Archive for the ‘E-procurement’ Category

You can procure anything, including Candy Canes Part I!

Wednesday, December 6th, 2017

 

Today’s post is from our SafeSourcing Inc. Archives

What does it take to make a candy cane, package it, market it, and distribution? All of these involve procurement. Today, the candy cane makes up a significant amount of the $1.4 billion Christmas candy market. In fact, billions of candy canes are made and consumed each year.

First the history of the candy cane: from the HomeBoy Media Network!

The candy cane is a Christmas tradition that many hold dear but nobody really knows why. Let’s face it, the only things we really know about candy canes is that they taste good and that they are red and white.

Whether the story of the candy cane is a legend or if it is true is not certain, but this is how the story goes: About two hundred-thirty years ago at the Cologne Cathedral in Germany, the children that went to church there were really loud and noisy. They often moved around and would not pay attention to the choirmaster.

This was especially difficult for the choirmaster when they were supposed to be sitting still for the long living Nativity ceremony. So to keep the children quiet, he gave them a long, white, sugar candy stick. He couldn’t give them chocolate or anything like that because the people at that church would think it was sacrilegious. So he gave them the stick and he bent it on the end to look like a cane. It was meant to look like a shepherd’s cane, and so it reminded the children of the shepherds at Jesus’ birth.

In 1847, a German-Swedish immigrant in Wooster, Ohio put candy canes on his Christmas tree and soon others were doing the same. Sometime around 1900 candy canes came to look more like what we know them as today with the red stripes and peppermint flavoring.

Some people say the white color represents the purity of Jesus Christ and the red stripes are for the wounds he suffered. They also sometimes say that the peppermint flavoring represents the hyssop herb used for purifying and spoken of in the Bible. The shape also looks like the letter “J” for Jesus, not just a shepherd’s cane. It is possible that these things were added for religious symbols, but there is no evidence that is true.

Around 1920, a man in Georgia named Bob McCormack wanted to make candy canes for his family and friends. He later started mass-producing candy canes for his own business which he named Bob’s Candies. This is where many of our candy canes come from today.

Tomorrow we will discuss the raw materials needed to make candy canes.

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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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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Advantages of e-Procurement.

Tuesday, November 14th, 2017

 

Today’s post is from our SafeSourcing Archives

e-Procurement comes with distinct benefits over manual purchasing, ranging from increased cost efficiency to greater access to suppliers. Let’s delve deeper into some of these noticeable advantages.

Increased cost efficiency is considered the primary benefit of utilizing an e-procurement purchasing platform. E-procurement puts a single buyer online with many suppliers, thus lessening the leg work traditionally associated with the buyer narrowing his or her field of suppliers.

Using the e-procurement platform, buyers have access to essentially an unlimited list of suppliers, which equates into a wider selection of goods and services. These suppliers have normally undertaken rigorous vetting procedures to ensure that they are the correct supplier for the specific job or work the client is requesting.

e-Procurement applications can be tailored to fulfill the distinct needs of buyers and sellers and be scaled to grow as the organizations expand. For example, suppliers from new territories can be added to supplier databases as the organization grows into new market segments.

e-Procurement processes can greatly increase productivity. Customers can acquire the items they want to procure from a catalog of approved items through an on-line requisition and ordering system. Purchasing staff can be relieved from processing orders, filing paperwork and handling lower priority tasks to focus on strategic sourcing and improving supplier relationships.

In some organizations, purchasing duties are dispersed over several different departments within the company. E-procurement platforms will enable a company to merge orders for similar items with one supplier, resulting in greater volume discounts and cost savings. Additionally, e-procurement may allow a company to simplify purchasing by reducing the number of products involved. Instead of having to sort through large volumes of paper or electronic catalogs, buyers are able to build custom catalogs that include only the items the company is interested in. Additionally, this method increases volumes of smaller numbers of items, which is another process used to generate volume discounts.

For more information on how SafeSourcing can assist you in exploring your procurement solutions for your business, 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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What always causes delays in the running of any e-RFX?

