Archive for the ‘Eprocurement Auction’ Category

Hey buyers! The economy is still terrible. Maybe now is the time to finally try reverse auctions.

Wednesday, August 10th, 2011

However, we continue to see a reasonable uptick in the use of e-negotiation tools in retail and this author believes that some of the following quotes from a retail CEO and his team  that watched their first  reverse auction last week may be the reason why.
1. “This was pretty simple to do”
2. “If we hired someone we could do these ourselves with you guys”
3. “This is fun”
4. “You mean the reports are already available”
5. “I love the sports concept”
6. “It was easy to follow the marquis and what was going on from one screen”
7. “The multiple color schemes were great”
8. “I can’t believe how fast you guys set this up”
9. “We saved that much money and only have to pay what we discussed”
10. “Can we do another one today”
11. “I may get a promotion out of this”
12. “I love that calculator at the end of the bid process”
13. “I like all of the supplier data that was accessible during the auction”
14. “Now I know how the big guys get the pricing they do”

Why not join others that have come a little late to the party. You can still benefit because today’s tools are easier to use, more interactive, maintain your attention during an auction, integrate gaming technology to keep it fun and are lower cost than their predecessors. If you happen to have already been doing this for years, why not find an easier way or do it less expensively.

If you would like to have fun, save money and do it quickly, please visit us at www.safesoucing.com.

We look forward to and appreciate your comments.

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Getting to Know the Organizations Helping to Protect Us

Monday, April 25th, 2011

If you turn on the news at any time of day you are constantly being faced with hundreds of stories about people trying to hurt other people.  It can be so overwhelming at times that it seems there is no one actually trying to “help” anyone else.

The fact is there are thousands of organizations and millions of people all over the world whose primary goal and focus is to help protect the planet and more importantly, the people on it.  These same organizations also provide certifications for millions of products that companies buy every day that demonstrate an awareness for protecting us from the “shortcuts” and harm that so many times arise in the course of making those products.
Organizations like the Forest Stewardship Council, who certify wood products promoting better and more responsible uses of our forests and ensure the sustainability of those same forests that are used in making their products.

 There are literally tens of thousands of organizations that provide these types certifications as well as the lists of the certified companies and products who have demonstrated that capability to do things the right way.  These items can be very useful resources to helping your company select a better mix of product.

For more information about these types of organizations please visit the SafeSourcing Wiki or contact a Customer Service representative to find out how you can begin sourcing from suppliers out of our database of certified vendors today.

We look forward to and appreciate your comments.

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Why procurement and supply chain professionals need e-procurement tools more than ever.

Thursday, April 14th, 2011

Procurement and other supply chain professionals have developed and nurtured existing relationships within their incumbent suppliers for years and in some cases decades. Too often, this has led to incumbent suppliers becoming to comfortable. The feeling of entitlement begins to creep in and some suppliers feel as though their business will be renewed annually. Too often this is true.

This author has often said that the job of buyers, category managers, procurement executives and other supply chain knowledge workers is the most difficult job in all of retail and retail distribution. These professionals are literally swamped. Quality, safety, environmental issues coupled with the enormous amount of new product offerings is overwhelming. Just conducting the basic research required to identify potential new sources of supply, finding the correct contact information as well as determining if the company has the capability to meet your needs. All of this is before you even sample, price or test new offerings. No wonder it is so easy to just stay the current course. This however would be a mistake.

A general rule of thumb that this author has always ascribed to is if you are doing business with a current supplier for more than three years and are only negotiating with that supplier, your prices are probably too high. The question is how can you find out?

That is where e-procurement tools come in to play. I won’t advertise here, but if you were to Google e-procurement or reverse auctions etc. any number of companies will come up. Or if you were smart, you just click this link and have measurable savings in less than 30 days and often faster. Visit SafeSourcing.

We look forward to and appreciate your comments.

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Is retail barter better? Maybe not if you can find willing participants for a forward auction of the same merchandise.

