Archive for the ‘B2b Supply Chain’ Category

We’ve all heard about the wild blue yonder. But what is Blue Ocean Strategy?

Wednesday, August 7th, 2019

 

Todays repost is fro Ronald D. Southard, CEO at SafeSourcing Inc. in 2014 and still relevant today.

4PL’s or fourth generation logistics providers are the newest (although not that new) of logistics providers and typically they are a consulting firm that brings together the resources of other providers such as 2PL’s and 3PL’s to drive world class logistics performance. This might include global or local companies that are focused on air transportation; ground transportation as well as ocean bound freight. The goal of these organizations is to piece together solutions rather than to develop or own them. Without assets, 4PL’s can change quickly as performance and demand dictates.

With a good 4PL in place companies typically are not bound by their traditional marketing areas and can create new demand in areas they may have never conducted business in before. This is referred to as Blue Ocean Strategy.

According to Wikipedia, Blue Ocean Strategy is a business strategy book first published in 2005 and written by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute at INSEAD. The book illustrates what the authors believe is the high growth and profits an organization can generate by creating new demand in an uncontested market space, or a “Blue Ocean”.

How are you managing your logistics requirements? If you’d like some guidance before you just jump in and get overwhelmed, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

Effective Supplier Data Management Improves Procurement Process

Thursday, July 11th, 2019

 

This may be old, eight (8) years in fact. Its still no less true today then it was then.

The following excerpt is from the above titled article.

There is more to an effective e-procurement program than cost reduction.

While buyers frequently record cost reductions in the range of 30% to 40% when utilizing an e-procurement or reverse auction process, the issues of quality and performance cannot be overlooked.

The foundation for successful e-procurement is the supplier database
that has been developed and is maintained by the e-procurement service provider. Significant time and capital investment goes into the development of an effective supplier database. It provides the buyer with a recognizable advantage in terms of classification of supplier capabilities, historical performance and the quality of the products provided.

The scope, accuracy and functionality of the supplier database are critical components for buyers when using e-procurement. These elements allow buyers to identify the best sources of supply quickly and cost-effectively, oftentimes uncovering alternative sources that were previously not even considered. This is one of the major advantages of including the services of an online reverse auction service provider like SafeSourcing in the procurement process.

Supplier data management is an excellent example of pairing technology advancements with intellectual property to produce an effective, economical support tool that benefits both suppliers and buyers – better pricing,better quality and better sources of supply.

Click here in order to view the entire article.

We look forward to and appreciate your comments.

Avoiding the fallacy of the single cause.

Friday, May 31st, 2019

 

 

Today’s post is from our  SafeSourcing Archives

Procurement projects will of course come in all shapes, sizes, and levels of complexity. Rarely is any single facet of a project determined by only “top-down” variables. Any one part is more likely influenced by a three dimensional layout of different variables, all of which can determine the outcome of the greater whole. But how can all of these intricacies be accounted for, without complicating the project so greatly that it becomes unmanageable? Here are three tips for managing complexity:

  1.  Honestly identify complexity: Don’t close your eye’s to the reality of the project and pretend that it’s simpler than it really is. Admitting that  your value chain is non-linear is not conceding defeat, it’s setting you up for identifying your criteria for success (Be similarly honest with identifying your constraints/bottlenecks).
  2. Consolidate complexity early (accelerated vs delayed differentiation): In supply chains that start with homogenous parts, differentiation should come late in the chain, but the opposite is true for outputs that begin with high complexity. If you consolidate complexity by identifying requirements, scope, and expectations of variables that lead to the single end product, it will keep you from having to break out the constituent parts.
  3. Leverage the entire value proposition: Build into your project the ability to negotiate details based on the full value of the project. For example, make it clear that if a vendor wants to find loopholes that diminish the value of their original quote, that you will be awarding the vendor with the best overall value proposition, not the one who presents a polished picture and adds all manner of hidden fees.

For more information on how SafeSourcing can assist your team with your procurement projects or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Part II of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

Tuesday, April 16th, 2019

 

Todays post is by Ron Southard, CEO at SafeSourcing

Yesterdays post reviewed why and how this author felt that reverse auctions were potentially good for both the distributor and the retailer alike. So just what is cost plus?

According to Wikipedia  Cost-plus pricing is a pricing method used by companies. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that one first calculates the cost of the product, and then includes an additional amount to represent profit. It is a way for companies to calculate how much profit they will make. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.

Once unit level cost has been established for the distribution of products it’s easy to turn that into a percentage and add it to the price of a product coming up with a distributed unit price or category price. The most important part of this pricing exercise for the distributor is to get the distribution costs correct. This can include price of storage, freight, length of travel, driver cost and any number of other costs. This is an area where a distributor can lose a lot of money if they are not very careful.

