Archive for the ‘Business Sourcing’ Category

Physicians, Accountants, Attorneys, Oh My!

Wednesday, December 20th, 2017

 

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

Most of us have had some experience with one, if not all, and you may very well dread having to see one another again. But why are so many people anxious about seeing a doctor, lawyer, or accountant? Going to a doctor often means we are sick or are in need of some sort of treatment, which is hardly pleasant. Needing to see an attorney often implies civil or criminal matters and finding out what repercussions may arise. Seeing an accountant could mean that either tax season has arrived or that your finances are too complicated to do yourself.

Another common link between these three professions is money. Each profession can charge you significant amounts each time to visit or talk. Sometimes, you may even get a bill for something you weren’t expecting. Often people try very hard to avoid hiring one of these professionals simply due to the unknown amount of money you may find yourself liable for. So, why are these professions still so successful? The answer is because they are worth it.

Everyone in these professions has to go through a lot of training and education. Even after the education and training, they must be tested. Even after that, certifications must be routinely updated. All of this costs time and money, and often these professional absorb massive amounts of debt as they initially work through their education. For a high price tag, however, they are expected to know and advise on some of the most important aspects of a person’s life, so they need to be up to date and more than knowledgeable in their field. They have to be experts.

While other professions also require vast amounts of education or experience, some also require the same type of dedication and continual research and education that is often seen with doctors, lawyers, and accountants.

At SafeSourcing, we expect and train our account managers and project managers to also be experts in their field, which means being prepared to give you advice on your procurement needs, categories, spend, and whatever else may arise during our process. Fortunately, SafeSourcing is here to save you money instead of breaking the bank.

For more information on how SafeSourcing can be your procurement expert, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

 

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Tuesday, December 19th, 2017

 

 

Considering Feedback During Negotiations

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

Regular readers of the SafeSourcing Blog know that we have covered the topic of vendor feedback and its role in the overall negotiation before. The blog “The Negotiation Began Long Before the Quote. Or, Make a Plan and Stick with It” is one great example and is worth a quick read through.

That said, it is still worth covering again and is as relevant as ever. In the past week alone, I’ve encountered at least three instances of how supplier feedback has had an impact on the negotiation process and has, possibly, affected the results of the e-Procurement events one way or another. I wanted to share these examples in an effort to provide some guidance about what type of feedback you might receive.

The first example is related to specifications where an incumbent supplier contacts the company hosting the e-Procurement event and points out that there are some details that they don’t think are properly represented. When the feedback reached our organization, the client asked whether or not these details were, in fact relevant and whether anything needed to be done. This is a great example of exactly how this type of supplier feedback should be treated.

Another example relates to pricing. It’s a very common practice to assign Max Quotes to each item in an RFQ. The Max Quote is the highest price that can be entered into the RFQ for that line item. Often, we will get feedback from vendors directly that the Max Quote is too low and that we need to increase it to allow for their quotes. Depending on how the Max Quote was determined and other factors affecting pricing, this might be valid feedback. On the other hand, I can point to two separate instances where this feedback was not accurate. In fact, in both cases, the results of the RFQs indicated that the Max Quotes were set at a reasonable amount. The evidence was the double digit savings in both RFQs.

The last example of vendor feedback that I’ll share here is a little more difficult to spot and is not something that I would consider to be common. This is feedback that is given to create fear, uncertainty, and doubt (FUD). FUD might be caused by a vendor before, during, or after an e-Procurement event. FUD might be caused by a laundry list of questions or concerns. This might be done to imply that the results of the e-Procurement event are suspect, or that this vendor is the only one who is truly qualified for the opportunity. Again, this can be tricky to identify, but is most often identified by a vendor who is alone in their concerns or who asks unique questions, sometimes circumventing the outlined communication policies to do so.

What is common among each of these examples is that all feedback should be considered. Some of it will be actionable. Some feedback will be determined to be of a lesser value. Another commonality is that your e-Procurement provider has probably seen all of this and has the experience to help you decide which is which.

For more information, please contact SafeSourcing.  We look forward to your comments.