Wednesday, November 1st, 2017

 

Todays post is by Ronald D. Southard, CEO at SafeSourcing Inc.

Have you ever heard a buyer say I can’t find or don’t have a specification for that product or service? Or, I’m not sure how much we spent on that last year. Or I’m not sure if we have a current contract in place or when it expires if we do. Don’t’ laugh, because this is all too common at the best of companies. We all know this is true and that it happens every day of every week. How in the world can the specification be missing or not exist in the for something you are currently buying? How would we even understand if what we are receiving is what we ordered? Back door receiving systems have tracked this for years. What happens if we order one type of copy paper like recycled 96 white, and receive a lower quality product?

The above examples have always amazed me because an original order had to be placed at some point in time. In many cases the invoice (at least the original one) may even reference the product number or description if not both. Sometimes the invoice even calls attention to the terms and conditions. In fact, it’s a pretty good bet that the incumbent supplier has a copy of the original contract and specification on file that can be obtained with a simple phone call. On many occasions when hosting e-negotiation events new sources of supply may help to clarify specifications through their questioning about the upcoming bid collection. And then, and it is a big and then, there is of course the internet and sites like Yahoo, Google, and Bing.

If your procurement department has this type of issue, please contact a SafeSourcing customers services account manager. I’m sure they can bail you out in about 5 minutes ninety nine percent of the time.

We look forward to and appreciate your comments.

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Believe Me, You could be improving your profitability by up to 73%.

Monday, October 16th, 2017

 

Today’s post is by Ron Southard, CEO at SafeSourcing.

I would be glad to personally discuss this premise with any Retail CEO or CFO that wants to challenge it!

Let’s review exactly what a reverse auction is, how simple they are to use and the potential financial benefits?

Reverse auctions are web based  or Software as a Service (SaaS) tools that let retailers and other companies find the best suppliers for any resale or not for resale product or service they wish to source.  Using a web based reverse auction tool, retailers, other business or even large holding companies can locate and invite many more suppliers to take place in reverse auctions than they could possibly find or manage using traditional sourcing methodologies or even tools like BING or Google. During the reverse auction they can review on one screen all of the responses from suppliers, data about the suppliers, notes from the suppliers, product specifications and other necessary information in an instant. Upon auction conclusion which is typically less than 30 minutes including extensions host companies can review potential savings scenarios and award business right from their desktop. Sound simple? That’s because it is.

Now let’s get to the simple financial benefits. Let’s assume a $150M smaller Retail Company with industry average earnings of one percent or $1.5M. Additionally cost of goods for this company is 70 percent or $105M. Let’s also assume this company were to only source ten percent of their for resale goods spend or roughly $11M. With well below industry average savings of just ten percent, total savings generated would be $1.1M which is a direct impact to net profitability. If all other segments of the P&L perform to plan and all savings are recovered during the same business calendar year net profitability would increase to $2.6M or a 73% improvement.  Again this assume no tributes to Caesar or other funny accounting associated with new capital plans and the like

So, why don’t many companies use reverse auctions and other e-procurement tools? That’s a great question! Maybe someone out there has an answer.

If this author were you, I just could not ignore this type of opportunity.

If you’d like some examples of the types of savings SafeSourcing can generate for you by size of spend and category, please contact a SafeSourcing customer services account manager.

We look forward to and appreciate your comments.

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The Central Procurement Function!

Thursday, October 12th, 2017

 

Today’s post is from Ron Southard, CEO at SafeSourcing Inc.

As you can imagine the answer to this question could actually be pages in length. However the following is directionally correct based on the question and minus the organizational structure and alignment.

The Central Procurement Function in responsible for the procurement of goods, services and capital projects by an authorized group within a company’s hierarchy. Central procurement in a best case scenario includes the financial decision making authority specific to that procurement on behalf of the entire company for reuse or resale from an approved list of vendors or suppliers. In some cases the budget for a specific spend may reside within another functional area  where central procurement collaborates and negotiates on behalf of that areas subject matter experts but the subject matter experts approve the final vendor selection.  In the case of manufacturing company’s  this function also includes the purchase of commodities used in the manufacture of finished goods.