So, are revere auctions a tool that can help distribution companies?  The answer is a clear yes both above and below the gross margin line. If you like to know more please contact me at ronsouthard@safesourcing.com.

We look forward to and appreciate your comments.

Part I of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

Monday, April 15th, 2019

 

Todays post is by Ron Southard, CEO at SafeSourcing

A lot of distributors have told this author that reverse auctions don’t apply to them because they use the cost plus model and as such they just add their price or profit margin on top of the contract price with their source to drive their distributed price.

The fallacy in this thinking is that it may make buyers and category managers lazy in their approach to driving margin within the categories that they manage. This results in a higher price to the retailers they distribute to and ultimately to the consumer or their customers customer. A worst case scenario is that the consumer stops shopping at their customer’s store which reduces overall volume and further increases prices by not meeting volume incentives. It’s a slipper slope.

Off course this argument is relatively easy to overcome when we get around to discussing capital goods and expense related products and services area. These areas have an impact on the distributor’s net profit. And I’m sure that many of you will agree that just because one says they are a cost plus provider does not necessarily mean it’s true in the most pure sense of the definition.

Check back tomorrow and we’ll review what the real definition of cost plus is in part II.

We look forward to and appreciate your comments.

It’s just a pallet; or is it? Part II of II

Monday, November 12th, 2018

 

Today’s post from our  SafeSourcing, Inc Archives

Use of Pallets: While pallets and palletization were once considered to be powerful components of material handling strategy, today, industry takes the practice largely for granted.  When the palletization concept was first introduced, however, it had a dramatic impact on the improvement of material handling efficiency. Rail cars, for example, that had taken two days to unload could subsequently be unloaded in just one or two hours.  Palletized products can be moved more quickly than by the manual handling of individual palletized cartons.

Benefits of this quicker handling include:

•   Faster turnaround of delivery vehicle and increasing operational efficiency of transport equipment
•   Dramatically reduced labor requirement versus manual handling
•   Reduced risk of temperature abuse for perishable products on unrefrigerated docks
•   With less manual handling there is less risk of product damage and reduced risk of worker injury. Palletized products can be moved more efficiently and stored more efficiently in warehouses and customers often prefer the receipt of palletized goods.
•   Pallets provide drainage and circulation for commodities requiring this, including fresh produce.

Grades of pallets: The GMA (Grocery Manufacturer Association) has determined the standard in which pallets are graded and thus is broken into four (4) different categories. Each category is a guideline to use when buying or selling pallets. The problem is that each category is open for interpretation and it’s important to verify exactly what you’re getting. Each category will have a price range and the price range will vary from region to region. The price will also vary based on the amount of available reconditioned pallets. Below are the four (4) different grading categories and their corresponding condition.

•   Premium – A very clean pallet that has probably been used only a few times. There is little if any repairs to the pallet. The pallet will have no plates and no companion stringers.
•   Grade #1 or A Grade – Typically this pallet has been repaired to close to its original condition. Broken stringers may have been replaced or repaired with metal plates. All damaged deck boards are replaced. This is a fairly clean pallet that is structurally sound.
•   Grade #2 or B Grade – Typically this pallet has had stringer damage that has been repaired by attaching an additional stringer alongside the damaged one. This is commonly referred to as a companion stringer, block stringer and double stringer. The “B” grade pallets usually have two (2) or less repaired stringers. The deck configuration on the “B” grade pallet is not always consistent because these pallets have been repaired many times.
•   Grade #3 or C Grade – Typically this pallet has been repaired numerous times. Most of the stringers on a “C” grade pallet will have companion stringers. The deck boards will be inconsistent in size, spacing and thickness. These pallets are usually in very poor condition and are accepted by few companies.

Owned vs Pool pallets: Many companies choose to buy their own fleet of pallets, but this is not always the best or most efficient thing to do.  What you need to consider…

Owning:

•   Cost: Depending on the amount of goods a company needs to transport, it can be very expensive to buy and upgrade a pallet fleet.
•   Management and tracking: Managing and tracking a rental fleet can be very hard work, if mismanaged, it can create huge problems if goods cannot be transported when needed.
•   Maintenance and cleaning: Once purchased, pallets will need to be continually repaired and cleaned in between usage, requiring the manpower, space and equipment to do this.
•   Storage: When not in use, pallets can take up a lot of space, which is inefficient and costly.
•   Fleet fluctuations: If a company suddenly has an increased order, or an order that requires a special type of pallet, then buying them just for these rare occasions is wasteful, as the rest of the time the overflow will just be gathering dust in storage

Pooling:

•   Flexible: You can rent as many or as few pallets as you need for each specific shipment, meaning you’re never over or under stretch with your pallet fleet.
•   Management and tracking: The pooling company can use their own specialist up-to-date management and tracking systems meaning you doesn’t have to worry about it.
•   Cleaning and maintenance: After each hire, the pallets will be inspected, repaired and cleaned by the pallet pooling company, before they are sent out again.  This means that you don’t need to worry at all about the expense of doing this yourself, and you know all the pallets will be up to standard before each use.
•   Storage: Once you’ve finished with the pallets you just need to hand them back to the pooling company with no need to set aside valuable space to store them.

