Archive for the ‘B2b Reverse Auction’ Category
Monday, March 14th, 2011
While the answer is probably not going to be “I’m going to Disneyland,” the answer from some of the biggest companies in the world, actually because they are the biggest companies in the world, is more surprising than you think.
Companies invest hundreds of hours gathering specifications and employing 3rd party partners to hold RFIs, RFPs, RFQs, and reverse auctions so that, at the end of the day, they can be assured of reducing their costs on the items that they purchase.
Unfortunately, great prices are only good if the rest of the company knows that they should all be ordering from the vendor that guaranteed and was contracted to deliver those low prices.
By not doing so, your company can actually lose money twice; once for the lost savings you could have received but didn’t because the company ordered from other, more expensive companies, and twice because many of these great deals are made on the premise that a certain volume of purchases will be made from that supplier. If that level is not met, worst case scenario is that there will be financial penalties associated with the lack of activity, but you are at least looking at a situation where that vendor will not offer those same discounts again.
Communicating this information is not as difficult of a task as it may seem, so make sure you have a channel for everyone to go to that will let them know what items are affected by these contracts and who they should be purchasing the items from.
Many times a company will have an intranet that can be used for this purpose. In other cases you may choose to employ a third party to host this information securely for your company. If the latter is of interest to you, contact a SafeSourcing Customer Service representative today to speak about the options available to you in this area.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, E-procurement
Monday, February 14th, 2011
Today hundreds of thousands of people will be out in force going to malls, grocery stores, jewelry stores and flower stores looking for that item in the 11th hour that they will likely pay too much for in order to show someone how much they value them.
It sounds crazy but this same craziness is exhibited all over the world in the purchasing departments of companies who pay a premium for inventory after a contract expiration date has passed, keep incumbent vendors even though they are getting overcharged because it is easier and waste perfectly good excess inventory just because they have no plan for how to control it.
Like spreading the effort of St. Valentine’s Day over 365 days instead of just one, what if companies began to put the plans in place to help them source smarter and safer?
What if companies began leveraging reverse auction tools and services that allowed for the review of the BEST vendor instead of settling for an incumbent because they think it will take too long to find another vendor?
What if companies employed contract management tools that would allow them to be alerted by email so that they never miss important contract dates?
What if companies used a 3rd party to help them move their excess inventory instead of wasting it?
They may find that they end up asking themselves why they weren’t doing it all along!
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, Business Sourcing
Wednesday, February 9th, 2011
If you are looking to break out all of the other costs associated in a product bid, just asking to have freight included or free freight within a certain radius or other similar language will not accomplish net landed cost or allow you to manage it going forward.
Quite often the terms net landed cost, haul back, FOB and others come up during the logistics portion of a sourcing event. Some times they are bid on separately and or delivered by a third party. When a company says they want a net landed cost what they are referring to is the cost of a product or products plus all of the relevant logistics costs, such as transportation, warehousing, handling etc. In other words, what’s my cost when it gets here or where we want it?
If you want to drive the best pricing and service possible you need to understand the terminology and make sure it is clear in your specifications and terms and conditions.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Purchasing
Tuesday, December 7th, 2010
According to Wiktionary the Vickrey reverse auction is named after a Canadian professor of economics named William Vickrey (1914-1996) who was also a Nobel laureate. Vickrey’s paper, Counterspeculation, auctions and competitive sealed tenders, was the first of its kind using the tools of game theory to explain the dynamics of auctions. Any one that truly understand the magic of a reverse auction understands that the same type of psychology that drives gaming in a Casino drives the dynamics of a reverse auction.
There are a number of types of reverse auctions which is why a strategy is important when you look at each category that you decide to take to market. Specifically to the opening question, a Vickrey auction allows for selling single items where the lowest bidder sells the item at the price offered by the second lowest bidder.
Now try and figure out how you would implement this strategy. Would you use ranking? If so, what impact might it have?
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction
Tuesday, November 30th, 2010
A lot of privately owned companies are happy to grow a little every year, add employees, make payroll, have happy associates and put a little money in the bank. It is only when a company decides to be a public company or use a Venture Capital Company that this philosophy becomes a problem.
This author could go on and on relative to the subject of realistic earnings; which continues to piss me off. However the title of this blog is much simpler. The answer is how much margin you want to target and how much should your supplier be allowed to make when selling products to your company.
A simple suggestion is if your company margin is plus or minus 5% of the industry norm you probably can afford to look at a number of categories as good candidates for a reverse auction. The technology area is one that often offers a pretty good opportunity for cost improvement which means increasing your margin and reducing what the manufacturers is making. A site that can help you with this in the technology area is isuppli.com which provides market intelligence for the technology space. In a recent review of technology gadgets in Men’s Health magazine isuppli lists a number of products such as Apple IPOD’S and Blackberry Torch whose margins are above 60%. This is based on materials plus production costs and the current retail price.
If you want to come up with a list of good items to take to reverse auction, look at your company’s gross margin and the margins of your suppliers by product and a pretty good list will reveal itself.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, Eprocurement Auction, Reverse Auction, Reverse Auction Procurement
Monday, November 8th, 2010
Despite the continuing economic condition SafeSourcing Inc. reported significant 3rd quarter 2010 revenue growth of 42.45% versus the same period of 2009.Safesourcing has also continued to significantly grow its customer base with wins across all retail verticals as well as other new industries. SafeSourcing also recorded significant net income for the same period.
According to Ron Southard SafeSourcing CEO, We continue to honor the commitment we made to the retail market when we launched this company of being able to address all spends regardless of size. During 2010 we have sourced products for companies with 1000’s of stores and for companies with only a single location. SafeSourcing has run hundreds of millions of dollars through our system this year for all RFX types and provided new sources of supply, a focus on companies CSR inititives and significant savings across all categories. Southard continued by saying that they could not be more pleased with the faith that their customers have placed in SafeSourcing during a very challenging economic climate.
To learn more about SafeSourcing please visit our website www.safesourcing.com.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, Business Sourcing, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain
Thursday, September 23rd, 2010
According to Wikipedia Private Label goods and services are available in a wide range of industries from food to cosmetics.
Historically these products or store brands were positioned as low cost alternatives to major national and international brands. Today if you read the labeling many of the products are virtually identical and in some cases companies are positioning their brands as better or premium to the large brands.
A great source if education is The Private Label Manufacturer’s Association or PLMA. Their website is www.plma.com. PLMA sponsors an annual show which this year is being held in Chicago the 14th-16th of November. This show is full of great workshops as well as manufacturers that would be glad to compete for you business.
According to GfK Roper, 57% of all shoppers now say that they purchase store brands which represents a 21% increase from ten years ago and an impressive 38% growth rate.
E-procurement tools typically assigned to the e-RFX suite are an ideal way to source these products and will help to drive your costs even lower. Start with an RFI to select the companies or manufacturers you are interested in partnering with and then invite the best few to bid for your business.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction
Friday, September 3rd, 2010
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 e-procurement tools for the retailers. He introduced him self as a private business owner with his two brothers and that he had experience biding in reverse auctions with Ariba and Free Markets.
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.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Retail Supply Chain, Reverse Auction Procurement, Strategic Sourcing
Thursday, September 2nd, 2010
I was reading a blog post from the Doctor over at Sourcing Innovation today titled “A Hitchhiker’s Guide to e-Procurement: Terminology” and I thought it was great as well as very timely.
Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.
This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Reverse Auction, Reverse Auction Procurement, Supply Chain Procurement
Thursday, August 19th, 2010
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.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement Solutions, Online Procurement, Procurement Outsourcing, Procurement Solutions, Retail Supply Chain
