Archive for June, 2021

In Negotiations, Price Matching Barely Scratches the Surface

Wednesday, June 30th, 2021

 

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

Every day, I talk with buyers of all sorts about their procurement processes. While I do get to hear some really interesting perspectives, I also get to hear some really old perspectives over and over again. One of the worst and oldest offenders is price matching.

It goes like this:

A buyer feels that the price she pays for her product or service is higher than it should be. So, she asks a competitor to provide her with a quote. She then takes that quote to her incumbent vendor and asks them to beat or match the price. It’s simple, and it is technically successful, because it delivered savings. I hear that this often generates 5-15% discounts. I’m not impressed by this.

What to do instead?

Testing the pricing in the market by asking for a quote is alright. So is asking your incumbent vendor to sharpen their pencil. But, it’s at this point that there is room for improvement. Any time your vendor signals that they are willing to offer a better rate like in the example above, they are tipping their hand. We now know that they are willing to reduce their margin to keep your business and that they do, in fact, have margin to reduce. It’s at this point, that we recommend applying a lever in the negotiation. An RFQ is a great lever because it creates an environment where the vendors are forced to compete live against each other for the lowest cost. Why have a vendor match a price and manually facilitate this slow type of back and forth? Let the vendors duke it out until they are done. Go grab some popcorn watch it happen. This will probably increase your savings by at least double.

Whatever you do, don’t settle for negotiating tactics that should have died with the dinosaurs. Modernize and use the tools at your disposal to win better.

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.

 

 

 

 

 

 

What does “reducing expenses” mean to you?

Tuesday, June 29th, 2021

 

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

At SafeSourcing, we’re always focused on expenses. Helping our customers manage their expenses and reduce costs is in our DNA. It’s fair to say that nearly every organization we work with also has some degree of their focus placed on expense management too. The degree to which this is true varies, but expenses are usually an area of at least some focus.

These days, the level of focus on expense management and reduction seems to be higher. At least, that’s what we are hearing. We hear several times a day from many organizations that they are really focused on expenses right now. But what does that mean and what are you actually doing about it?

There are certainly many ways that one might decide tackle expense reduction. There are some very severe measures like furloughs and layoffs that, while effective in reducing expenses, have some other wide-reaching negative side effects on your business. There are some more temporary measures that can be taken such as freezing spending in certain areas. This can also be effective in the near-term, but this too has negative consequences.

In these times, measures such as these are being considered and implemented regularly. We see it in the news and we hear it in conversation.

There is another way to manage and reduce expenses, of course. Our readers already know that SafeSourcing reduces costs for our customers while maintaining current specifications and service levels and the cost reductions are not temporary. On average, we deliver over 24% cost reduction across all spend categories. That means that if you work with SafeSourcing to reduce your expenses, the reduction scales as you go. If you source $100,000 using our services, your new expense may be around $75,000 after working with us. If you source $10,000,000 using our services, your new expenses may be around $7,500,000.

Plus, working with SafeSourcing also means you get to hand off the hard work of finding vendors and negotiating new rates which can be very time consuming, especially if you’ve already reduced headcount.

I thought it was a good time to share a reminder that there are options if expense reduction is your new priority.

What does “reducing expenses” mean to you?

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.

 

 

 

 

Safety in Contracts

Thursday, June 24th, 2021

 

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

We’ve all heard that there is safety in numbers. It’s generally understood that in a larger group, each individual has a lower chance of something bad happening. Fish do it… humans too.

The point is that safety is a general concern. While we all take precautions to ensure personal safety, often the same level of attention is not paid to the safety of our contracts. Of course, there are contract management solutions available to provide safety relative to your contracts.

As I see it, contract safety is knowing when contracts are set to expire and proactively taking steps to prevent unfavorable auto-renewals. Contract Safety is knowing that the price you negotiated is also the price you pay throughout the contract term. Contract safety is always having your contracts at hand in the event that you need to review them.

