Archive for April, 2021

Newer Entries »

Listen to the Market!

Wednesday, April 14th, 2021

 

Today’s post is  SafeSourcing Archives

When buying and selling goods and services, one of the first steps is to look at the atmosphere of the market.  Without this crucial step, you may find yourself in a dangerous situation.

One issue that typically applies to individuals when they are searching for the perfect home or the right car is that they can be sucked in by the market and not even realize that they have reached their demise. For instance, if there is no market in a category, then the products will never go anywhere because no one wants them.

Potential simple things that  can and will affect the market:

-Seasons
-Natural Disasters
-Changes in trend
-The items are too specialized

Each of the above are pretty simple, but the cause and effect associated with each have a huge impact on everything you buy, ship and use. A change in trends, might be something as simple as the size of container ships increasing. More products on one ship that uses less fuel is great, but can the ports handle it? Can the existing logistics mapping handle it. Can weather (wind) impact it.

Do you have time to think this all through? I doubt it.

There are many factors that can positively or negatively affect how you buy and sell goods. Luckily for you, SafeSourcing is here to help because we study these things! Please contact a SafeSourcing Customer Services Account Manager.

We look forward to your comments.

Posted in

What is a Third Party Logistics Provider or 3PL and how do retailers use them?

Tuesday, April 13th, 2021

 

If you are having difficulty with your current distribution model, compress your spend using eProcurement tools and then source a reputable 3PL.

According to Wikipedia a third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or “third party” logistics services to companies for part, or sometimes all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

As such, there are a number of types of 3PL’s within retail that may in fact service a single retailer as well as smaller buying groups of small retailers. All might fall under this umbrella including wholesalers such as SUPERVALU, collective buyers such as TOPCO or even a retailer collaborative that may in fact just coordinate aggregated purchases and in fact pick other 3PL’s to provide warehousing, picking and packing and distribution. Each of these providers may in fact provide some or all of the same services. The later or collaborative of multiple retailers might even be looked at as a non asset based 3PL.

In all categories of third party logistics providers however it is still the end user or retailer regardless of size that determines what products they buy and accept delivery of in their stores. As such, it should be no more difficult for smaller retailers to run e-negotiation events? There will need to be discussions as to costs that are purely associated with the warehousing, slotting, picking and distribution of products by a 3PL once an e-negotiation event has been planned, but these items should be easy to break out for bid or add to the final pricing prior to award of business as a flat fee. This is a practice that all 3PL’s should be familiar with already. Retailers should anticipate that their existing 3PL depending on services offered would rather not have you conduct these types of events as it negatively impacts their volumes with manufacturers and other providers and as such their company’s margins.

Understanding your options and the flexibility that 3PL’s can provide may actually make it easier for all retailers to use e-negotiation tools to impact their bottom line.

We look forward to and appreciate your comments.

Posted in , , , ,

Retail spend management basics.

Monday, April 12th, 2021

 

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

No you do not!

A major step to trying to understand where to spend your effort when building an e-RFX attack plan is to understand the detail of your company’s P&L and how it can provide clues as to where you might have the most impact.

I meet with buyers or other e-procurement knowledge workers on a regular basis that want to know what categories are the best to select in the short term to prove the benefit of  e-negotiation tools. This quite honestly is not a bad approach for pilot selection as it creates an almost sure thing that results in a lot of excitement and the energy to move the process forward within a company.

Quite often before meeting with a new client, I will analyze their annual report and their summary and detailed P&L if available in order to get a good idea as to where the opportunities are hiding that can have an immediate impact. However in order to have long term viability as a way to conduct the business of buying, a more detailed analysis is required. Quite frankly before you can even begin to discuss vendor or supplier selection, management or evaluation this process is critical.

Key data required to prepare you for this analysis can consist of but is certainly not limited to the following. All of this data is readily available from a variety of industry sources. Quite often the data is a year old but you can bet it is better than anything else your customer may be using today.

1. Research and accumulate your specific Industry data
2. Analyze last years P&L
3. Compare your cost of goods with your Industries averages
4. Compare your gross margins with your Industry averages
5. Compare your net earnings with your industry averages
6. Conduct the same comparisons with selected retailers with whom you compete. Pretty easy if they are public.
7. Compare your departmental sales and margin results to those of your specific industry.
8. Look for department level anomalies.
9. Look for specific product anomalies within major and sub departments.
10.Select top categories that are below plan and outside industry average for cost of goods and margin.
11.Select top products that are underperforming to industry averages and plan

One example of the above might be to look at the grocery department sub category of pet care. Now drill down to the sub category of cat and dog products and a list of all accessories. Now look at what products are underperforming to the industry and plan. Continue your analysis with other underperforming categories.

In summary, did you need a spend cube to try and figure this out? No you did not. You needed someone that understands your industry and your P&L with some analytical common sense.

If you’d like to learn how these techniques can assist you, please contact a SafeSourcing customer services account manager.

As always, we look forward to and appreciate your comments.

Posted in ,

Have you ever played liars poker?

Friday, April 9th, 2021

 

Today’s post is from Ron Southard, CEO of SafeSourcing Inc.

