Archive for August, 2022

Seller-Driven Auctions

Wednesday, August 31st, 2022

 

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

At SafeSourcing we run many seller driven auctions. These may come in handy as the supply chain loosens and retailer realize they have way overbought and have backrooms full of dated products. We actually use our Forward Auction Tool from our SafeSourceIt™eProcurement Platform. This is also a great way to reduce SHRINK which I have written about in the past

A seller-drive auction is an auction where sellers post goods for sale and buyers will bid on them. A good example of a seller-driven auction would be eBay©. A seller would place a particular item that they want to sell online, and buyers wanting to purchase that item will place bids trying to ultimately win the auction for the product (s).

SafeSourcing is an eprocurement company that operates across multiple industries. As such we have specific experience in almost any commodity, service or capital related spend. Our SafeSourceIt™ Global Supplier Database has over 500,000 suppliers including companies that often bid on aged inventory. You are probably sitting on quite a bit of inventory right now. To learn more, please contact a SafeSourcing customer services associate.

Retail Contract Leakage. Where does it come from and how can we stop it?

Tuesday, August 30th, 2022

 

Todays post is by Ronald D. Southard, CEO at SafeSourcing Inc.

How does your organization  now 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 part 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 at. Once you have the 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 contract language. Most contract management systems have alerts that can be triggered as frequently as required.

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 there is a good possibility of controlling them.

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

10. Invoice discrepancies

11. Missed volume discounts

12. Insurance discrepancies

13. Shipping discrepancies

14. Expired contracts resulting in price uplift

15. Evergreening

16. Overtime Violations

17. Material discrepancies

18. Sub Contractor discrepancies

Don’t  have your team work hard to drive benefits with your procurement solutions and then lose much of what you have gained to contract leakage. Ask your e-procurement solutions provider how they can help or save yourself a lot of time or please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

What are you and your procurement team looking at? CPI, Inflation, Cost of Goods?

Friday, August 26th, 2022

 

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

So many companies in so many industries are struggling with their supply chain today. Most of the blame is on the Pandemic, supposed government assistance and other calamities such as weather and wildfires. All of these have had an impact that has resulted in poor labor pools and shrinking commodity availability. This has resulted in a historic increase in the Consumer Price Index that looks like it will not slow anytime soon.

The Consumer Price Index CPI in the United States is expected to be 273.16 points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. In the long-term, the United States Consumer Price Index (CPI) is projected to trend around 281.24 points in 2022 and 286.59 points in 2023, according to our econometric models. That’s a further 5% increase from where we sit today. So, guess what, your prices for products and services are not going down any time soon. To believe that they are is folly. Waiting for them to or for the markets to stabilize is just not a sound procurement strategy.

However, that is just what many companies are doing. There is a hunker down philosophy until we get this figured out. To me, that is a cop out strategy that supports doing less with less. Less employees, so let’s source less stuff. Let’s stick with current vendors even though they are raising prices almost daily and based on the above numbers will continue to into the foreseeable future.

What’s the answer? It’s pretty simple actually. Augment your staff with companies that have the tools and the knowledge to mitigate your workload and improve your costs and service. Companies like SafeSourcing. Just today I watched a company use our resources to source sanitary wipes. Eleven (11) suppliers participated in the bid. The low supplier offered a cost reduction of 21% on all items. More surprisingly the total of all low quotes would reduce costs by a staggering 36% offering some additional negotiation prior to award. This is in an up market. We see these types of results regularly. Because of our SafeSourceIt™ Supplier Database, we know where the suppliers are that can offer you the  best pricing and best service levels that support your needs. Because we run categories dozens of times in a year, we may well understand current issues in the marketplace better than you do.

So, if you want to keep paying higher and higher prices and charging your customers more and maybe losing some, keep doing things the same way. If you really would like to lower your costs in a historically up market, contact SafeSourcing  because we can help.

Resources

Trading Economics

Ten intangibles we bring to the table from our associates in a recent internal survey!

Thursday, August 25th, 2022

 

 

Todays post is from Ron Southard, CEO at SafeSourcing.

I am very proud of the results of a recent internal survey that identified 80 intangibles that our employees and management believe SafeSourcing brings to our customers. Here are ten that have a great impact on our customers.