Without these elements, you don’t have contract safety. If you don’t know where the contract is or you can’t verify the terms including pricing, or you don’t know when the contract ends, then you do not have contract safety.

Again, there is reasonably sound logic behind the theory that there is safety in numbers. I encourage you to take the same logical approach the safety of your contracts.

Dave Wenig is a Regional Sales Manager at SafeSourcing and is a devoted champion of saving money. Dave or any member of the experienced team at SafeSourcing would be happy to discuss how SafeContract™ can provide you with contract safety. For more information, please contact a SafeSourcing representative.

We look forward to your comments.

 

 

Why increased profitability continues to evade the middle market retailers.

Wednesday, June 23rd, 2021

 

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

I wrote this post 12 years ago. Not much has changed. That’s a shame.

There are two primary sources of objections that continue to halt the use of these profit enhancing tools in the middle markets.

The first source is your own buyers or category managers. For some, it is the false belief that these tools will eliminate their jobs. For others, it is the thought that in rising markets, buyers tend to be conservative in the hopes that their suppliers will continue to honor old contracts and delay price increases. Neither assumption is true. E-procurement tools make a buyer?s job easier as they can do more in less time such as working with dozens of suppliers versus only the same few.? Honoring old contracts almost never happens. Ever-greening of contracts is a huge problem in retail where the lack of sophisticated contract management systems that can provide automatic alerts results in hundreds of contracts auto renewing at predetermined price increases. This results in huge cost increases to retailers that were not planned for. This is all the more reason to be thinking about your spend months before contracts expire even if it only results in cost avoidance.

The second area where you can expect pushback is from your incumbent suppliers or wholesale distributors. If you have never participated in the setup of a reverse auction and most middle market retailers have not, that initial call to your suppliers to ask them to participate in a reverse auction event is always an interesting journey. Be prepared for all of the reasons in the world why you should not waste your time on this type of process. The more forceful the pushback the more likely you are to see savings that you should have seen earlier. As such, although suppliers may b well aware of or even using these technologies to reduce their costs, middle tier retailers have not able to share in these savings to the extent they should.

If middle market senior executives lead the charge and cost and the availability of new sources of supply is no longer an issue, there is no reason middle market retailers should not benefit greatly from running reverse auctions.

If you’d like a risk free trial, please contact SafeSourcing.

The Slow Boat to China  

Tuesday, June 22nd, 2021

 

Today’s post is written by Ivy Ray, Senior Procurement Specialist at SafeSourcing Inc.

For individuals waiting for a delivery that is stuck in transit, it is a minor irritation.  If you are a manufacturer producing supplies for your customer, it is a nightmare! Higher shipping costs have tremendously impacted the supply chain.  In addition to the increased cost, there are longer wait times, due to the slower circulation of containers. This slowdown, driven by the pandemic, is crippling to the supply chain, and has reduced overall capacity.  All of which is driving up rates and creating massive delays that are expected to continue for weeks to come.

China has been requesting the return of their containers after unloading, so instead of the usual filling of the returned container with goods, they are going back empty. Other factors, including reduced labor productivity at warehouses and at marine terminals, are also contributing to this issue.

In “normal times”, the alternative of air freight would be an option to relieve the strain, but these are not normal times.  Freight rates from China to the U.S. have surged 300% and international flight volumes have plunged due to recent travel restrictions. Air freight companies typically use the extra capacity on the belly of a passenger plane to transport cargo. Hopefully, the recent increase in passenger travel will soon bring this option back into play.

While there are always factors that have negative impact on the supply chain, these instances usually occur and are most times expected.  The recent traffic jam on the Suez Canal did not help matters at all. Global trade has been disrupted and is affecting multiple industries simultaneously which is unprecedented. Economies around the globe are absorbing the ripple effects of the disruption and there is an expectation that this will last, though the end of this year.  We are back to quoting the frequently used phrase for 2020, “we’re all in this together”, and we will have to hold on and wait for our ship to come in!