 

 

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The Future of Work and Pay – Part 2

Thursday, November 30th, 2017

 

Today’s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing.

When I was in high school, a music album cost me $15-$20. Today, for $10 a month or less, I can literally listen to any song in the world as much as I want. Similarly, the amount of calories that are available to me for relatively little money is greater than it’s ever been in the history of mankind. Medical advancements have lowered mortality rates, and will allow me to live longer than I ever would have been able to in past decades. So in many ways, you could say that even after compensating for inflation, we are more wealthy today than we have ever been just in terms of access to more, cheaper, and better quality resources. However, we also need to consider that the producers, like in the music industry, are making only tiny fractions of what they used to. This loss of profit margin spans across all industries being affected by automation, and equates to there being less jobs available, as well as less pay available  for those positions. However, there are many who think that because income used to be higher when compared to inflation, and things like education and healthcare used to be cheaper, that we should revert back to the industrial practices of previous decades.

Although manufacturing is critical to output, not all manufacturing practices should be lumped together in the same bucket. To say that an industrial machine press of 30 years ago is the same as one from 2017 would be ludicrous. Today’s machine presses have a throughput that is higher, and their operation takes much less man power than of previous generations. Factory jobs that used to need thousands of workers now take hundreds, and require much more advanced education. So when it is proposed that the solution to all of America’s problems is to gain back the factory jobs of the 90’s, we should take the advice Steve Job’s gave to Obama in 2011 when he said, “American manufacturing jobs are not coming back”. To go back to the factory jobs of 30 years ago, would be to reduce the available efficiency, and therefore increase the cost of current goods. In short, there’s no going back to “the way things were”.

For America to be competitive in the marketplace, manufacturing jobs will need to either have the same level of automation that modern international factories do, or be able to pay their laborers pennies on the hour as they do in countries with lower wage markets. Obviously, more productive capacity per capita is always the better option, but society will have to adjust to a new normal of lacking low-skill labor opportunities.

Work, career goals, professional community, and monetary incentive to produce goods and services are important reasons to keep the able-bodied working. So how do we keep our society doing fulfilling work, at a livable wage without de-incentivizing high level output and innovation? There are a few ideas being discussed right now:

• Universal Basic Income: A flat income rate, given to every citizen, regardless of how much or how little they work, or income they have.

• Negative Income Tax: A flat tax rate across all income brackets, but with payments (negative tax) given to those individuals whose income falls below a minimum.

• Working Income Tax Benefit: A tax credit that is given out for to those who work, with the benefit being tied to how much they work, up to a certain threshold.

These are just a few of the models being discussed right now that have risen to prominence. However, the conversation is far from over, and there will be many considerations to explore for a very complex problem. One thing is certain: That either technology will stop advancing, or work as we know it will fundamentally change.

What other potential solutions are there?  We would love to hear your feedback. Please leave a comment or for more information on how SafeSourcing can assist your team with 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.

 

 

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The Future of Work and Pay – Part I

Wednesday, November 29th, 2017

 

 

Today’s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing.

The power of exponential growth is not something very easy to understand intuitively. The classic example of this, is the fabled story of the creator of the game Chess. The emperor who was enamored with the game asked its creator what he wanted for it. The game’s creator simply asked for rice, at a rate of 1 grain, doubled in number, for every square on the Chess board. This meant he received 1 grain for the first square, 2 grains for the second square, 4 grains for the third square, 8 grains for the fourth, and so on. Not until the emperor agreed, did he realize that he owed the game’s creator more rice than would be needed to build a pile the size of Mount Everest.

Similarly, not many people understand the rate at which technology is advancing today. Technology isn’t just  advancing, its rate of advancement is advancing. In other words, if technological advancement was represented visually on a chart, it wouldn’t be a straight line moving upward, it would be a line curving upward steeply. So steeply in fact, that you would need a new chart to represent it every few years just to be able to see the full curve. The computers that took us to the moon cost millions of dollars to create, filled warehouses, and had the computational power of a pocket calculator. Twenty years later, supercomputers would shrink to room-sized contraptions, but able to process at a rate of a full teraflop. Ten years later, I’d be playing video games in my living room on a game console with more computing power for a few hundred dollars. And today, my daughter has an even more powerful kids tablet that cost less than $100.

