Archive for the ‘B2b Reverse Auction’ Category

Communicating openly with suppliers is a key to high quality e-procurement events.

Thursday, April 2nd, 2015

 

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

We’ve all known for a while that our seat partners look over our shoulders to see who we are and what we do. I told him I was reading an Aberdeen business brief and who and what they do. I went on to explain that our company was focused on the use of  e-procurement tools for or customers. He introduced himself as a private business owner with his two brothers and that he had experience biding in reverse auctions with these tools.

We discussed SafeSourcing’s offerings and ultimately came around to what made e-procurement events successful for his company in the past as a prospective supplier and what would encourage them to participate again even if they did not happen to be awarded the business in a particular event. His take was that this was initially an educational process for their company and ultimately would become a way to do old things in a new way. He also suggested the following

1. Openly communicate with prospective suppliers
2. Make sure they understand everything and comfortable
3. Make sure they have no open questions.

With that as an understanding I offer the following list of sample questions one might consider when inviting a supplier as a new participant.

1. Does the supplier understand that there is no cost to them to participate?
2. Do they understand they will be trained at know charge?
3. Do they understand event timing and requirements?
4. Does the supplier understand the terms being used and how they apply to an e-procurement event such as? In fact, do they understand what a reverse or forward auction is?
a. Reserve Price
b. Proxy Volumes
c. Low Quote
d. Proxy quote
e. Funds
f. Terms
g. Notes
h. Extensions
i. Matching quotes
j. Event  rules
k. Product specifications
l. Samples
m. Award of business

At the heart of it, it comes down to something we all know but don’t always practice and as such negatively impacts the sustainability of processes that just make good sense. And that is that the supplier is your customer too and the customer comes first and should be treated the way you would like to be treated.

If you’d like to learn more about SafeSourcing’s  quality approach to supplier management during the eProcurement process and why our satisfaction rating is 99.999% with our vendor participants, please contact a SafeSourcing Project Manager

We look forward to and appreciate your  comments.

Will a Reverse Auction always result in savings?

Thursday, March 12th, 2015

 

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

To the above point, this author has never seen a single category or product that can not be sourced using a reverse auction. And, I know many will argue this point with me. My answer however is a little more complex and is based on the evolution of original reverse auction or e-negotiation tools. As these tools have evolved, so have the processes associated with them whereby today’s tools have many features that support the entire RFI to RFP process within the same toolset resulting in a final compression event of reverse auction?

The process is really what determines the success of your e-negotiation event and that includes the determination of what it is you are looking to measure. Simply indicating that you want to reduce last year’s price or the price from your last contract is not always a fair analysis. Markets fluctuate daily and a year after your original contract, markets that drive the product you are sourcing may not be favorable to reducing your current price. However utilization of these tools may be able to help you reduce prices you might have to pay while prices are rising or put another way help you avoid costs. Cost avoidance is a good thing, particularly if your competition is not doing the same thing.

In many cases, if your contracts are not current and you have not used these types of tools to negotiate your current pricing and you do not know where to find alternative sources of supply; you will most likely see savings during the first year. After that the category and commodity driving it will determine further compression, holding prices constant or cost avoidance. All are a benefit of todays best of breed e-negotiation tools.

If you’d like to learn more as to how SafeSourcing can reduce your cost of goods, capital budget or expenses, please contact a SafeSourcing Project Manager.

We look forward to and appreciate your comments.

So, just what is a retail market exchange?

Thursday, August 14th, 2014

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

Quite honestly this is a fairly complex question so the answer is not simple. To begin with let’s take a look at just what a market (retail) exchange is.

One of the earliest exchanges in the retail space was called the Retail Exchange which was sponsored by some very large retailers and is still available today from a company that bought the system from its retailer sponsors. As simply as possible, a  Market (Retail) Exchange  is a business to business or B2B E-commerce platform that allows Suppliers, Resellers, and their customers or buyers to offer, purchase and manage their goods and services in a simple and effective way. Typically an organization must be a member of the exchange in order to participate. Once a member the organization can then conduct business with other organizations by establishing on line connections with each other. Typically exchanges are a shared hosting environment and in some cases for very large companies dedicated server implementations. In recent years exchanges have migrated to SaaS or software as a service models in order to address wider markets.

