait for their pizza to cook, they want it ready NOW. With that in mind we have to put a focus on quickness. Convenience stores are taking advantage of this trend; think about the ways to reduce customer’s time spent getting food. From high speed ovens, fast cooking fryers, grab and go solutions, and easy check out kiosks, there are a multitude of ways to be perceived as a quick option for consumers.

Today a driver can choose from a salad and fresh made grilled chicken sandwich from a gas station/convenience store or sushi or fresh custom pizza from a truck stop/travel center. The options are starting to become endless giving drivers and consumers more options than just driving on down the road to find a suitable place to eat.

Are you interested in more information on how SafeSourcing can assist you in exploring your procurement solutions for your business or on our “Risk Free” trial program for RFPs and RFQs, 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.

References:

  1. https://blog.mtiproducts.com/convenience-store-foodservice-trends-2017

 

Growing Sales Volume through Relationships

Monday, August 27th, 2018

 

Today’s post is written by Ivy Ray, Account Manager at SafeSourcing Inc.

To be successful, food product manufacturers need to know their market and understand how to sell its benefits to consumers. They must invest in market research, product testing and tasting well before they hit the stores. They also need to be sure they have a strong brand presence.  Chobani Greek Yogurt started less than ten years ago.  Since then it has grown from a one million SBA loan to one billion in revenue securing the number one spot in the U.S. for Greek yogurt brands. Retailers have choices as to how they receive goods from vendors, depending upon their size and specific needs.

  • Independent / Direct to Retail
  • Distributors
  • Brokers

These are a few of the pros and cons for each:

Direct to Retail

PRO: The majority of independent and specialty retailers prefer to deal directly with a small vendor as the service is more specialized and the small vendor can usually react more quickly to their needs.

CON: Servicing independent stores can be quite costly when consideration of the order size is compared against the “drop cost”.  If the cost of delivering the product, including the cost of time, transportation, administrative, and other costs are factored against the gross, the net margin may be lower than dealing with a distributor or a broker.

Distributor

Most food products pass through a distribution network to get from manufacturers to retailers. The largest food distributor in the nation is Sysco Foods.

PRO: Distributors are experts in the logistics of food distribution. The distributor, or “truck-to-door”, typically purchases directly from their vendors, stocks inventory, takes orders from retailers, manages the inventory on the shelf, services the retailer’s needs, introduces new products into retail and delivers the products to the stores via direct store delivery(DSD). A chain buyer may buy for 4-10 categories of products and deal with 6-10 distributors and dozens of major nationals, and also be responsible for category management of thousands of items.

CON: The distributor requires a margin of 20%-30% to purchase and stock inventory, sell, deliver and invoice the products, and may carry between 1,500 and 50,000 stock keeping units (SKUs).The principles of a small line can lose control of their products at retail and lose control of the relationship with the retailer.

Broker

U.S. Industrial Commerce defines a broker as “An independent contractor or legal entity who acts as an intermediary between a buyer and a seller. The most common and accessible way to tap into new markets and expand your sales territory is through food brokers.

PRO: Food brokers handle or represent a limited number of food companies in a specific geographic area. Brokers will normally work with retail store staff to promote the lines that they carry and provide the companies that they represent with a varying degree of information and services. Brokers are very selective in the lines that they represent as the cost of servicing these lines is high ($300-400 per sales call) and the sales of these lines must be sufficient to not only pay the bills, but generate a profit.

CON: Food brokers will normally charge a fee or commission of 5-10% of the net invoiced price of all products shipped into the customers that they service. Brokers will normally not be responsible for the shipping or invoicing of products that they represent.

Distributors may also work with brokers who act as a manufacturer’s agent in getting additional distribution for a specific product line. The relationships your brokers and distributors have with retailers play an integral role in growing your sales volume.

For more information on how 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.

References——————————————————————

http://blog.procorrdisplay.com/the-role-of-brokers-and-distributors-in-moving-a-food-brand-forward

https://bakermarketingservices.com/2014/12/how-to-tell-an-export-distributor-from-an-importer-or-a-broker/

 

Buying Power!

Friday, August 24th, 2018

 

Todays’s Post is by Eli Razov, SafeSourcing  Account Manager.

Do you believe you are getting the biggest bang for your buck?Are you getting the best prices for your goods and services? Everyone would like to believe so. Most companies buy larger volumes than a private buyer, which is why they often see better prices. Well, unfortunately you are not always getting the best price. Typically you already have a vendor for your goods or services. Any time you need to place an order you may send in a PO. Every once in a while you may see an increase in pricing with a reasoning attributed to rising index prices or something of the like. But how are you sure this should affect you and how can you tell is this is the best price for you?

We, here at SafeSourcing, have put together a SafeCollaborative which brings many of our clients together to increase buying power. By combining our clients’ like items and taking them out to market, we can increase the volume needed and, therefore, decrease the price. We will be looking to take a Plastic T-Shirt bag event out to market within the next month. This is a great opportunity for everyone to participate in an event for an item everybody needs. While most companies may have their own particular specifications regarding size, mil, weight, and color, these bags typically are sold by the same vendors and manufacturers. So combining everyone’s needs we can ensure a lower price for a higher volume therefore helping you get the lower price.