If you have found yourself wondering why there is so much talk in business right now about automation taking away jobs, it’s not only because more and more activities are being automated that used to be done by humans. It’s also because the ability of machines to do human’s jobs is growing exponentially. During the industrial revolution, thousands of workers lost farm jobs to factory farming. But that change took decades to take place. Today, a new app hits the market and makes thousands of jobs irrelevant in a day. Predictions today indicate that any job that requires financial analysis will be replaced by computer applications in the next 20 years. As technology advances, our ability to produce products faster and cheaper will advance with it. However, those advances won’t be limited to increasing the scale of the production of goods. Advances of scope in what is available to automation, in the form of algorithms that can analyze financials, grade students, scan x-rays, and create proposals, with a tiny fraction of the human input that it takes today.

Procurement won’t be safe from this advance either. In the coming decades, spend will be synced with market suppliers, and bidding will be automatic. Massive databases will house everything there is to know about a company, so that RFIs will be generated within minutes of the proposal being requested. While these advances will destroy many jobs, exponential growth will also increase the wealth available.

For more information on how SafeSourcing can assist your team with 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.

 

 

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How do you choose a new supplier?

Friday, November 17th, 2017

 

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

After several devastating hurricanes, the United States is in the cleanup, recovery, and rebuilding process for those areas hit worst. One notable area was the island of Puerto Rico, which was hit by multiple hurricanes, damaging a multitude of structures throughout and leaving the majority of the island without utilities. Because of this devastation, companies were sought to organize and begin the rebuilding of some of the necessities, like water and power.

One particular company, Whitefish, was contracted to begin the power grid restoration for the island, a contract worth hundreds of millions of dollars. However, whether through oversight or intentional, this company, based in rural Montana, had no experience with projects of this size and, in fact, only had two employees. After that information was made public, the contract was ultimately cancelled and eventually awarded to another, larger company. The aftermath of this award of business, however, was a lengthy delay in the rebuilding process at a time when fast response could literally save lives.

While choosing a new supplier of your own may not have such an impact on millions of people as the situation in Puerto Rico, choosing the wrong one can still have a large and negative impact on your organization as a whole. This could mean additional time spent processing orders, paying a higher price until agreements are made or reviewed, or even legal fees involved if a contractual dispute occurs.

This is why it is highly important to not only research any potential suppliers ahead of time, but also to vet those suppliers. At SafeSourcing, we go to great lengths to ensure all the right suppliers are included for projects that you may consider running, and exclude those that do not meet the high standard we expect.

For more information on how SafeSourcing can help with your sourcing needs, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

We look forward to and appreciate your comments.

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Reduce Capital Expenditures

Wednesday, November 15th, 2017

 

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

Many of our clients find great success in significantly reducing their indirect spend. The typical expense categories that are sourced are always winners and are often the first categories that come to mind when selecting which categories will be sourced using eProcurement tools. As nearly all of our clients know from first-hand experience, these categories have earned this reputation for good reason. The average savings for Supply categories, for example is in excess of 21%. This is relatively well known and is only the start of what is truly possible with eProcurement.

What is less known, and too often overlooked, is that this same eProcurement methodology can very easily be applied to your capital expenditures. At a time when many of our clients are preparing for the coming year, I wanted to point out that you should not forget to leverage eProcurement for your capital expenditures.

At this point, you may well have a very clearly defined sourcing plan in the form of next year’s budget. My suggestion is simple – remember to review that identified spend with your eProcurement provider. You’ll be glad you did.

I would encourage you to also keep an open mind as you decide which of these capital expenses you would identify for eProcurement. You might be surprised to know that our clients have had success in areas where most clients don’t even consider. In one example, we were able to successfully take just one panel van out to market as an RFQ. Inside of days, the client saved many times more than could ever be saved negotiating with dealers using traditional methods. In another example, we achieved 30% savings on two towable generators.