Friday, April 1st, 2011

Why is it that we never hear of retailers running forward auctions? There are dozens of sources waiting to buy your overstock which all retailers know will reduce shrink and improve bottom line profitability. Many companies that may have large amounts of excess or slow-moving inventory use corporate barter transactions to move this inventory. This author thinks that a forward auction may drive better cost recovery.

If you go to any internet search engine and type in the term overstock, the data returned is in the millions of pages. Many of these links are locations  for Business to Business (B2B) and Business to Consumer (B2C) companies that will gladly agree to participate in e-negotiation events in the form of a forward auction to purchase your overstock or liquidated products for resale through their on line offerings.

Online forward auctions are an ideal way to get the best price for capital equipment, materials, overstock and services you may want to sell, such as when you need to liquidate excess inventory. There are two basic types of forward auctions. The first is a liquidation auction where sellers are reducing inventory from overstock or liquidation and buyers are seeking to obtain the lowest price for items they have an interest in for resale and other purposes. The second type is more of a marketing auction where sellers are trying to sell unique items and buyers wish to obtain unique items. This is typical of an eBay type of offering.

Much of retail shrink happens in the back room or receiving area of retail stores. It just so happens that this is also the location of much of the overstock in the retail community. Much of this product sits there month after month resulting in significant margin hits to quarterly and annual earnings and as such to a company’s stock price.

Ask your e-negotiation solution provider how they can help reduce your overstock and shrink with forward auction tools, and who they would invite as buyers. You company stakeholders will applaud your efforts.

We look forward to and appreciate your comments.
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IT Sourcing and the Relationship Between Hardware and Software

Tuesday, February 22nd, 2011

We live in a world that is moving so technologically fast that it is difficult to be an expert on everything that is happening.  Because many of us have businesses and responsibilities that have nothing to do with all of this emerging technology, we rely on 3rd parties such as consultants and sometimes our own vendors to help make decisions that relate to these areas.

One of the places that I consistently see businesses make mistakes on when they take direction from an outside source is to buy the hardware they need to go with the software they purchased from the software vendor.  While it can be cost-effective in some cases, generally if a software company is selling hardware they don’t manufacture, you are either paying too much for it now, or you will down the road when it comes time to upgrade or repair that hardware.

Many times vendors will claim that a company must get the hardware from them because it was made specifically for them.  Frequently this is just not the case, and when it turns out to be the case, it is probably time to evaluate the vendor/company you are using for that software.

I ran across a blog the other day that actually dealt with this very topic.  In the blog the author was discussing how important it was for the customer that they select software that is completely independent of the hardware used in it.  It also went on to detail that the best software will integrate with several types of hardware giving the customer the choice to select the products that fit them the best when it comes to features, functionality and price. As the consumers you have the power to demand these types of options, make sure you select vendors that will give them to you. Blog

We look forward to and appreciate your comments.

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Is there benefit to a large retail supplier database?

Wednesday, February 2nd, 2011

Reviewing why retailers do not have continuing success when running prior e-procurement events over again, one area of commonality is a lack of new suppliers. Another is the price being too high for the same event that has already been built and will result in lower savings the 2nd and 3rd time around.

There is a proper way to insure the sustainability of your reverse auctions going forward. Following these guidelines will also encourage senior managements consideration of placing more spend under the control of e-procurement tools and specifically reverse auction tools.

Once you are armed with a robust retail supplier database and related tools such as  the SafeSourcing® SafeSourceIt™  tool set:

1. Conduct a detailed category discovery
    a. Learn all there is to learn about the retailers way of doing business.
    b. Walk distribution centers and warehouses
    c. Walk an array of stores and understand all formats of the enterprise.
    d. Compile a list of all corporate categories
2. Rank categories by
    a. Total spend
    b. Importance
    c. Sourcing frequency
    d. Quality objectives
    e. Look for aggregation opportunities
        i. Lighters, lighter fluid, flints, fire sticks.
3. Conduct supplier discovery
    a. Rank suppliers
        i. Size
        ii. Experience
        iii. References
        iv. Environmental certifications
        v. Safety Certifications
4. With all of the above in hand; develop a three year game plan
    a. Identify suppliers for each event over the three years
    b. Develop savings targets by category
    c. Develop a three year time line  for all categories
5. Role Play internally  the first year for a test category
    a. Ask the following questions
        i. How will you award the business
        ii. Review alternate scenarios
        iii. Review savings by scenario
        iv. Determine which suppliers will be invited back
        v. Determine what new suppliers from your database search will be   invited next year

We look forward to and appreciate to your comments.