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist

 

We look forward to your comments.

Summer is Here and Lobster Prices are High!  

Monday, June 21st, 2021

 

Today’s blog is by Gayl Southard, Vice President of Administrative at SafeSourcing Inc.

As the nation moves past the coronavirus pandemic, lobster is more expensive than usual.   Due to a limited supply, high demand and the reopening of the economy, tourists are headed back to seafood restaurants and lobster markets for the first time in months.  Some stores charged $17 or $18 per pound for live lobster in May, and that was about twice the price a year ago.  In June, pricing is $13 or $14 per pound.  The wholesale price for live, 1.25-pound lobsters in the New England market was $9.01 per pound on May 1, business publisher Urner Barry reported. That was about $2.70 per pound more than the previous May 1, and the highest price for that date in at least five years, the company reported.

Customers are looking to get back out to restaurants, and that high-end seafood is in high demand, said John Sackton, an industry analyst and founder of SeafoodNews.com.

Some factors influencing the high prices include a lack of available inventory and what appears to be a slow start to the fishing season. New England’s busiest lobster fishing season takes place in summer, and many harvesters are just starting to get their traps into the water.

U.S. lobster fishing is based primarily in Maine, though many lobsters also come ashore in Massachusetts, Rhode Island and New Hampshire. Fishermen managed to have a productive season in 2020 despite the economic damage caused by the coronavirus pandemic.  Fishermen in Maine brought more than 96 million pounds of lobsters to the docks, and while that was the lowest total since 2010, it was still much more than they typically caught in the 1990s.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

References

Patrick Whittle, Associated Press, June 8, 2021, 1:29

 

What Can You Do to Improve Your Company’s Finances?

Friday, June 18th, 2021

 

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

I recently started working on a new tool that our team will be using to show our prospective clients and current clients how much savings that we at SafeSourcing can offer them.  While working on this tool, it reminded me of when I first started with the company years ago.  I was watching one of our RFQs that was running for one of our clients and was amazed that they received pricing that was more than 20 percent less than what they were currently paying.  My first question to one of my colleagues was, why are they paying so much?  And then my next question was, why doesn’t everyone do this?  Running an RFQ cannot only save you money on current products or services that you purchase but can also help in cost avoidance.  If you have current contracts ending soon, it is very possible that you will see those prices rising.  Running an RFQ with us could help you to avoid having to incur costs in the future.  If you would like to learn more about cost avoidance, take time to review data from a recent SafeSourcing BLOG.

Below are some of the RFQs that we have recently run for our customers to help them lower their expenses.

  1. Vehicle Leases
  2. Fleet Purchase or Lease
  3. Fleet Repair and Maintenance
  4. Diesel Fueling Program
  5. Plastic Supply Items
  6. Plastic Bags
  7. Paper Bags
  8. Lids and Straws
  9. Pest Control
  10. Office Supplies
  11. Cleaning Supplies
  12. Liquid and Foam Sanitizer
  13. Waste Removal
  14. Propane Exchange
  15. Uniforms
  16. Receipt Paper
  17. Bottled Water

Interested in learning how SafeSourcing can help your company save money and run more efficiently?  If you would like more information on how SafeSourcing can help your procurement efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

 

 

 

So what?

Thursday, June 17th, 2021

 

Today’s post is by Dave Wenig is the Senior Vice President of Sales and Services at SafeSourcing Inc

Let’s get right to the point. What incentive do you have to reduce the costs that are within your control? Would you get a bonus? Would you get a bigger boat? Maybe a vacation home? Maybe it’s just one of many KPIs that gets tracked and rolled up into your performance review. What is it that would change the way you’re living?

The answer to that is going to be different for everyone, of course. But that’s also the answer to the question posed in the title of this blog. So what?

SafeSourcing is constantly proving that we can deliver an average 24.8% savings. But if that doesn’t matter to you, then why bother. If you are not responsible for managing expenses, then who is, and would it matter to them?