The success of an exchange is based on the number of suppliers or resellers that belong to it and their willingness to participate with a retailer for their business. The activity is more of hands off approach once your offer is posted that can include punch outs to a supplier’s website and catalog services for sourcing of products.

From my perspective I like the personal touch of the historical RFX process in the form of a SaaS full service offering that actively engages new sources of supply and sells them on wanting your business.  There is a much smaller investment from both a financial and resource perspective. If you want to learn more about the RFX process please visit SafeSourcing Blog archive or the SafeSourcing Wiki.

If you’d like to learn more about how SafeSourcing can assist you in the complex world of eProcurement, please contact a Safesourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

E-Procurement at ProcureCon Canada 2014: Capturing Money Left On The Table!

Tuesday, April 1st, 2014

Todays post is provided courtesy of Mr. Eugene Duynstee, President of KPM Enterprises Inc.

The following content was presented by: Eugene Duynstee, President of KPM Enterprises Inc. and Ron Southard, CEO of SafeSourcing Inc. at the ProcureCon Canada Conference 2014 which was attended by a number of Canada’s Senior Procurement Professionals

All too frequently procurement professionals faced with negotiation with incumbent suppliers are being told:

   •  We always give you our best price
   •  Our products/ services are unique – no one else can do what we do
   •  No one else knows your business as well as we do and would look after you the way we do

If you sense these are not true, you would be right. The result?  “Money is left on the table”.

The dilemma: You  have a lot on your plate, and there is often pressure from above to just “stick with the incumbent”, but your responsibility is to garner the best cost for the required quality and service, so what do you do?    

Take the easy path, or the right path? How do you capture   the “money left on the table”?

The answer: You need to find a way to dramatically improve the efficiency and effectiveness of your buying process. This is what will lead to success:

   •  Consider more vendors: double the number of eager vendors wanting your business
   •  Develop a more efficient RFP process:  process 3-5 X the # of RFP’s in the same amount of time.
   •  Level the playing field for vendors competing for your business: don’t allow one vendor to have undue influence
   •  Expand the scope of information: provides you with a better assessment based on quality and service, as well as price.
   •  Conduct an e-auction: this has been proven to establish the best price from vendors

Where do you find this? All the e-procurement tools necessary to realize this innovative buying process are currently in use, and are readily available and supported by a capable and experienced procurement partner.

What makes e-procurement easy to use?

   •  The process is structured and automated
   •  It provides instant access to extensive pool of supplier and product information
   •  It does not require your IT group
   •  It is led by a partner that does 80% of the work

What does an eProcurement partner provide to you?

   •  Detailed, comprehensive specifications
   •  Extensive vendor data base
   •  Easy to use, flexible software
   •  Remote access (cloud based)
   •  Vendor training
   •  In-depth category expertise
   •  And importantly, a no risk trial to get you started and comfortable

What results can you expect?

   •  Save an additional 15-25% on your costs
   •  Deliver an ROI 10 – 15X the investment
   •  Increase your impact on the business
   •  And most importantly, the “money left on the table” is captured!

If you’d like to learn more about how easy it can be to capture money that you ARE leaving on the table, please contact a SafeSourcing Customer Services Representative.

We look forward to and appreciate your comments!

 

Why is the Unloading Category a Great Choice When Executing an eProcurement Event?

Tuesday, December 10th, 2013

Today’s post is by Ryan Melowic; Assistant Vice President of COE at SafeSourcing.

Many companies use third-party unloading services to eliminate the risks and costs of internal employees. These companies should work to thoroughly understand this category because there are tremendous opportunities for savings in it. Please let SafeSourcing explain.

The unloading services category is complex and requires a keen understanding of all the moving parts. In addition, there’re different load types, different units of measure and additional fees and they must all be broken down to properly take this category to market. For large companies, the level of breakdown that is needed is a daunting task.

When executing an eProcurement RFX for unloading services, gathering the pricing is the less complex part. Comparing the different pricing models for each vendor is the complex part. With SafeSourcing as your partner, your company can rely on us to do the heavy lifting of this category for you. Our experts have the experience needed to conduct a thorough analysis of your current unloading services category. SafeSourcing will then go to market and provide the analysis needed to show your company what options to choose to save the most money.

