Archive for the ‘E-procurement Solutions’ Category

Do you know how a price index plays into e-procurement best practices?

Thursday, March 29th, 2018

 

Todays post is a repost by Ron Southard, CEO at SafeSourcing Inc.

From a simplistic perspective an index is a system used to make finding information easier. There are any numbers of indexes or indices available to help procurement knowledge workers insure they are sourcing products at the best possible pricing. The key word here is price as what we will be discussing are specifically price indices.

According to Wikipedia a price index (plural: “price indices” or “price indexes”) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to measure the economy’s price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.

Normally an index reflects the current and historical price of a variety of commodities ranging from metals to grain. A common index used in sourcing petroleum products is OPIS or the Oil Price Information Service which you can learn more about by visiting www.opisnet.com.  However in order to drive the best possible fuel pricing there are other dependencies such as whether you are doing spot buys or bulk purchases and these strategies will determine what specific index you would want to review as well as it’s relation to other product information sources such as Platts or the Gulf Coast spot assessments.  This will put you in a better position to determine how to bid the product and also earn a discount relative to the lowest common denominator.

All other commodities have similar sourcing issues dependant on what the highest cost item is in their product makeup. An example here might be the cost of grain in the feeding of cattle or poultry.

Ask you solution provider to explain these tools to you and to recommend how you might use them toward the best outcome.

If you’d like more information, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

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Where is the best place for retailers to spend their effort to improve profitability?

Friday, January 12th, 2018

 

Todays post is a oldie but goody by Ronald D. Southard, CEO at SafeSourcing

Obviously all retail companies would like to focus on all three areas and there are even sub sections of these top line areas that we could spell out as needing attention. The challenge is where to deploy already taxed resources?

It does not require an accountant to figure this out. If we assume that COGS or cost of goods and services is about 75% of top line revenue that would result in a simple gross margin of 25%. Based on a number of industry reports we are also safe using a shrink number of 3% of top line revenue.

This author is aware that there area a few companies with shrink below 1% and cost of goods below 75% which means there are also companies with gross margin better than 25%. The obvious question is; are these companies that solution providers want to target for profit improvement sales? Probably not.

So let’s look at an example of shrink improvement with data analysis tools and process improvement tools versus cost compression with SaaS e-procurement tools. Let’s assume we have a company that does top line sales of $1B. Using a shrink number of 3% shrink would be $30M annually. If you were able to reduce shrink by a third in one year, profit improvement would be $10M. If this were a supermarket company with a 1% bottom line or $10M, improvement could be as much as 100%.

Now let’s take a look at reduction in cost. If we assume the same company has COGS of 75% or $750M and that we were only going to address 20% of that number or $150 and only reduce those costs by 20% which is slightly above industry averages the net profit improvement would be $30M or 300% improvement in year over year net profit. If we were only able to achieve 10% savings which is well below industry averages, net profit would improve by 150%.

I’ll leave the gross margin example for you to figure out. In the above case it is clear that attacking COGS has an impact on the bottom line of up to 3 to 1 versus addressing shrink with your already taxed resources.

If you are interested in an immediate impact to your bottom line, please contact a SafeSourcing Customer Services associate today.

We look forward to and appreciate your comments.

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On the Twelve Days of e-Procurement Christmas.

Wednesday, December 13th, 2017

 

Todays post is a holiday favorite by our CEO from our SafeSourcing Archives.

  1. On the first day of Christmas our e-procurement service provider gave to us, a streamlined procurement process.
  2. On the second day of Christmas our e-service provider gave to us, more suppliers to source our goods from.
  3. On the third day of Christmas our e-procurement service provider gave to us, pricing that works for smallest categories..
  4. On the fourth day of Christmas our e-procurement service provider gave to us, consistent and customized product specifications.
  5. On the fifth day of Christmas our e-procurement service supplier gave to us, more time for other priorities.
  6. On the sixth day of Christmas our e-procurement service provider gave to us, improved quality in our products.
  7. On the seventh day of Christmas our e-procurement service supplier gave to us, better supplier education.
  8. On the eighth day of Christmas our e-procurement service provider gave to us, a simple award of business process.
  9. On the ninth day of Christmas our e-procurement service provider gave to us, support for a better carbon footprint.
  10. On the tenth day of Christmas our e-procurement service supplier gave to us, total category e-procurement.
  11. On the eleventh day of Christmas our e-procurement service provider gave to us, safer products for our customers and planet.
  12. On the twelfth day of Christmas our e-procurement service provider gave to us, a sustainable e-procurement process and improved corporate net earnings.