We have run collaborative events for multiple services and goods.

If you have something you would like to have us take to market, we are sure there are a few more clients that would like to join and take advantage of these savings. Please contact a member of the SafeSourcing team for any inquiries or RFQ events you would like us to help with.

For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Representative we have an entire team waiting to assist you today.

 

 

Data Driven

Thursday, August 23rd, 2018

 

Today’s blog is by Margaret Stewart, Manager of HR and Administration at SafeSourcing Inc.

In every organization, decisions are made that can affect not only the organization, but also clients and customers. Every person within an organization must make decisions to some degree, with the more impactful decisions usually resting on those higher in that organization.

So how are big decisions made? Often in movies, television, and stories, we hear about how a decision made on the fly or based on a gut instinct can play out, sometimes to a great fortune or profound success. While situations like this can and do happen, the opposite likely happens far more often. Those in an organization are far more apt to weigh all options before making any decisions and, possibly most importantly, have the data to back up that decision.

While a good instinct is highly valuable in an organization, being aware of and basing decisions off of tangible data may be even more valuable. For example, if a procurement department sees a company offering a product for 20% lower than what they currently pay, one may say switching to that company for that product would be most beneficial. However, if that data is reviewed and analyzed it may show that the new company charges switching fees, administrative fees, minimum order fees, and delivery fees. In this hypothetical case, that same procurement department would likely stay with their current supplier.

Like the company in the example, SafeSourcing values data and uses that data to best help their clients and customers. We review and analyze internal information and market trends to see the best categories to take to market or not take to market and use that information to make decisions and help those we are involved with.

For more information on how SafeSourcing can help in your procurement efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

 

Contract Types

Tuesday, August 21st, 2018

 

Today’s post is from our SafeSourcing Archives.

If you don’t like the pricing model of the contract you’re working within but didn’t know you had other options, here is a high-level overview of a few of the standard contract types being used today:

Cost Plus: An agreement wherein the seller agrees to charge based on cost of goods sold, plus whatever profit margin is required to make the project viable. One example is where a highly commoditized good is subject to price regulation or index pricing, and therefore will have their pricing fluctuate based on the market constraints. The only pricing the vendor has control over in this scenario, is their profit margin, which will be the only pricing variable the vendor can agree to discount during negotiations.

Guaranteed Maximum Price: Similar to a Cost Plus contract, a GMP agreement is where the contractor is reimbursed for their actual cost, but also is paid an agreed upon fee. This fee is not to be exceeded unless the scope of the project changes, for which a formal “change order” can be enacted.

Incentive Contracts: This agreement begins as a cost reimbursement model, but varies based on whether or not previously determined goals were met. The incentives can be positive or negative, such that a vendor can be rewarded for underrunning the estimated cost of the project, or penalized for being over-budget. Both scenarios still require timely delivery of finished project. One potential drawback though, is that it can be difficult to monitor quality of work/product meets standards, as this model can also incentivize vendors to cut corners.

Time and Material: This contract type is fairly self-explanatory, in that the basis for pricing is on the number of man-hours used, and any necessary materials to complete the work contracted. Profit is either baked into the hourly rate, or invoiced as an add-on. This contract type is most typically used in situations where it is difficult to forecast the number of hours needed to complete, and must be billed as needed.

Unit Price: In this contract type, the activity or good is grouped into a pre-defined unit. The vendor is then paid a fixed amount for each unit completed. Profit and overhead is typically included in the unit rate, and rate is determined in part by estimated total units contracted.

Lump Sum: A Lump Sum contract is typically enacted when a full scope of work is well defined, enabling the vendor to quote the exact amount required to complete the project. This contract type can be financially risky to a vendor who could later discover hidden costs to perform the project, and can be risky to the timeline of the principle, as the contract would not penalize or reward timeliness as would an Incentive Contract.

For more information on how SafeSourcing can assist your team with this process 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.

Vehicle Subscription

Friday, August 17th, 2018

 

 

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

Did you know that there is a fairly new option when it comes to procuring a vehicle?  We all know that buying and leasing are available options, but now there are also vehicle subscription services.  With these services you basically pay a monthly fee that gives you access to different models of vehicles.  The fee includes all the major expenses such as insurance, maintenance and roadside assistance.  During the subscription period you can switch out vehicles so you’re not always driving the same type of vehicle.  Maybe you want a sedan as primary car for your day-to-day driving and decide you want to swap it out for an SUV for a family vacation.  The subscription services are utilized via an app on your smartphone. When you want to swap a vehicle connect using the app, choose the vehicle and a concierge service will deliver the vehicle to you.  Unlike buying and leasing a subscription may be cancelled or reinstated at any time with no additional fees.  As of now, there are only a handful of manufacturers offering the new option and it will cost you more than leasing and buying.  However, there are other manufactures that will be making subscriptions an option later this year and in 2019.  Below are some of the benefits of using the new subscription services.