As you see there are many things to consider before buying or pooling pallets in your business. Should you own pallets or use a service to manage them? What type of pallet do you really need? We at SafeSourcing are ready to help you through all the questions and help you lower your procurement costs.  For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments

It’s just a pallet; or is it? Part I of II

Friday, November 9th, 2018

 

Today’s post is from our  SafeSourcing Archives.

If you’re in a business today that provides goods, supplies, equipment  and alike somewhere along the line these products most likely traveled on a pallet, either in the loading, shipping, delivery or receiving process.  Pallets are the most common method for this as well as being used for storage purposes.  In this article I wanted to share some key factors to consider when purchasing, using or accepting pallets, no matter the originating source.   In this blog my intention is to educate you a little more than you probably wanted to know about pallets.

First the definition,  pallet:  sometimes inaccurately called a skid (a skid has no bottom deckboards), a pallet is a flat transport structure that supports goods in a stable fashion while being lifted by a forklift, pallet jack, front loader, work saver or other jacking device. A pallet is the structural foundation of a unit load which allows handling and storage efficiencies. Goods or shipping containers are often placed on a pallet secured with strapping, stretch wrap or shrink wrap and shipped. While most pallets are wooden, pallets also are made of plastic, metal, and paper.

Types of pallets: although pallets come in all manner of sizes and configurations, all pallets fall into two very broad categories: “stringer” pallets and “block” pallets. Various software packages exist to assist the pallet maker in designing an appropriate pallet for a specific load, and to evaluate wood options to reduce costs.

•  Stringer pallets use a frame of three or more parallel pieces of timber (called stringers). The top deckboards are then affixed to the stringers to create the pallet structure.  A stringer pallet is also known as a “two-way” pallet, since a pallet-jack can be used from only two sides to move it. Two-way pallets are designed to be lifted by the deckboards. In a warehouse the deckboard side faces the corridor.
•   Block pallets are typically stronger than stringer pallets. Block pallets utilize both parallel and perpendicular stringers to better facilitate efficient handling. A block pallet is also known as a “four-way” pallet, since a pallet-jack may be used from any side to move it. Four-way pallets or pallets for heavy loads are best lifted by their more rigid stringers. A warehouse has the stringer side facing the corridor.

Efficiencies: organizations using standard pallets for loading and unloading can have much lower costs for handling and storage, with faster material movement than businesses that do not. The exceptions are establishments that move small items such as jewelry or large items such as cars.  But even they can be improved. For instance, the distributors of costume jewelry normally use pallets in their warehouses and car manufacturers use pallets to move components and spare parts.

Pallet pooling:  due to cost and a need to focus on core business, pallet pooling becomes more and more common. A pallet management company can help supply, clean, repair, and reuse pallets. Pallets should be seen as reusable packaging items. Every pallet that is built could potentially be used and used again until such a time when it will need to be replaced.

Stay tuned for Part II of: It’s just a pallet; or is it?

There are many things to considered before purchasing pallets, such as; should I buy new or used pallets, what grade of pallet is right for my business, do I want a service to manage the pallet inventory for me?  We at SafeSourcing are ready to help you through all the questions and help you lower your procurement costs.  For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

How to negotiate without hurting your supplier relationships

Tuesday, September 4th, 2018

 

Today’s post is from our SafeSourcing Archives

When negotiating a sale with a vendor, the wrong process can quickly change the tone of communication from a friendly sales meeting to that of a confrontation. With large accounts at stake and communication tools that can lose the intended meaning of the speaker, misunderstanding can easily breed offence. The process doesn’t have to devolve into a foray that sours business relationships however. The health of your business will require healthy, win-win, long-term relationships with your suppliers, so let’s consider a few rules for promoting a healthy negotiation outcome:

Clear away assumptions

The only assumption you should start with is that you will discover unknown variables during the procurement process. This is why it will be crucial to allow for questions, feedback, involvement from SME’s and stakeholders, as well as flexibility for the process to be iterative. Your team may publish a set of specifications, then find that there were options in the market they weren’t even aware of from the vendor community. Assuming you know all there is to know about a category could force you into a purchase that is sacrificing value without considering other opportunities identified in the process, as well as alienate suppliers who may be trying to help you help yourself.