  1. SafeSourcing’s staff is passionate about Saving Companies money.
  2. SafeSourcing is willing to develop new solutions or strategies to meet our client’s needs.
  3. SafeSourcing’s staff is willing to put in the extra effort needed to meet our client’s timelines.
  4. SafeSourcing’s employees bring extreme category knowledge to all events they execute.
  5. SafeSourcing develops and provides detailed custom reporting on complex events.
  6. SafeSourcing works to keep our costs low so we can offer an extremely competitive pricing.
  7. SafeSourcing’s white glove customer service is second to none.
  8. SafeSourcing’s leadership team truly cares about the wellbeing of their employees.
  9. SafeSourcing truly cares about sourcing safe products and services.
  10. SafeSourcing is committed to continuous improvement and desires to lead our industry.

If you would like more information on how SafeSourcing can help you improve your sourcing results,  or to learn more about our risk free trial, please contact a SafeSourcing Customer Services representative.

We have an entire team anxious to assist you.

 

 

Bargaining Power

Wednesday, August 24th, 2022

 

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

Bargaining power is the power which one party may have to influence another in a negotiation. Through negotiation, companies will work together in collective bargaining to increase their bargaining power by increasing their purchase sizes.  In addition, a party’s bargaining power is a key factor in determining whether or not trade occurs and how the value created is distributed. Other factors that may affect bargaining power include buyer’s leverage and the marketplace.

It’s often surprising to our customers when the run an online RFQ or Reverse Auction as to the amount of savings they achieve. Every customer or prospect tells us that they are very skilled at negotiating and get the best prices available in the market. They often assume this based on their size, industry status, relationships, and a myriad of other reasons. They are always wrong. I tell small chains that they can get the same prices as large chains about always. Ok, maybe not Walmart or Amazon prices, but close if not the same.

They real key to getting the best price and terms is to have a large number of suppliers that want your business and have the capacity to service you. Most buyers are not aware of the number of suppliers that are available to bid for their business, and how to leverage them for the best price. At SafeSourcing we use our SafeSourceIt™ eProcrement tools that encourage behavior based on a variety of settings. In a recent food related event, we invited thirty suppliers to participate. Some were local, others national and others regional. All wanted the business, and our customer is willing to change suppliers if needed.

SafeSourcing is an eProcurement company that operates across multiple industries. As such we have specific experience in almost any commodity, service or capital related spend. Our SafeSourceIt™ Global Supplier Database is an often-used to assist companies in finding vendors that want to bid for your business, please contact a SafeSourcing customer services associate.

 

 

Summer is still here, and Lobster Prices are still High!  

Tuesday, August 23rd, 2022

 

Today’s blog is from our SafeSourcing Inc. Archives

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

 

If you can improve profitability 73%, Why don’t more companies use Reverse Auctions and other e-Procurement Tools?

Friday, August 19th, 2022

 

Todays post is from Ronald D. Southard, CEO at SafeSourcing Inc.

Todays reverse auctions are web/cloud based  Software as a Service (SaaS) offerings that are part of very sophisticated procure to pay applications that let retailers and other companies find the best suppliers for any resale or not for resale product or service they wish to source.  Using a web based reverse auction tool, retailers, other companies or groups of companies (Group Purchasing Organizations) can invite far more suppliers to take place in reverse auctions than they could possibly find or manage using traditional sourcing methodologies. During the reverse auction event they can review on one page all responses from suppliers, data about suppliers, notes from suppliers, product specifications and other necessary information at an instant. Upon auction conclusion which is typically less than 30 minutes retailers and other companies can review savings scenarios and award business from their desktop.

Now let’s get to the simple financial benefits. Let’s assume a $150M Retail Company with industry average earnings of one percent or $1.5M. Additionally cost of goods for this company is 70 percent or $105M. Let’s also assume this company were to only source ten percent of their for resale or above the gross margin line spend or roughly $11M. With below industry average savings of ten percent, total savings generated would be $1.1M which is a direct impact to net profitability. If all other segments of the P&L perform to plan and all savings are recovered during the same business calendar year net profitability would increase to $2.6M or a 73% improvement.

NO BS Here! If you don’t believe me, I will be glad to personally sit down with your CFO and Finance team and prove it to you!