Now, ask yourself if all of these goals are accomplished on your company’s behalf by your present e-procurement service provider. If n0t, please contact a SafeSourcing customer services account manager. Click CONTACT US!

We look forward to and appreciate your comments.

Continued best wishes for a Merry Christmas  the rest of the Happy Holiday Season.

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The Politics of Procurement

Wednesday, October 4th, 2017

 

 

Today’s post is from our  SafeSourcing Archives!

As a Project Manager within SafeSourcing, I am often tasked with beginning a sourcing project, as well as ending it. Mixed in with customer communication, there is also supplier communication.  We can learn vast amounts of information from the suppliers that we source products and services from.  We can find out current industry trends, as well as the forecast for the following year.  The possibilities are endless.

At SafeSourcing we are exposed to hundreds of suppliers on a weekly basis. Some suppliers shine brighter in some areas than others; however, we also run across suppliers who become unresponsive during the process of running an RFI, RFP, or an RFQ.  This is where the politics come into play.  When this happens, you “re-route” your approach.   Many times it becomes a simple solution by being redirected to another sales consultant, or perhaps a new department. Sometimes this approach is not conducive, and another strategy must be applied. At this point, the request becomes an escalated issue within the company. I normally ask whom the original contact’s boss is, “who makes decisions to participate?” More often than not, the company will want to know your credentials.  As a Project Manager who is intimately familiar with any project I take to market, I can accurately and confidently answer any questions or concerns.

At the end of the day, the politics in procurement is managing the supplier interactions from a sales individual all the way to the CEO.

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.

 

 

 

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Ecosystems Abound​

Tuesday, September 19th, 2017

 

In technology, the term ecosystem Is used to describe a set of platforms, software, solutions, etc. that all work well together to derive more benefit for the users. Often the additional benefit is found through very well designed integration points or through efficiencies. In procurement, these ecosystems exist and create these same types of benefits for the users.

The typical Procure-to-Pay model can be used as an example of how an organization can put their procurement tools and practices at the center of their ecosystem. Some eProcurement providers, SafeSourcing included, offer integrated Procure-to-Pay solutions with a focus on procurement. As more and more organizations look to cost reductions as a key part of their strategic goals, this becomes increasingly more valuable.

Of course, many organizations have implemented or considered eProcurement in their sourcing, but from an ecosystem standpoint, many have not yet progressed to capture the additional value available. For example, an organization that utilizes eProcurement, but does not have their contract management tools within that same ecosystem often has a diminished return relative to the success of the contract management tool. When that tool falls outside of the eProcurement ecosystem, users may not receive timely notifications of key contract dates and financial losses related to renewals might be experienced.

Similarly, organizations whose eProcurement ecosystem also includes cataloging and purchase order capabilities will find that they have a higher attainment rate of the initial savings created by procurement as well as tighter adherence to approved purchases throughout the life of the agreement.

These are just two examples of how to benefit from having procurement at the center of your ecosystem. These are certainly not the only two examples. To learn how you can get more from your eProcurement tools, contact a SafeSourcing representative.

Dave Wenig is the Director of Sales, North America at SafeSourcing. For more information, please contact SafeSourcing.

We look forward to your comments.

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HEY! Leadership Teams!

Saturday, August 12th, 2017

 

Todays post is from Ron Southard CEO at SafeSourcing Inc.

Let’s also assume that you want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time, like the next budget period; and want a sustainable process moving forward. Are you comfortable with your teams answer?

A number of issues you might consider are whether you have the requisite headcount, specifications, strategy, research skills as well as knowledge of new sources of supply to accomplish these lofty goals yourself.

Once you have settled on the fact that your existing team cannot achieve the above goal, the next question should be; what type of event services can an e-procurement solutions provider offer to help us if we can’t this ourselves?