SafeSourcing has seen savings in this category hit the double digits numerous times this year. When looking at the amount of money that is typically spent in this category the savings dollars are large.

For more information on how SafeSourcing can help you with your unloading Services l procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.
We look forward to your comments.

You might think that suppliers understand that a reverse auction is a great opportunity for new business.

Friday, November 15th, 2013

The easiest way to do this it to keep the communication open friendly and non adversarial. At SafeSourcing we have a training class for this that we have with our customers and for all new associates as the join our company.
A friend of mine that is a manufacturer said it this way. “Openly communicate with our supplier’s because their relationships are important to us. Make sure they understand everything and are comfortable with it. Make sure they have no lingering questions.

Here although not all inclusive is a list of sample questions one might consider when inviting a supplier as a new participant.

1. Does the supplier understand that there is no cost to them to participate?
2. Do they understand they will be trained at know charge?
3. Do they understand event timing and requirements?
4. Does the supplier understand the terms being used and how they apply to a reverse auction event such as?
a. Reserve Price
b. Low Quote Indicator
c. Max quote
d. Funds
e. Terms & Conditions
f. Notes
g. Extensions
h. Matching quotes
i. Event  rules
j. Product specifications
k. Samples
l. Award of business
m. Letter of Intent
n. This is an opportunity for new business
o. Event communication strategies

At the heart of it, it comes down to something we all know but don’t always practice and as such negatively impacts the sustainability of processes that just make good sense. That would be open clearly articulated communications.

If you’d like to know why SafeSourcing has a customer satisfaction rating greater than 99%, please contact a SafeSourcing customer services account manager

We look forward to and appreciate your comments.

Conduct your sourcing as a market basket or product alone and you’ll leave value on the table.

Thursday, August 1st, 2013

Market basket sourcing has been around for a long time. Most of us are familiar with a market basket as something we see or use in a supermarket. Every market basket is made up of different items and different quantities of items based on the needs or desires of the individual consumer. The majority of the mix is based on use both planned and historical. In today’s age of big data, the relationships of these items one to another or their affinity is also important although not necessarily well understood. An example would be why someone buying baby diapers might also be buying beer and chips and how that may influence sourcing decisions.

As such it is the uniqueness of these individual market baskets that should concern business owners when they develop their sourcing strategy. This applies as much at an individual shopper level for a retailer as it does at the business to business level.

Understanding the unique characteristics of products and their relationship to other products is key to understanding how to source those products. Just as retailers look at the their top deciles of customers and try to figure out how to get better wallet share from these groups by understanding the mix of the products they buy; businesses can look at the top deciles of the goods and services they buy to conduct their business and figure out how to get a better price for the items the sell or use most frequently. A market basket approach to sourcing where everything is lumped together will never accomplish the compression goals set in a companies sourcing strategy.

Sourcing based on the top deciles within a particular product category on an item by item basis not only drives the best possible compression, it also creates data relative to products and services where incumbents or awarded suppliers are not competitive. This data is extremely useful in setting next cycle strategies. It is also important as to your supplier strategy in terms of who to invite to participate, such as specialty suppliers within certain deciles of spend.

Sourcing using market baskets combined with sourcing based on deciles as well as units will achieve the best overall results over time. To learn more contact a SafeSourcing representative and ask them about SSDBS™.

We look forward to and appreciate your comments.

Twenty-one steps to running high quality Retail e-procurement events and reverse auctions.

Thursday, May 23rd, 2013

Todays post is from Ron Southard, CEO at SafeSourcing!

At any rate and regardless of the specific naming convention used there are certain rules which when followed will create higher quality e-procurement events for the Retailer as well as the Supplier?

Following these steps will result in maximizing savings or cost avoidance regardless of market conditions!

The importance of focusing on a clear process will also increase event participation at the supplier level. As a result of paying attention to quality and detail your existing trading partners and potential new sources of supply will respect your process and it will keep them coming back in the future to compete for your business again.