The central procurement function is typically authorized within a company in order to insure consistency thought-out the organizations procurement process by eliminating the potential negative effects of non-collaborative, non-aggregated purchasing by multiple divisions, departments and other corporate entities that can support rogue or unstructured buying.

Measurements of a central procurement organizations success can differ widely from company to company depending upon where they fall relative to a procurement maturity model. Typically these organizations are measured by overall procurement Key Performance Indicators or KPI’s at the procurement department level that usually includes the following at a minimum.

1.  Percent of spend under management
2.  Price Improvement
3.  Quality Improvement
4.  Safety Improvement
5.  Reduction in Carbon Footprint
6.  Service Level Improvement
7.  Distribution Flexibility
8.  On  Time Delivery Improvement
9.  Supplier Management

Management of these KPI’s is intended to insure that  companies have a defined  processes in place so as to promote a fair and open competitive model for the supplier community that’s  interested in soliciting their business.  This also minimizes the opportunity for fraud and collusion while insuring the best possible product or service is purchased at the best possible price and overall value to the company.

If you’d like to learn more about the central procurement function, please contact SafeSourcing.

We look forward to and appreciate your comments.

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When using e-procurement tools to source complex services make sure you have a well defined change of control process.

Friday, October 6th, 2017

 

Todays post is by Ronald D. Southard, CEO at SafeSourcing Inc.

Change happens. It can result from poorly designed specifications, terms and conditions, quoting instructions and other data related to a bid.

The normal process for managing these changes is a change of control process which governs how any changes to the services being provided as identified in the actual bid.

The change of control is normally managed as a request that communicates the requested changes to the services deliverables. Normally the change request will describe the following at a minimum.

1. The change
2. The reason for the change
3. The effect the change may have on the existing Statement of Work.
4. Impact on cost or savings

In most cases a project manager or the associate with responsibility for managing the program deliverables will be required to submit a written change request to the contracted or warded supplier.  The supplier will then develop and return the response to the contracting company.

The contracted supplier and the contracting company will then review the proposed change request and either approve it, modify it or reject it. When approved the contracting company as well as the contracted supplier must sign the change request in order to authorize the work as well as the implementation of the work and its potential impact on the existing project plan or project time line.

If you don’t want erosion inn your savings, make sure you spend the time to cover this process in your bid parameters.

Please contact a SafeSourcing Customer Services Account Manager in order to learn more

We look forward to and appreciate your comments.

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Procurement after a Natural Disaster

Wednesday, September 27th, 2017

 

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

Both hurricane Harvey and hurricane Irma have wreaked havoc in Texas and Florida over the past several weeks, resulting in dozens of lives lost, and costs in damage to buildings alone are being estimated as between $100 and $400 billion dollars. But of course the cost isn’t limited to direct building damage as there will be costs in disruption to production activities, costs, and increased demand for goods. So what are some of the things procurement professionals should keep an eye out for post-natural disaster?

Crop losses: Orange crop losses are estimated at 10%, grapefruit at 20%, and could increase due to the greening disease Florida has been battling with that is exacerbated by moisture. Other crops of fruit, nuts, and melons are expected to be similarly affected.

Lumber: Even before the two hurricanes hit land, demand for plywood for boarding up windows increased. Now that the rebuilding efforts are underway, lumber is in greater demand than ever. Prices in Texas and Florida are expected to rise by 20%, partially due to a secondary cause of a recent 10% tax on Canadian soft wood imports.

Insurance: Currently the insurance industry is estimating they will be on the hook for about $300 billion in property and business loss claims, with losses in the $35-$70 billion dollar range. The re-insurance industry that further protects the financial health of the insurance agencies, is considering re-negotiating their rates to account for such monumental loses.

Energy: Total production of gasoline and natural gas is not expected to have been reduced by more than 1%. However, the disruption caused by the storms has had an interesting impact on demand as well, while hundreds of thousands of people are not driving back and forth or able to utilize the amount of energy they did on a normal basis. The outlook in the mid-term is a volatile and unpredictable market.