Wen company’s  can begin almost immediately (SaaS/Cloud offering) with no risk (Cost Neutral Pilots)  and no IT involvement,why don’t more companies use reverse auctions and other e-procurement tools? That’s a great question!

If this author were you, I just could not ignore this type of opportunity. If you’d like to learn more, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

Will the CO2 shortage affect you?

Wednesday, August 17th, 2022

 

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

Well, I was reviewing the news headlines on some of the sites today like I usually do and found another weird shortage that may affect a lot of people’s moral.  This shortage may make those of us that go out for happy hour a little less happy.  There is a CO2 shortage that may impact our beer supply nationwide.  CO2, carbon dioxide, is used to carbonate beer.  This carbonation is what makes the bubbles and foam which is particularly important to retaining the beers temperature.  The experts are saying that the CO2 shortage is due to a contamination issue at the only company in the eastern United States that provides the CO2 to breweries and manufacturers.  The carbon dioxide hub is located in Jackson, Mississippi and they are comparing the CO2 shortage to the same type of situation that occurred in the nationwide baby formula shortage that I wrote about earlier this year.  The carbon dioxide supplies were already very tight because all of the pandemic shutdowns that forced many of the key suppliers to go offline and they are still not fully recovered from that.  The summer is also a troubled time because the key facilities go offline for their yearly scheduled maintenance.  According to experts, the CO2 problem could be indefinite and may impact the soda industry next.   Below are some other things that could be impacted by the CO2 shortage.

  • Wine
  • Carbonated Beverages
  • Dispense drinks
  • Packaging of Meats, Baby Foods, Fresh Foods, and Baked Products
  • Decaf Coffee
  • Fire Extinguishers
  • Refrigerant
  • Oil
  • Pharmaceutical and Medical Applications
  • Aviation Fuels
  • Lasers

Interested in learning how SafeSourcing can help your company save money during these and other shortages?  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.

 

 

Season’s Greetings :-)

Tuesday, August 16th, 2022

 

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

You do not expect to hear people talking about the holidays just yet, but you should be thinking about them!

While Christmas, Thanksgiving, New Year’s Day, and so many other holidays seem pretty far off, many retailers already have their holiday plans in place. This does not mean they know whose house their gathering and whether they are making a turkey or ham. This has more to do with how they plan to sell those turkeys and hams and where they might get them from. In addition, there are a number of other items associated with the holiday season, and not just those for resale.

With the holidays often comes inclement weather, so retailers and organizations must have some sort of plan for snow removal and deicing capabilities. If people cannot get to your store, they certainly cannot shop at your store. Having a plan of your season items and services is something you should be working on if not already completed.

A procurement partner like SafeSourcing can help you with your planning. While it might still be up in the air who will make pumpkin pie, we want your business to be able to get pumpkin pie and can help your procurement efforts find the right suppliers and products that fit your organization’s needs. We will collaborate with your team and can help overcome challenges you have faced and know that when the time comes, you will be ready for those season’s greetings.

For more information on what the SafeSourcing team can offer you, or on our Risk-Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

Can Aggregation be your friend during these times?

Friday, August 12th, 2022

 

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

Aggregation is a process whereby a number of a firm’s smaller projects are combined and treated as an individual project. The main purpose of aggregation is to ensure accurate reporting and compliance with regulations regarding the permitted levels of provisional limits for a single commodity.  Aggregation is also a total made up of different parts from various sources.

The SafeSourcing Inc Collaborative Aggregation Philosophy supports the thought that disparate buying groups can on occasion work together successfully as a loosely coupled purchasing organization in order to combine volumes for better pricing consideration by suppliers. Often the specifications for these events need to be very similar in nature such as office supplies or other similar categories. Separate shipping charges and other terms and conditions may apply to each participant. Participants must support single supplier award in order to ensure the success of collaborative aggregation events to ensure that suppliers honor their prices.

We have recently seen a lot of activity in this area with dramatic savings for spends of all different sizes. Some categories have even achieved savings of over 30%. That’s 30% better than what you negotiate.We mapped these savings and are seeing some retailers with as few as 20 stores paying less than some very large customers who ran these categories during the last two years.

The markets are ripe! If you would like to learn more about how our customers and suppliers collaborate and aggregate to work together, please contact SafeSourcing.

Source:  www.fitchtraining.com