The reality is that payroll expenses are on the rise even while headcount is low. Vendors are pushing their price increases again with incredible frequency and at awfully high levels. In fact, we’re hearing stories about being understaffed by about 20% while those same companies are seeing seven figure salary expense increases to maintain their operations through overtime and other pay increases.

What’s your “so what?” If you don’t have one, I promise you that someone in the organization does and they would be very happy if you helped them reach their goals.

For more information, please contact SafeSourcing.

 

 

 

Business Education

Wednesday, June 16th, 2021

 

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

While much of today’s workforce has had some sort of formal or higher education, many jobs do not necessarily require that particular education level but may require just some level of education. The reason for this is because that while specific disciplines may not be needed to perform a job, it does require the general education skills that come with most college or other higher degrees. For example, a job may need a person to be able to create and give power point presentations, which is something that is often taught in higher education. This idea is flawed, because of course people may know how to do certain tasks without a formal education and it is also true that some with a formal education may not know how to do certain tasks. This is where business education comes in.

Some workplaces require higher skills at some things rather than others. Perhaps one job requires great rapport and phone skills while another requires a focused and regular use of excel. Businesses can not only look for candidates that fit each role the best, but also can implement on the job training. This ensures that employees are provided the tools and ability to perform tasks to their greatest capability.

In addition to training employees on some of the skills they will need, general education about a particular industry can help an employee understand not only what they are doing, but also why they are doing that task. If employees understand the importance of a duty, they will likely proudly perform that task because they understand the impact it will have on the other employees and the company as a whole.

SafeSourcing utilizes training as a regular practice for clients and for employees. In addition, we provide to the public a free newsletter every month that contains useful information about businesses, the economy, markets, or trades. On top of that, SafeSourcing also has a free wiki with industry related terms and definitions so that everyone can have access to the knowledge needed to perform to their utmost best.

For more information on how SafeSourcing can help with your understanding of business needs, explore products that are good to source, or on our Risk Free trial program, please Contact a SafeSourcing Customer Service representative.

We have an a very educated and business savvy team ready to assist you today.

Morale and Productivity

Tuesday, June 15th, 2021

 

 

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

It is often said that happy employees are productive employees and productive employees are happy employees. So, how do the two affect each other and why? We will look at what kinds of things promote better morale and what can boost productivity.

Morale – First, morale is enthusiasm, ability, and confidence of a group. This means if your organization’s team is able, confident, and hopeful then their morale is high. If morale is high, your team is likely pretty happy with what they are doing. However, is morale is low, you may find your employees lacking motivation and drive. So, how can you boost morale? Below are a just a few ways to help morale when it seems low:

  • Talk to your employees – this may seem simple, but it gives everyone a chance to say whatever is on their mind and also opens up a line of communication that might otherwise be unused.
  • Give positive feedback – this one is essential to keeping happy employees. Giving positive feedback shows someone what they have done well and what they should do more. Small wins in the workplace are still wins and can encourage more positive behavior in the long run.
  • Be a teacher – when something doesn’t go the way expected or desired, being a teacher and giving positive advice on how to handle it and what methods could help. This is a morale boosting way of addressing a problem without placing blame or outright accusing one of erring.

While we may all want our employees to be happy simply because we value each person’s happiness, there are more reasons to help boost morale. The two are, in fact, correlated. While low morale can cause job dissatisfaction, absenteeism, and affect turnover, high morale can do the opposite. A happy employee is more likely to stay longer with a company, is more dedicated, and is more productive. On top of all of this, they can help boost the morale of other employees, helping to boost morale of an organization as a whole, increasing retention and productivity.

Another great way of boosting morale in a company is when the company itself is doing well and one particularly great way to help a company is by implementing a procurement partner. Every company has things they need to buy and source and a procurement partner can help your employee’s morale by providing assistance, expertise, resources, and results that can help everyone involved

For more information on how SafeSourcing can help 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.