The bottom line is that for procurement professionals, a wide variety of industries have been thrown into turmoil, making it difficult to begin new initiatives or guarantee pricing for the short term. Furthermore, logistical concerns for moving product in and out of the affected areas will incur protracted lead times. This both presents challenges to sourcing new contracts, while also making it critical to lock down future agreements. Where commodities affected by natural disasters are concerned, everyone will be feeling the pinch. However, these challenges above make it more important than ever to lock-in favorable agreements more important than ever.

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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Avoiding common RFP mistakes

Tuesday, August 8th, 2017

 

Today’s post is by Michael Figueroa, Project Manager at SafeSourcing

I sometimes hear stories from suppliers that are downright outrageous; I’ve literally been told “the dog ate my RFP”, and “I didn’t read any of the documentation” on multi-million dollar projects by executive level professionals. I’ve worked with a supplier on multiple year projects who has been late on each one, and always because his “mother just passed away”. If you’ve worked with me before you know I can sometimes be a little bit pushy to make sure you understand the structure of the RFP at hand, but I assure you it’s only to make sure the process goes smoothly for you. But what causes people to overlook the details of a project? I would suggest that the root of the problem is something every human being is susceptible to: Assuming we already know everything we need to know.

When going into a new RFP or other procurement project, the first assumption should be that we don’t know the needs of the customer until we’ve taken the time to learn them. I’ve seen suppliers come into a project trying to force their agenda, or assume the details of an RFP rather than observing, learning, and understanding first and asking questions second. It will always be difficult to come to a mutually beneficial business partnership if you don’t even understand the initial request that is being made. A successful RFP provides some basic information and asks questions, allowing the supplier to respond explaining their position, including product/service details, quotes, constraints, etc. Not actively listening and learning causes us to talk past each other, and can cause a misalignment of value propositions.

Listening well is a skill so commonly lacking that it is one of the first things taught in relationship counseling, and shouldn’t be overlooked in our professional lives. Active listening is taught formally in the classroom or counseling session by having one person take turns speaking to another, with the listener repeating in his/her words what was heard. This is effective because it prevents us from falling into the destructive habit of thinking about what we want to say while we should be listening to what is being said. Research suggests we only have the mental bandwidth to process a maximum of 1.6 conversations at a time, and if you’re fully listening to your own thoughts about what you want to say, you’re only hearing 60% of what you should be observing1.

[1] “Too Much Noise – Steelcase.” 2015. 15 Jul. 2015 <http://www.steelcase.com/insights/articles/much-noise/>

We make every effort at our company to make sure you are aware of the details of any procurement project, and also encourage feedback during the process to ensure each project is a positive opportunity, allowing you to put your best foot forward.

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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“You Buy It, We Procure it”

Monday, July 31st, 2017

 

Today’s post is written by Heather Powell, Director of Customer Services & Project Manager at SafeSourcing Inc.

The above quote has recently become this author’s mantra. When working with current or new customers, I often ask what’s next in your pipeline or purchases. Too often I get a response similar to we don’t have anything coming up or we aren’t buying anything big today/this month/this year. A purchase doesn’t have to be considered big in the moment of ordering, but over time the expense adds up. For instance, copy paper is bought for almost every single office or location. While it might be a ream or case at time, added up might be in the thousands of dollars annually. Perhaps you own a fleet of vehicles and purchase tires multiple times a year. Without a pricing agreement in place to ensure the best possible pricing all year round, you are losing money.  Within each of these purchases, it might seem small or a onetime purchase, however, an annual spend or general ledger (GL) will show at the end of the year as a significant spend to the company.

SafeSourcing can work with your company to identify purchases and potential saving opportunities through our SafeSpend™ analysis. This presents your company with an overview of where not just the large purchases are, but where the small purchases are that add up to large purchases. This will give you the view into saving potential that SafeSourcing can offer with various sevices. Remember… “ If you buy it, we procure it”!

For more information on how SafeSourcing can assist you in exploring your procurement solutions for your business 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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