By now, let’s assume you have come to the conclusion that there is no way possible for your team to do this alone. You now need to find a reputable eProcurement solutions provider. A quality e-procurement solutions provider should be able to ramp up to your task immediately. They should possess skills that are the foundation of their past success. These are very specific skills that enable them to run large volumes of e-procurement events in a full service mode with little guidance from you that have historically driven impressive savings on products and services over a long period of time. They should be able to provide reference to where they have done this in the past and how they were able to augment other company’s staff with little interference of their day to day work. Remember, knowledge transfer; passion, skill and required headcount to carry out these practices on a day by day basis are what drive results.

This process is provided by people behind the scenes with a very specific skill sets. If you really want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time, like your next budget period. And, you already know that you cannot do this by yourself, reach out to a Safesourcing customer services account manager to see how quickly we can be of assistance.

We look forward to and appreciate your comments.

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Enterprise Software RFPs

Friday, August 4th, 2017

 

Todays post is from Ron Southard, CEO at SafeSourcing

We’ve discussed the differences between the RFPs, RFIs, RFQs, and Surveys many time and also touched on why they were different as well as when you would use one.  What we said then was that you typically want to run one of these events when you have an idea about the basic functionality of a product you need but are not sure who can provide it and what else it is they can bring that you didn’t think of.

In many cases, the road to procuring enterprise software will require one of these tools due, in part, to the fact that software can change so quickly, but also because typical decision factors like price play a much smaller role to the features and functionality of the software.

In preparing to make a major software purchase a Request for Information or Proposal can be a great first step.  Here are some things to keep in mind about the solution and the company when preparing for one.

Flexibility – One of the keys in the process of evaluating software solutions and the companies that create them is to gather information about the flexibility of the product.  A focus on how configurable the system is and how well a solution can be fitted with your company’s needs and appearance is an important part to building a good software RFP/RFI.

Reputation – A company’s reputation for delivery used to go a long way in the business world but in the wake of a tougher economy price has begun to gain ground.  In the arena of software, it is still one of the most important factors to evaluate when selecting a software partner.  Building a relationship with companies known for under promising and over delivering on a consistent and referenceable level can be a huge factor in protecting a million dollar investment.

Pricing model – The key here is not in the actual price but how the company prices that is important.  Your company’s needs will dictate the pricing model that benefits your company whether for the enterprise; per seat or per user.  How a software provider prices and what they charge you for are HUGE factors in determining if they are suited for you and your company. The more information you can gather at the RFP/RFI stage as possible is very important.

Support – There is no more important product to verify good support on than software.  As upgrades occur, employees get promoted or leave the company, new employees need training, or issues arise, the level of support a company will commit to is critical to the confidence you can place in them.  On top of this, the more mission critical the functionality the software is to support is for your company, the more important the level of support becomes.  Any software RFP/RFI you create should have a detailed section to determine what level of support you can expect from each vendor.

For more information on SafeSourcing and how we can provide RFIs/RFPs that help you focus on these important factors, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

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Here is some Lasik for retail e-procurement professionals in order to create better focus.

Monday, July 17th, 2017

 

Here’s and old post that continues to have merit with a link to another resource from FitSmallBusiness.com

Very often this author gets the question as to where to start in the e-procurement process. Too often I read that one needs to do a detailed discovery. The question is of what and how to get to the right place the quickest. So here is some Lasik for you that will help you see a little more clearly.

Using another idiom, and with renewed focus we hope to make it possible to see the forest for the trees by not focusing on excessive detail that is not needed yet.

There are four areas where you should begin your search for an e-procurement starting point and they are pretty simple.

1. Gross Sales
2. Cost of Goods Sold
3. Gross Margin
4. EBITDA.

This is really to say that if you take a look at your top line or Gross Sales and your bottom line or EBITDA and they are out of whack relative to your plan or industry averages you need to look at the above the gross margin line or Cost of Goods Sold or below the gross margin line which is expense related items for as an e-procurement focal point..

As such a couple of terms whose definitions you should be aware of are as follows.