I was just re-reading some of my old posts and came across this one. You know what? It’s still true!

So, when SafeSourcing in 2021 says it has 5 suppliers (think 5 Aces)  because it does.

Locating, managing and updating supplier information for companies you may choose to do business with has never been more difficult. How many former suppliers from let’s say 4-5 years ago are no longer in business? How many newer companies have evolved or taken their place? I already know the answer you are going to give me. It’s I don’t know.

We keep hearing about big data. What you need relative to suppliers beyond just their name is more data. With new regulatory requirements emerging daily, economies failing, the supply chain shrinking in some places and expanding in others,  changing  safety factors and  environmental factors ( think LEEDS), detailed supplier information and traceability are but a few of the issues that require regular maintenance in order to mitigate a company’s risk.

Solution Providers like SafeSourcing that provide supplier databases (SafeSourceIt™) that are part of automating the procurement process, need to step up and make sure that their data support these changes on a regular basis to the greatest extent possible by providing tools that interact with both regulatory agencies and suppliers  in order to insure consumer safety and environmental impact.
Particularly as more new sources of supply and a continual stream of new products enter the supply chain daily.

Actions that solution providers should take include but are not limited to:

1.  Monitor daily alert data as to product recalls and safety warnings.
2.  Trace warnings back to the original source of supply automatically and maintain history.
3.  Require that suppliers meet certain safety certifications in order to participate in their database.
4.  Require that suppliers meet required environmental certifications or programs in order to participate in their database
5.  Provide a regular purge of suppliers that do not comply with necessary standards.
6.  Validate the entire database regularly for companies no longer in business
7.  Adhere to a strict RFI process for new suppliers requesting participation in your database.
8.  Provide a KPI rating system for suppliers you offer to companies as new sources of supply.
9.  Monitor regulatory agencies such as ISO for new standards and include them as further requirements for suppliers in your supplier databases.
10. Conduct on going category research for evolving new sources of supply.
11. Compare your best customers GL to your database for additions deletions.

Ask your solution provider what their process is to grow manage and maintain their supplier database for your benefit.

If you’d like more information on the SafeSourceIt™ Supplier Database of nearly 500,000 cleansed global sources of supply, please contact a SafeSourcing customer services account manager.

We look forward to and appreciate your comments.

 

Posted in

Understanding the Relationship Between Procurement and Marketing

Thursday, April 8th, 2021

 

Todays post is from our SafeSourcing Archives

The relationship between a retailer’s Marketing and Procurement Departments has been one struggling to maintain cohesiveness in many companies for quite some time.

While the Marketing team is continually trying to find creative and cutting-edge ways to increase sales within a retail organization, Procurement is constantly looking for ways in which to not only reduce costs, but find the best fit of suppliers with their company.

In many cases, marketing will expend a good deal of effort to find vendors to work with them on projects that when turned over to the procurement team can’t even be considered because their price is too high.  In the end this costs the company money, creates continued division between departments, and causes unnecessary lost time and sales.

Studies and reports have shown, and we at SafeSourcing agree, that the involvement of the Procurement department, even at the most basic level, into marketing projects can reap huge benefits as both departments work toward finding partners in their suppliers to achieve both their marketing and procurement objectives.

Retailers whose Marketing departments can leverage the database of the Procurement department’s suppliers will find a positive effect on their spend while achieving the ROI they are looking for on their campaigns and will create a better team environment within the company to achieve like-minded goals.

For more information about how the SafeSourcing database of known suppliers can help your company’s marketing and procurement departments work together to achieve these goals, please contact a Customer Service representative today.

We look forward to and appreciate your comments.

Posted in , , ,

Sustainable Seafood and Lake Food Practices You Should Be Aware Off.

Wednesday, April 7th, 2021

 

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

Whether you like to go fishing, eat seafood and lake food or source it for your business. Please, do it sustainably.

I always liked to go fishing as a kid. It didn’t matter if it was freshwater or saltwater as I could walk to both. The interesting thing is that I didn’t really like to eat fish. My mom was not about to clean and cook what I caught, so the only time I ate any non-shellfish, it came from the store, was not fresh and tasted terrible.

Once I met my wife and became used to eating fresh seafood, I began to like it a lot. I still like to fish today, mostly catch and release. That’s probably a good thing as our fisheries worldwide are severely stressed. Unfortunately, three quarters of the world’s fisheries are fished to capacity or overfished. That’s a really a shame for both sports’ fisherman and our ever-expanding global population in search of sustainable food sources.

A couple of organizations you should know about and visit that are helping in this capacity for seafood, lake food and shellfish are Alaska Seafood where you can learn more about FAO-Based Responsible Fisheries Management Certification. You can also learn more about Best Aquaculture Practices for shell fish at this link.

It’s nice to benefit from our fisheries and to be able to go fishing in our oceans, lakes and streams. Doing it in a sustainable way will preserve it for our future generations.

If you’d like to learn more about how SafeSourcing can help you source your sea and lake food and how we hold our suppliers accountable to local and global standards, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

 

Posted in

The Nine Deadly E-Procurement Objections!