1. Executive sponsorship is mandatory from the C- Suite.
2. Get the entire buying organization together for a kickoff and discovery session.
3. Provide an over view of what you are going to be doing and the impact it can have on the company. Use company financial models.
4. Discuss and agree on success criteria.
5. Every event will not be a homerun. Singles and doubles score runs.
6. Create a fun environment.
7. Consider prizes for the most creative use of the tolls by functional business area.
8. Use scorecards by department with percent of savings.
9. Discuss the meaning and importance of corporate aggregation.
10. Hand out event templates to gather existing product specifications.
11. Put a time requirement on data collection.
12. Gather an accurate list of your present suppliers.
13. Work with your sourcing solution provider to identify a top 100 list of opportunities.
14. Develop a Calendar the events.
15. Prioritize by dollar value, date and strategic value.
16. Conduct department level detailed discovery meetings of 30 minutes to an hour.
17. Investigate existing contract language.
18. Look for auto renewal (evergreen) language roadblocks.
19. Determine alternate sources of supply with your sourcing solutions provider company.
20. Develop an event rules and instruction template and post with each event.
21. Develop a category and event based strategy

Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.

If you’d like help building your strategy, please contact SafeSourcing.
 
We look forward to and appreciate your comments.

 

Why are there so many people saying there are no savings available today when using reverse auctions tools?

Thursday, March 14th, 2013

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

The following are just a few examples of some recent savings:

1.  29%   Computer Equipment

2.  24%   Landscaping

3.  44%   Payroll Processing

4.  21%   Packaging

5.  34%   Office Furniture

6.  25%   Bottled Water

7.  44%   Drug Tests

8.  22%   Shipping Supplies

9.  41%   Background Checks

10. 25%   Handheld Scanners

11. 24%   POS Hardware Maintenance

Here’s a little bit more about SafeSourcing.

SafeSourcing is an eProcurement company offering a complete Procure to Pay suite of applications. The heart of our family of products is our popular SafeSourceIt™ reverse auction technology. We can help you reduce cost, improve efficiency and extend the reach of your procurement team with results that can be referenced by executive suite contacts typically generating an ROI of greater than 10X that is immediately measureable in the current financial quarter.

If you’d like to learn more about reducing your costs, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

Reverse auctions will continue to drive consistent results over time.

Thursday, February 28th, 2013

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

As spring training is now in full swing, let’s use a baseball analogy, you may not get the home runs and grand slams that you saw during your first and maybe second year implementations of this tool but with proper planning and execution you will at a minimum continue to beat market pricing. Think of it as singles, doubles and triples and sometimes a walk where you just hold onto what you already have.

In order for this to happen we have to understand how to conduct successful auctions in today’s business world and it is not the same old same old where the low bid always wins. The number one job of any business is to drive bottom line profitability. Because of this, companies that win your business during an E-RFX process need to make the business they have just won as profitable as possible. They may take your business during an auction as a loss leader in the hopes of increasing their wallet share with you over time. They may take your business at a loss in a down economy in order to drive cash flow to just as the song goes, keep on keeping on. They also will take actions during the next year or two to drive their internal costs down which will make your business more profitable to them. These circumstances means there is potentially more compression on the table the next time you go to market with their category. The why is actually pretty simple? Your new supplier wants to keep the business and the relationship, your old supplier wants their business back and other suppliers need new sources of revenue. What’s the math look like? Last year your vendor invoiced you for $10M. This year they have to reduce to $8M in order to remain your vendor because others are willing to take the business at this price. The question to your vendor is, would you like to lose $2M or would you like to $8M?

There are many other benefits to running these RFQ’s over and over again. A few are , new product offerings with better features, new suppliers that you are not aware of, suppliers you strategically did not invite the 1st time (if you want to know why, give us a call), existing products with new technologies and quality improvements to name a few. To support this, don’t sign contracts for periods of longer than two years, one if you can manage it or you will be paying too much by contract expiration.

If your e-procurement solutions provider knows what they are doing, reverse auctions can and should become a long term tool in your procure to pay tool box.

We all know that ball clubs that consistently hit singles and doubles game after game ultimately win more of those games. In fact a grand slam can’t happen unless there are already runners on base.  If you want to learn more about how to succeed year in and year out with this process, please contact a SafeSourcing customer services account manager.

We always appreciate your comments.