Think win-win

You and your suppliers know each other’s business: How can you help each other do business better? Things like “If we changed shipping schedules we could save our vendor a ton of money. And if the vendor sent us PO’s through our EDI system we’d save a lot of time”. The give and take of negotiation doesn’t have to be win/lose. Find the variables that make sense for both parties and adds value to the full project, not just the invoice.

Have a clearly defined process

Leveraging competing quotes to drive savings can be exhausting when done linearly. The back and forth over remote location can be extremely time consuming, and the “negotiation room” tactic leaves suppliers feeling short-changed. This is why e-sourcing web-tools are designed to consolidate complexity through clearly defined mechanisms. Bids are collected with a simple and immediate indication of low quote status. Negotiation is technical, not personal, parameters such as top threshold of quote are identified from the outset, and the timeline and specifications are all in one place.

For more information on how SafeSourcing can assist your team this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Retail collective buyer organizations and consortiums are evolving in order to compete with mega retailers.

Friday, June 15th, 2018

 

These business structures have been around for a long time. Many have evolved to use cutting edge e-negotiation and eProcurement tools. Their retailer members are also benefiting from their use of these tools in order to reduce their net landed costs in many different ways

These types of organization can go by many different names such as wholesaler, collective buyer, consortium, cooperative, share groups and more. They all have one thing in common. They consolidate purchasing volumes for a wide array of groups that may have very similar business structures, but for the savvy consortium can also be wildly different.

In the retail vertical, companies may actually belong to several different buying groups because their primary group does not offer expertise in a certain area.

Consortiums are also evolving and beginning to focus mixed markets where it makes sense. In general consortiums tend to be vertically focused such as a drug industry consortium with the members generally representing the drug industry only. However some consortiums are beginning to market them selves outside of their vertical to retailers or other companies who want to take advantage of learned expertise that the consortium possesses in the categories that are common across more than their own vertical and offer increased volumes. An example might be drug stores sourcing very similar products that health care organizations like hospitals source. Although this may seem like a stretch fro most, it is now very common within retail for non vertical specific players to work together.

Today?s advanced e-negotiation or e-procurement tools make it much easier to accomplish collective buying and aggregating outside of a consortiums initial area of expertise. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers and other companies while also coordinating and participating in collaborative events from hundreds if not thousands of miles away. Suppliers now have an opportunity to earn business they could never compete for in the past.

Retailers should ask their collective buyers how they plan to make the use of these types of tools and what they have to offer in terms of introductions to other companies for increased volume.

We look forward to and appreciate your comments.

Can recessions represent opportunity Part I of II ?

Sunday, June 10th, 2018

 

Today’s post is our SafeSourcing Archive.

Do you know what FedEx, Hewlett-Packard, Disney, Hyatt, MTV, and CNN all have in common? They were all started during periods of economic recession.
Uncertainty in the business landscape can fuel tremendous opportunity. How many corporations are trying to scale down excess inventory and are willing to sell at drastic discount to do it? How many dislocated and highly skilled professionals are willing to accept historically low salaries to find reliable work? How many consumers have drastically changed their purchasing behaviors?

To the adaptive go the spoils?

That last scenario is the one that frightens retail businesses the most.

After all, who wants to abandon their core business and cash cows? That’s a scary proposition, when traditionally most firms would prefer low risk/low reward stability over higher risk innovative adaptability (Consumers have the same career mindset, as you’ll see below). However, as our highly dynamic economic and technological environment has repetitively proven, no one can afford not to adapt if they want to survive. Some corporations and new startups have discovered that trying to convince consumers to spend the way they used to (and can no longer afford to) is a losing game, and that the real opportunity is to discover and acquire a share of the new ways consumers are spending. For instance, Target has rebranded itself as a discount designer product store. For others though, it may be more prudent to create spin-off discount brands to serve that market, but keep that brand insulated from your premium brand to prevent any negative ass
ociations of discount retail from your primary brand. Opportunity is not exclusive to consumer spending though, it exists also in the new ways consumers are seeking revenue.

Counterintuitive to what most of us might think about recession-era job seekers, is that there has been a shift in emphasis away from the pursuit of higher pay for potential job seekers.

Due to the insecurity the population is feeling however, it should come as no surprise that security is the consistent priority, replacing pay scale as the most sought after characteristic of employment. A 2010 poll by the Associated Press showed 64% of workers under 25 years of age are unhappy with their jobs, and less than half of all Americans are happy with their jobs. What does this mean to employers? There exists opportunity in recruiting talent, and they are looking more for stability than they are looking for large salaries. Of course, savings in production are being pursued just as fervently as savings in acquisition, but everyone can benefit from these savings all along the supply chain.

Please check back tomorrow to read part II of Michaels informative post.

If you’d like more information about SafeSourcing, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.