Tuesday, April 6th, 2021

 

 

Todays post is by Ron Southard CEO at SafeSourcing

This is a repost from a couple of years back because I just came out f a discovery session with a roomful of buyers and heard at least 5 of these. Fortunately the company CFO who was in attendance asked the following “If this is so, why does Ron have so many examples of products and services we buy every day at lower costs than we pay”. 

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. We already get the best cost.
2. We’ve done business with this supplier for years.
3. We don’t have product specifications.
4. We don’t have time for this.
5. Switching costs will be too high.
6. We can’t insure the same quality.
7. We need to adhere to certain standards.
8. We are aware of all of the sources of supply in this area.
9. Our business is different!

Often the real reason for these objections is a lack of understanding as to the services being provided which actually extend the productivity of financial and procurement knowledge workers. An underlying reason is that these same knowledge workers believe they are already doing a good to great job. They believe they understand the detail of the category, the supplier community and the leverage point for driving quality results.

So what does it mean to your procurement knowledge workers when based on the above the very first e-procurement event you run returns dramatic savings from your incumbent as well as several other suppliers you were not aware of? Does it mean your team is not doing their job? Does it reflect poorly on them as individuals and or a team?

This author does not believe so, what it simply means is that they are not aware of how much more they can accomplish, how much further they can extend their reach and how much more time they will have to evaluate data instead of collecting and assembling it based on the use of modern strategic sourcing tools that extend their knowledge base.

If you would like to learn more about how your team can accomplish more in a shorter period of time, please contact SafeSourcing.

We look forward to and appreciate your comments.

Posted in , ,

Why should retailers be concerned with evergreen contracts?

Friday, April 2nd, 2021

 

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

This author has been asked on numerous occasions why I am so concerned with evergreen contracts. First, let’s discuss what an evergreen contract is. A simple definition is that it is a contract or an agreement between two parties (you and your supplier) that is automatically renewed or rolled over after each completion period which is typically a year, until canceled by the either party.

This does not sound so bad at first glance, particularly if the current terms of the contract such as price, performance, quality, service or service level are all being met and are to your advantage when they automatically renew. However this is not normally the case, particularly with contracts that are driven by commodity markets such as oil, chemicals, resins, pulp, steel and many others. In addition you can bet if the advantage is in your favor in the initial contract that your current supplier will notify you in writing within the specified period which is usually 60 days that they are going to let the contract expire or want to renegotiate.

In large parts of the retail trade, there are very few sophisticated contract management solutions deployed, the cost to the industry annually runs in the billions of dollars. This is because the original contract normally has language that includes price increases above the current contract when it auto renews and the auto renewal is normally for a year if the supplier is not notified in writing prior to the anniversary date. Once renewed you are stuck. This happens because most buyers or executives think they will remember in time to notify your supplier when in fact this almost never is the case. As most retail companies have thousands of contracts in the place the amount of data requiring review is unmanageable.

The worst case I ever reviewed was a contract written nine years earlier that had renewed every year. The customer was actually paying the uplifted prices and substantially more than a much smaller company was paying for the same type of service at significantly lower volumes. This did not even include newer technology benefits.

Contract management solutions that offer alert subsystems based on contracts Meta data are the best solution to this problem and typically provide near immediate ROI based solely on the cost avoidance associated with evergreen contracts.

SafeSourcing offers an easy to use solution called SafeContract™ to help our customers with this problem. Ask your solution provider how they can help you. Or contact SafeSourcing.

 

Posted in , , , , , , , ,

How does your organization ensure that every award of business is implemented or delivered as awarded?

Thursday, April 1st, 2021

 

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

I wrote this a while ago, it’s still true today. If you miss any of these steps your sourcing efforts have been wasted.

Stopping contract leakage is one of the most difficult tasks in the entire procurement lifecycle. To begin with, you need to understand where the data to be measured is kept. Good luck if you do not have a contract management solution. Once you have a clear idea as to the location of the data, it needs to be looked at on a regular basis in order to insure leakage is not occurring. The question here is what constitutes leakage and how often it should be reviewed such as monthly depending on contract language. Most contract management systems have alerts that can be triggered as frequently as required.

If you had a contract management system, most of the following list speaks too many of areas in which contract leakage can occur and can also be measured. These discrepancies happen in all companies large and small. If you are aware of them, capture them and report on them there is a reasonable possibility of controlling them. Again, you can’t do it without a contract management system

1. Buying without a contract.
2. Expensing something outside of a contract
3. Having multiple contracts in place:
4. Executing a new agreement when one is already in place
5. Paying a price different from the contract
6. Delivery variances
7. Quality specifications variances
8. Making payments at a prices different from the contract
9. Scope creep of the product or service purchased without change control
10. Resulting Invoice discrepancies
11. Missed volume discounts
12. Insurance discrepancies
13. Shipping discrepancies
14. Expired contracts resulting in price uplift (evergreening)
15. Overtime Violations
16. Material discrepancies
17. Sub Contractor discrepancies

Don’t work hard to drive benefits from your procurement organization and then lose much of what you have gained due to contract leakage. Ask your e-procurement solutions provider how they can help.

We look forward to and appreciate your comments.

Posted in ,

Newer Entries »
© 2024 SafeSourcing