  • Flexible payment plans
  • Use of different vehicles
  • Vehicles are delivered via concierge service
  • Roadside service included
  • Insurance is included
  • Maintenance included
  • Easy cancellation

If you would like some help finding the right solution, we can gather all the necessary information for you and help you decide which device will meet 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.

 

Truly Appreciating Referrals ​

Thursday, August 16th, 2018

 

 

Today’s post is by Dave Wenig, Vice President of Sales and Services at SafeSourcing.

Telling your friends, family, colleagues about some product or service is as common as anything. Online reviews and ratings are everywhere. It’s just human nature. If you need proof, just go to Facebook or Instagram and see how many pictures you see of your friends’ meals. Still, for something so common, we tend to be careful about giving actual referrals. It’s all too easy to share negative experiences as warnings to your network. There is very little personal risk in sharing a negative review. As a consumer, it can even feel somewhat satisfying to vent about a bad experience in this way.

Positive reviews are much harder to earn. Even more difficult to earn are actual referrals. There are probably many reasons for this. One is that unlike sharing a negative experience, giving a referral puts the referrer in a position of perceived risk. Clearly, they were satisfied with their experience, but will the contact in their network also feel satisfied? Worse, if they are not satisfied, will the recipient of the referral hold the referrer accountable?

Yet, this practice of sharing, both positive and negative, thrives today. Our own networks have grown steadily larger and easier to manage. Much of this is as a result of social media and technology in general. We’re able to connect with more people in more meaningful ways now that communicating from any distance is a negligible feat. While conversation about social media can be polarizing, there is no denying the scope of its impact.

Here is a Mark Zuckerberg quote about influence and referral. “People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message.” Given that, Mr. Zuckerberg is the third richest person in the world as of the day I’m writing this, we should at least consider his opinion.

At SafeSourcing, we understand that to give a referral is no small thing. We understand that this is a vote of confidence and that this is a personal investment. We are fortunate enough to have been on the receiving end of many customer referrals and are always incredibly appreciative of this act. We also take this very seriously and we feel the full weight of the responsibility.

SafeSourcing wants to thank our customers who think highly enough of us and the eProcurement service that we provide to stick their necks out for us with a referral. From the date of this posting through September of 2018, we’re offering a discount program for referrals. For our current clients, we’ll offer a 50% discount on your next RFx Event for any new referrals that lead to an RFx Event (contact SafeSourcing for full details).

We appreciate and are honored by each referral we receive.

For more information, please contact SafeSourcing.  

 

To Fix or To Prevent…. Part I of V

Wednesday, August 15th, 2018

 

Today’s post is from our SafeSourcing Archives

One of the toughest questions that face companies is where to put their Repair & Maintenance budget dollars.  One train of thought is to try and reduce the costs for hourly repair rates and parts as much as possible and then deal with the issue when it arises, while the other train of thought is to invest heavily in a preventative maintenance program and try and extend the life of the equipment and head off major damages before they occur.  Over the next week we will be taking a look at a recent SafeSourcing study on Refrigeration repair and maintenance decisions our customers have made and apply it to repairs and maintenance of all equipment.

Repair and Maintenance spend is one of the largest non-payroll expenses that companies have.  Whether it is to service HVAC, refrigeration, computer, security, roof, or other equipment, companies are spending hundreds millions of dollars to keep their machines and businesses running.  SafeSourcing customers generally fall into one of three categories when we begin to discuss the repair and maintenance categories with them and out of that proper move forward strategies can be developed.

Exploring – These customers are unsure of which model will work best for their organization.  Historically they may have “tinkered” preventative maintenance plans but by and large they have been primarily break fix companies.  Most of these customers are seeing R&M costs rise and equipment life expectancy decline and are at the point where they need to determine which model will work best for them.  These customers typically will follow all three phases of exploration which will be covered over the next three days.

New management – As seems to be happening every day, companies are being acquired, companies are merging, old regimes are retiring and new ones are coming up to speed.   During these times companies tend to review every aspect of their business and where money is being spent regardless of whether it is an area that seems to be working well.  Repair and maintenance expenses are typically an early category that is reviewed because of its size.  While companies in this group tend to follow the three phases, they tend to use it validate they are doing the right thing just as much as to explore a different way of doing things.

Established – Customers that fall into this category have already invested the time to determine the best fit for their company and have usually conducted extension studies and data reviews to land themselves where they are today.  Even with all of that, these companies will still look at running phase 2 and 3 so that they validate any new companies or programs that have been introduced since the last contract and then use those details to develop Statements of Work that are the most beneficial for their company.

Please continue to follow this series this week as we break down the most widely used approaches for determining R&M needs, concluding with some of the average results we are seeing with our customers from these three phases.  For more information on this tool 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.