Archive for the ‘Eprocurement Auction’ Category
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.
Posted in E-procurement, E-procurement Solutions, E-supply Chain, Eprocurement Auction, Global E-procurement, Retail Supply Chain
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.
Posted in E-procurement, Eprocurement Auction, Global E-procurement, Online Procurement, Online 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
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.
Posted in Eprocurement Auction, Reverse Auction, Reverse Auction Procurement
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.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Global E-procurement
Thursday, November 11th, 2010
As we have discussed in a prior posts, a Request for Information or “RFI” is in its most simple form a document distributed to new sources of supply prior to inviting them to participate in a Request for Quote or RFQ. The process assists you in your decision as to whether or not you wish to invite new suppliers to participate.The document lets potential suppliers know the information you require in order for them to be considered for participation. This is also a great way to update the information for your incumbent suppliers. This is particularly important in light of our recent economic woes.
Some of the information contained in an RFI can include but certainly is not limited to the following.
1. General education relative to your procurement process.
2. Certification requirements such as safety or environmental.
3. Rules of engagement
4. Supplier general information.
5. Sourcing tree information.
6. Country of Origin Information.
7. Near Shore or Off Shore Practices
8. Financial Information
A Request for Information is a great tool that when used properly enables retailers to evaluate potential new sources of supply while also holding their incumbent suppliers accountable to the same standards they would of new suppliers. Although most often used in complex sourcing events, RFI’s are very helpful in almost all e-negotiation events.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction
Wednesday, November 10th, 2010
This was the case years ago, but with the advent of many of the internet based prescription drug sites such as RXlist, Drugs.com and many retailers sites, it is easy to find lists, formulations, directions, dictionaries and generic equivalents. What more could a Pharma buyer ask for. Now all you need to do is use your e-procurement solutions provider to drive your costs down.
According to RXlist, the top twenty prescription drugs in the U.S. are as follows.
1. Lipitor
2. Hydrocodone / Acetaminophen
3. Hydrocodone / Acetaminophen
4. Levothyroxine sodium
5. Amoxicillin
6. Lisinopril
7. Nexium
8. Synthroid
9. Lexapro
10. Singulair
11. Plavix
12. Simvastatin
13. Hydrochlorothiazide
14. Amlodipine besylate
15. Azithromycin
16. Warfarin sodium
17. Furosemide
18. Azithromycin
19. Levothyroxine sodium
20. Advair Diskus
Let’s hope this information helps you to drive down your costs.
We look forward to and appreciate your comments
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Global E-procurement
Friday, October 15th, 2010
In yesterdays post of the same title we discussed many reason why using these tools can help to make your company more competitive and profitable at the same time. What we left out is that the might also keep your company in business.
A number of years ago as a young sales person I traveled to a regional retailers store to demonstrate the newest scanner/scale technology. Yes, believe it or not there was a time when scanners and scales were not an integrated product. I had practiced my demo for days and planned on using labor reduction, customer throughput and error elimination as part of my ROI discussion. When I arrived at the store and met the manager I asked him to find some produce that I could demo. What was curious to me was that there were no customers in the store and I mean none. The manager explained that Wal-Mart had opened a Hyper Mart down the street. These were much bigger than today’s Super Centers. All the productivity in the world could not help this retailer as the competition offered greater selection and better pricing. Throughput, error reduction etc. did not matter because customer traffic was down substantially. This retailer is no longer business today.
I am not against Wal-Mart or any other quality retailer like them that wants to compete for new business. Tesco from the UK actually came to the U.S. with their small Fresh N Easy format a couple of years ago. What should concern retailers, acualty smaller ones is that Wal-Mart now plans to open small urban stores that are predominantly focused on groceries. Because of whom they are and how they buy. small retailers and I mean regional and small chains will not be able to compete, will loose business and unfortunately some may fail.
E-procurement tools just might be what allows your company to compete and exist. It will take quite a while for Wal-Mart to test and roll out this model, so now may be a good time to prepare by improving your bottom line and creating your own war chest.
As an example, SafeSourcing does a lot of work with regional and small drug store chains. These chains have seen average savings of 24.7% during the last year using our tools. That’s not bad for an industry with a 1.5% bottom line.
Give us a call; if you don’t save you don’t pay.
We look forward to and appreciate your comments
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction
Thursday, October 14th, 2010
Nothing else that a retailer is doing including remodels, customer marketing campaigns, new formats, new products or any thing else focused on sales increases can have the impact on your bottom line that e-procurement tools can. If you choose to use hosted or SaaS based offerings, the cost is so low as a percentage of savings that it’s almost silly. If you want to free up some cash in order to fund those other opportunities mentioned above now is the time to reach out to companies like SafeSourcing.
Cost of goods and services is the largest area of retailers P&L. Focus on this area can drive cost from their business immediately. Since the early 1990’s, initiatives focused on the customer in the form of CRM programs, Efficient Consumer Response initiatives, and Large scale data warehouses or decision support systems have been implemented, but have not appreciably improved the bottom line for many retailers.. E-procurement solutions immediately improves the effectiveness of buyers and category managers by offering them a broader universe of choices over a shorter period of time, without the need to conduct detailed research, and as such makes their job easier.
Calculating the dollar and percentage return on investment at the conclusion of an e-procurement event is immediate so the ROI in most cases is also instantaneous. Historical savings in the retail industry have averaged as much as 20% and in many cases has been as much as 10X or greater. In almost all cases these are direct savings versus budgeted expenses. As such the dollars drop directly to the bottom line and can easily be converted to basis points of improvement that are factual and reportable within a current quarter. To this authors knowledge there are no other applications or tools that can make this claim.
Give us a call; if you don’t save you don’t pay.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Global E-procurement
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
