Archive for the ‘Eprocurement Auction’ Category

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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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When should Retailers use a Request for Information or RFI?

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.

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Sourcing prescription drugs gets a little simpler all of the time.

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

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If you want to improve your profitability maybe it’s time to look at a private label program.

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.

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E-procurement.What’s in a definition?

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.

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E-procurement.What?s in a definition?

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.

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Retailers; how much are you really saving with reverse auctions and other e-procurement tools.

Monday, August 16th, 2010

Further more; your buyers can not save you as much as you might save if you used these types of tools. So when and if you do, make sure you measure and understand the true savings.

There are all sorts of e-procurement companies. Not all focus only on retail. However, all of them have web sites and all of the web sites tout savings that are all over the map. The question is what type of savings are they talking about. Following are some of examples.

1. Total low quote savings.
2. Total low quote company savings.
3. Total savings awarded companies.
4. Total realized savings.
5. Total savings versus budget period to date.
6. Total category savings.
7. Total savings year to date.
8. Total annual realized savings.
9. Total potential savings.

Companies really have to be specific as to what they ask each company relative to savings opportunities and make sure they have a formula in place for calculating savings over the course of the contract period for which the products are being sourced. There are all sorts of missed opportunities associated with actual event based low quote savings that can be created by lengthy review periods, delays in sample evaluation, extended award time periods, delays in contract dates, switching costs within the finance department, delays in shipping, specifications not being matched and specification creep that results in adding more expensive non specified items.

The bottom line is that you may have had low quote savings of 28% and that’s great. You may have had net realized savings of 18% and that’s great too. However if you don’t have a plan as to how you will measure savings you won’t know what caused the leakage and it can’t be fixed.

We look forward to and appreciate you comments.

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Pricing for Retail E-Procurement can be interesting!

Tuesday, July 27th, 2010

In other words, there are too many companies that have been at this for a long time whose pricing is way too high in the retail marketplace for what they provide.

I was speaking to a large retailer recently that has an unlimited use tool in place from a very large player in the e-procurement space. I asked what type of savings they were able to achieve and how many people they had assigned to handle events, supplier communication, hosting support etc. These are all of the normal questions.

After we had discussed at least 20 different categories, it occurred to the both of us that the savings from our events were at least a third higher than the savings from the use of the unlimited tool.? Even if you added in our fees, the savings were still substantially higher on event by event basis with SafeSourcing. There are a number of reasons for this. One is that to many times when retailers deploy a solution internally or as a SaaS offering they default back to their old way of doing business with a new tool once the solutions provider has left. Supplier research is limited, the number of participants is less, training is inadequate and the result is lower savings. There are also proprietary benefits to the SafeSourcing solution that I won?t share.

Another way that retailers over pay, is when an older company comes in and matches the lower cost of doing business with a newer and better provider in order to win the business. This model will not last because many of these older companies are not structured in such a way that will allow them to absorb these lower fees profitably on an ongoing basis. Over time your price will continue to rise. In fact next year, your price should go down if you are running the same event again. Hasn?t most of the work already been done in the past?

Some good questions to ask your prospective solutions provider would be the following.

1.?How many events per month can one of associate host?
2.?What are you doing to automate your solution to take out cost?
3.?Will we pay the same in year two as we paid in year one for identical events?
4.?Is your cost higher because of your investment in brick and mortar locations?
5.?Is your cost higher because of your headcount required to run events?
6.?What are your average savings for events over $100K?
7.?What are your average savings for events under $100K?

There are certainly more questions but you get the idea. Be careful out there.

We look forward to and appreciate your comments.

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What is retail e-procurement?

Thursday, June 24th, 2010

In many cases the question might be better phrased as to; what is procurement?

It’s amazing as to the number of companies both large and small that have no internal procurement organization. It is even more amazing how small the groups when companies do have them. In either case due to a of lack of resources, disconnect from information resources, lack of authority and little collaboration an energy sucking power struggle exists that limits the effectiveness of the entire procure to pay process.

I like to think of this process as the procurement lifecycle. In general the lifecycle follows a pretty typical buying pattern, each step of which has its own set of difficulties. The first step which when generalized could be called information gathering. Inforamtion gathering can include collecting and producing product specifications as well as research and locating suppliers that can meet those speciations. While the last item in the list called renewal can include the entire order and fulfillment process as well as contract compliance.

The procurement lifecycle pretty closely follows this process

1. Information gathering
2. Supplier contact
3. Background review
4. Negotiation:
5. Fulfillment
6. Consumption, maintenance, and disposal
7. Renewal

If we cycle back to our original question of what is e-procurement? The answer is pretty simple, it is the electronic or internet based version of the same process much of which has its own unique terminology.

We look forward to and appreciate your comments

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