Many of our clients, whether retailers or otherwise, will be working on construction such as opening new stores and remodeling old stores in the coming year. I propose all of that related spend should be sourced using eProcurement. If it is not competitively sourced, you will overpay. Before you build that new carwash, you should know that we do that too. Recently, we achieved over 10% savings on the building and over 34% savings on the installation portions alone for a client.

In this short post, I’ve listed only a few examples out of many, many more and I have not even mentioned your cost of goods or cost of sales. I hope, however, that my main premise was clear. If you have budgeted for capital expenses, you should consider eProcurement to reduce the cost of those expenses. You’ll likely find that you’re able to accomplish much more in the next year based on the savings generated by eProcurement.

For more information, please contact SafeSourcing.  

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Milk Does a Body Good

Tuesday, October 31st, 2017

 

Today’s post is by Gayl Southard, Administrative Consultant, SafeSourcing.

Chances are your parents and grandparents grew up with one type of milk- -cow’s milk. Today there are many types of milk to choose from.  The question is what type of milk are you looking for?  Are you trying to cut fat?   Are you lactose intolerant?  Are you concerned with the sugar content?  Milk can be a tricky question.  The following are different types of milk offerings:

  1. Cashew Milk. Cashew milk is very similar to almond milk. It is approximately 40 calories per cup and 3.5 grams of fat. It is often fortified with vitamins D, B12, and A. The drawback is that is low in protein.
  2. Coconut Milk. Coconut milk has become a healthy fat and protein in recent years. It has a unique flavor and is typically low in calories. It is higher in fat than other types of milk, and can be higher in sugar, unless it is unsweetened. It often comes without protein.
  3. Goat’s Milk. Goat’s milk was one of the first alternatives to cow’s milk. It is high in protein, but is also high in saturated fat. It is similar to whole milk. It is packed with a lot of nutrients, including magnesium, potassium, and vitamins A and C. It also comes fortified with vitamin D.
  4. Hemp Milk. Hemp milk is made from hemp seeds. It is a rare milk and high in omega-fatty acids. It provides more iron than cow’s milk. It is low in protein. It is best to look for unsweetened hemp milk fortified with vitamins A and D.
  5. Almond Milk. Almond milk has become very popular. It is a lactose-free alternative that has more vitamin E than cow’s milk. It is found in a variety of flavors and is low in calories (30 calories per cup if unsweetened). It is low in protein compared to cow’s or goat’s milk.
  6. Cow’s Milk. Cow’s milk is very high in protein and provides calcium, vitamin D and phosphorus. It is high in protein, keeping you feeling full for extended periods of time. The drawbacks depend on the type of milk selected- skim milk contains no fat, while whole milk is full of saturated fat (eight grams of fat per cup).
  7. Soy Milk. Soy milk is the original alternative to cow’s milk. It is popular with people that are lactose intolerant. It is low in fat, high in protein, and often fortified with vitamins A, B, and B12. Look for varieties that haven’t been heavily sweetened.
  8. Flax Milk. Like flax seeds, flax milk is high in fiber and omega-3 fatty acids. It is typically low in fat and calories. It can also be high in protein. Avoid the flavored varieties as they are heavily sweetened which also ups the sugar content.

SafeSourcing regularly sources milk for a variety of companies. For more information on SafeSourcing and how we can help you with your sourcing needs, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

Emily Lockhart, Active Beat, 3/15/2017

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Where does your money go?

Wednesday, October 25th, 2017

 

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

Any business has to tackle the financing issues, whether it’s payroll, marketing, or overhead. While some expenses, like payroll or overhead, cannot be easily reduced, other expenses of a business can be reduced without losing anything in return. This is when a procurement partner can help.

Procurement partners can work with a company and finance teams to determine which areas represent the largest expenses within a company and which areas could see the most savings. The goal is to take an category that is already purchased and will continue to be purchased, and source a better value for the business.

Choosing the right procurement partner can make a big impact on the success of your sourcing projects. Having a dedicated and reliable team who are always willing to put in the extra work can be the difference between uncertainty and peace of mind. A company like SafeSourcing has the experience, dedication, and skills to help in any sourcing project your company may seek. In addition, SafeSourcing offers tools that can make the process run more smoothly  making things easier for your team.