According to two separate sources, Wikipedia and FitSmallBusiness.com  Cost of Goods Sold or COGS is a financial accounting  term which includes the direct costs attributable to the production or procurement of the goods sold by a company. This amount  can include the materials cost used in creating the goods along with the direct labor costs used to produce the m. It excludes indirect expenses such as distribution costs and sales force costs. COGS appear on the income statement and can be deducted from revenue to calculate a company’s gross margin.

Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA which is an approximate measure of a company’s operating cash flow based on data from the company’s income statement. EBITDA is calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.

Based on the above a lot is determined by who built you annual plan and how realistic it was to begin with.

Tomorrow we will review what underperforming these measure means and how it should point you in the direction as to where to begin your e-procurement focus.

We look forward to and appreciate you comments.

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The Importance of Marketing your Brand

Wednesday, June 14th, 2017

 

Today’s post is from our SafeSourcing Inc. archives

How are you marketing your brand? Is it bringing in the customer base you desire? Are you achieving your desired results?

Your company brand is your mark of distinction; it’s what sets you apart from your competitors. When you establish your brand, it is important to also develop a plan of execution by implementing a brand marketing strategy. Your level of commitment reassures consumers, suppliers, and anyone else that your company does business with that they can trust you.

“Brand management is so important that Reputations Corporation, a Vancouver-based consultancy group, reports that 72 percent of consumers say reputation influences their buying decisions; 80 percent of employees will accept less pay to work with a company with an excellent reputation; while another 89 percent say reputation is a tiebreaker between equal products. Whether you’re trying to influence key decision makers or attract and retain top talent, you’ll want to consider the following tips on managing your company’s brand.” (Fenn, 2010)

If you need help with: buying marketing tools, hiring the right marketing consultants or with any advertising avenues. We can assist you with your sourcing needs and look into the potential savings in the process.

SafeSourcing, Inc. provides innovative eProcurement tools that can increase efficiency and improve profitability for our customers, and provide superior value for all stakeholders. In addition to providing information, tools and services, SafeSourcing proactively supports consumer safety and environmental standards throughout the global supply chain management process. To learn more, visit SafeSourcing.com

Let SafeSourcing manage your sourcing projects. We enjoy bringing this blog to you every week and hope you find value in it. 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.

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Ahearn, Cale (2016, September 21). : Read more: Business Ethics Definition | Investopedia http://www.investopedia.com/terms/b/business-ethics.asp#ixzz4Vx9u5zDh Follow us: Investopedia on Facebook

 

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Could You Get More Procurement Savings?

Wednesday, May 17th, 2017

 

 Today’s post is by Dave Wenig, Director of Sales, North America at SafeSourcing.

Many of the organizations we speak with believe they handle their purchasing reasonably well, either with their existing internal processes or without any eProcurement tools at all. These companies may even realize savings as they negotiate with their vendors. That’s said; very few of these organizations are doing as well as they should, given the wide availability of eProcurement solutions and/or the ease of use available with full-service SaaS options.

Here are my top 5 signs that your organization is not maximizing the savings potential by using only a traditional procurement process.

  1. You only seek quotes from 2-3 vendors.Historically, our data suggests that having 6-8 suppliers quoting drives the highest possible savings.
  2. You haven’t competitively bid a category in the last 3 years.It is at this point that we find a category should be sourced, including non-incumbent vendors,to ensure you are still receiving the best market prices.
  3. You don’t have easy access to your existing contracts.If you don’t already, you should implement a contract management tool. Too often, we see organizations unsure of contract terms and key dates falling victim to unfavorable auto-renewals.
  4. You do not have a set of specifications for the category.This is both common and fixable and places the incumbent vendor in a place of perpetual power in negotiations.
  5. You’re not using eProcurement.As well as your organization does when negotiating, we see significant increases in savings, often 10-20% more, when our clients use their eProcurement tools effectively. One client recently admitted that they would never have asked for the prices or discounts that we deliver for them. Each of the four preceding signs is also an indicator that you’re not using eProcurement. In fact, by implementing a strategic eProcurement program, you’ll likely resolve one through four organically.

Do you see any of these signs in your organization? If so, take steps to correct and you’ll see immediate, measurable results.  For more information, please contact SafeSourcing.

We look forward to your comments.

 

 

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