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Here is how to insure that your e-procurement bids as successful as possible

Tuesday, January 11th, 2011

Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality. Probably one of the most important elements and most overlooked is that of incumbent supplier communication once a bid has been authorized. That is not setting any false expectations with your incumbent suppliers. As you already have a relationship you will most likely receive calls, emails or texts as to what is going on. Your answer has to be that we value our relationship and encourage you to use this process as it is the only process by which we will review bids.. Do not indicate that everything will be ok or that things will work out just fine or any similar language. If you are using a 3rd party, instruct your supplier to provide any questions or communications through the third party only. 

The e-negotiation process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on an equal playing field. Ideally each supplier must bid on the same documented specifications, terms, and conditions for all items. However breaking out individual line items that a specialty supplier can provide bids for can help to reduce the opportunity for suppliers to manage the overall gross margin of their bids and drive higher savings. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest possible price, for the benefit of the host company. Competitive bidding cannot occur where specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding tangible benefit for the host company.

The above message needs to be communicated to any and all associates that are involved in the process and may have a reason to communicate with suppliers.

We look forward to and appreciate your comments.

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When should you run a reverse auction? How much margin is enough?

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.

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Just what is a reverse auction? Be careful the answer is not that easy.

Friday, November 19th, 2010

There has been a lot of discussion about reverse auctions lately in the blogosphere. Most of it has centered on whether or not reverse auctions are strategic or not. Many of you are well aware of my opinion on that subject. What interested me was my customers thought that there was a negative reaction to the term. Guess where it came from? You’re right it came from the buyers which is one of the two places it usually comes from, the other being the suppliers. This normally happens during the early adoption stage of e-procurement tools within a company.

My answer to the question was you can call it what ever you want within your own company but do you know how many kinds of reverse auctions there really are. The answer was no. So listed below are some of the names of different types of reverse auctions. Some apply to specific industries while others are just enhanced versions of a particular type. Probably the most commonly used is the classic Dutch auction.

My question to you e-procurement types out there is how many can you name or better yet define the use of. And if there are so many types with the reason being manipulation of the results in different ways, then maybe reverse auctions are strategic or not.

1. English Auction
2. Multi unit English Auction
3. Yankee Auction
4. Proxy English Auction
5. Classic Dutch Auction
6. Vickrey Auction
7. Japanese Auction
8. Chinese Auction
9. Pay-Your-Bid Auctions
10. Aggregate Demand Auction
11. Negotiated Price Auction
12. Exchange

We look forward to and appreciate your comments.

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Twenty-one reasons why all retailers should use E-Procurement tools.

Monday, November 15th, 2010

 These are certainly not all of the benefits that retailers can drive from the use of e-procurement tools, but it is a good starting point.

Our list is not ranked in order of importance although many might argue that not much is more important than improved earnings.

1. Guaranteed to improve net earnings
2. Guaranteed to improve safety
3. Guaranteed to improve Corporate Social Responsibility.
4. Guaranteed new sources of supply
5. Retail has less spend assigned than any other industry
6. Streamlines the  procurement process
7. Holds suppliers accountable to your standards.
8. Improves quality
9. Cost avoidance in a volatile market
10. Creates a competitive environment
11. Drives reliable market pricing
12. Maintains a reliable history for future comparison
13. Educates suppliers as to how retailers wish to procure products
14. Supplier training eliminates questions
15. Improved and consistent product specifications
16. Improved negotiation.
17. Improve carbon footprint
18. Simple award of business process
19. Frees up time for other tasks
20. Works for procurement of all product categories
21. Provides a detailed audit trail.

This author is not sure why a derivative of this list could not become the mission statement for any procurement department.

We appreciate and look for ward to your comments.

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