For more information on how SafeSourcing can help with your sourcing needs, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

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Dollars and Sense

Friday, October 20th, 2017

 

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

Many (most) of the topics featured on this blog focus on eProcurement and the savings generated by the use of it. Today’s blog certainly follows that theme, but with a bit of a twist. As you might have gathered from the title, I’ll dig more into when and why it makes sense to use eProcurement to achieve your savings objectives and other goals.

Timing 

When you have been doing business with a vendor for an extended period of time, typically at about three years, it is time to assess the market conditions. One of the best ways to do so is through eProcurement. Over time, vendors will very naturally work to improve their margins. eProcurement works by keeping those margins within reason based on competitive levels.

Cost Avoidance 

The day you receive that notification of an unwanted price increase is the day you should prepare to take that category to market. Often, our clients receive two benefits in this case. One, their pricing is reduced as compared to the new increase from their incumbent. Often, this pricing is even better than the old price. Two, often, new vendors will offer more favorable terms such as fixed pricing or other terms to help avoid costly increases in the future.

Quality or Supply Chain 

Another common reason for leveraging eProcurement is quality issues or issues or interruptions in your supply chain. These type of issues typically warrant a fresh look at alternate sources of supply. eProcurement will satisfy this need and take the additional step of providing compressed pricing from well vetted alternatives to your current source of supply.

There are many times when eProcurement makes good practical sense as well as financial sense. If you find that any of these examples ring true, reach out to us here at SafeSourcing and we’ll help you understand your options.

Sometimes, savings dollars just makes sense. We look forward to your comments.

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Nested if/then Statements for Everyday Use

Thursday, October 19th, 2017

 

Today’s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing

Most problems don’t have solutions as simple as yes or no, such as “if A, then ‘yes’. If B, then ‘no’”. Solutions are more often evaluated through multiple sets of dependencies, such as “if A+B is greater than C, then find the average of X-Z”. Of course these statements aren’t intuitive, so if we don’t understand how to use them formally in logic equations or computer code, we are much less likely to get them right in real life situations. So here’s a crash course in Excel “IF” statements:

The basic description of the “IF” function is “If something is True, then do something, otherwise do something else”. To see it in action, start with typing “=IF” in an Excel cell of your choice. You’ll see Excel suggest the full formula as “=IF(logical_test, [value_if_true], [value_if_false])”. Each of those statements within the parentheses is a variable that does something specific, and they have to be separated by a comma so that Excel knows when you are entering a new variable. Here is how each variable behaves within the function:

  • “logical_test”: This means there must be an active function. Let’s go with an example of “A1>B1”.
  • “value_if_true”: Whatever value you include in this variable, will populate the cell you’re programing the formula for, if the “logical_test” variable is true. Such as if A1 = 2, and B1 = 1.
  • “value_if_false”: Whatever value is in the false variable, will be populated if “logical_test” is untrue. Such as if A1 = 1 and B1 = 2.

So if we insert some example variables into the formula like so: “IF(2>1, “Yes”, “No”)

This function would insert a “Yes” into the cell being programmed, and is one of the more simple ways to use the function. However, you can swap any of the aforementioned variables for other formulas as well. This is called “nesting”.

For example, you could write a formula like this: “=IF(K5<K6,”YES”,IF((COUNT(H7:H10>2)),”HIGH”,”LOW”))

Let’s describe what this function is doing in sentence form, with a context of evaluating vendor proposals: If Vendor 1’s cost is lower than Vendor 2’s cost, enter “YES” into the cell, if Vendor 1 is not lower than Vendor 2, then if the number of DC’s the new vendor carries is greater than 2, enter “HIGH” into the cell, otherwise enter “LOW” into the cell. This tells me either to select Vendor 1, or to evaluate several other dependencies to make a final decision.

This level of specificity is not normal in everyday speech, but is absolutely critical in procurement. If you have a vendor proposing an agreement, a full evaluation of the value proposition can’t be based on just one variable. Practicing this and other logic functions in Excel and other tools is an excellent way to hone your ability to evaluate complex procurement problems.

For more information on how SafeSourcing can assist your team with 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.

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