Archive for the ‘E-procurement’ Category

E-Procurement

Wednesday, August 3rd, 2022

 

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

How does your procurement department define E-Procurement today?

The following is a generally good definition of E-Procurement. However, complete SaaS offered end to end solutions have continued to evolve over the years. Often solutions today are used across multiple solution providers as they can be turned on and turned off and integrated in a truly brief period.

eProcurement is a business to business exchange of goods or services facilitated by the internet. A complete set of e-procurement tools can include products for management of correspondence, bids, questions and answers, previous pricing, contracts and email. Although many Enterprise Resource Planning suites offere-procurementsolutions, the current generation of software is typically purchased on-demand or as software-as-a-service (SaaS). Elements of e-procurement can include request for information (RFI)request for proposal (RFP), and request for quotation (RFQ), which together are categorized as “RFX”.

If you’d like to learn more about SafeSourcing’s additional E-Procurement solutions that are part of our SaaS offered esourcing suite like SafeContract™, SafePO™, SafeContract™ and the SafeSourceIt™ Supplier Database please contact a SafeSourcing customer services associate.

Managing Change While Managing Costs

Wednesday, July 27th, 2022

 

 

Today’s post is by Dave Wenig, Sr. Vice President of Sales and Services at SafeSourcing, Inc.

For our customers, we are primarily focused on delivering cost savings. Generally, in eProcurement, we aim to provide an apples-to-apples comparison so that our customers can make an award decision relatively easily based on the results of an online RFx Event. We do that very well and average over 24% savings. Sometimes, however, our customer is looking to reduce their category costs while also making changes to what it is that they are purchasing.

The good news is that the goals of reducing costs and making a change are not mutually exclusive. While every situation will be different, here is how one customer of ours recently accomplished both goals. The customer, a retailer, knew that they would be phasing out certain plastic products that use regularly. They have a significant annual spend in this category currently. Their goal was to discontinue the use of plastic and switch to alternative products that are more environmentally friendly including biodegradable and reusable options. Because they had carefully planned this change, we were able to develop a plan to work together to manage the change effectively while still taking full advantage of eProcurement tools to reduce costs along the way. Below is a quick summary of how we did this.

  1. Reduce the cost of the current plastic products using a live Request for Quote (RFQ)so they are not overpaying for the remainder of their orders. This generated a substantial savings.
  2. Develop a Request for Proposal (RFP)to attain a better understanding of the specifications, capabilities, and pricing for the alternative products.
  3. Review the RFP results and establish the specifications for the alternative products that would ultimately replace the plastic products.
  4. Host an RFQ to compress the pricing for the alternative products
  5. Test samples for the alternatives, make a decision, and coordinate the roll out of the new products to coincide with the timeline of phasing out the plastic products.

The most important part of this process was the planning. SafeSourcing and the customer coordinated the process and took the steps above in accordance with that plan. In contrast, when we see customers attempt to manage change through the eProcurement process without a plan, we tend to see results that are less impressive. They will likely have savings, and they will likely make a change, but they will not strike the ideal balance between the two.

If you’re interested in learning more about our contract management tool or any of our full suite of Procure to Pay tools,  please contact SafeSourcing

 

 

Event Review Time

Thursday, July 7th, 2022

 

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

This is step six of the SafeSourceIt™ white glove project plan SaaS offering with the very first item being to Send Vendor Thank You and Customer Survey Links. The reason we return better results that anyone in our space is our thorough and well tested process.

The Event Review Time indicates how much time, beyond the close of the event, that the event host and sourcing partner reserve the right to re-open the event. Also known as the “validation period”, this time is used to review all the details of the event to ensure there were no technical difficulties and /or that the system accepted all quotes, as appropriate. The event review time requires each participant to be available, via telephone, during the event review time. If a participant has not heard from the sourcing partner within this time, then the event is considered closed. The results will be reviewed by the host, who will decide on the award of business.

SafeSourcing is an eprocurement company that operates across multiple industries. As such we have specific experience in almost any commodity, service or capital related spend. Our SafeSourceIt™ white glove project plan continually delivers savings more than 24% greater than you can achieve on your own. To learn more, please contact a SafeSourcing customer services associate.

 

 

The importance of RFx in the Procurement Process – Part I of II

Wednesday, March 2nd, 2022

 

As businesses continue to use reverse auction tools more frequently to reduce their costs and introduce competitive pricing from existing and new suppliers, it is inevitable that the events will also begin to increase in complexity.  With complexity comes the need to understand the offerings of the invited companies before price is ever brought up.  You need to know that the companies you may be dealing with have experience and can handle your business.

To ensure that the right companies are involved in competing for your business many times it is necessary to run a Request for Proposal or Information (RFP or RFI) to gather information about the suppliers before a pricing event is run.  Some of the important things to keep in mind when doing this are:

• Be Specific! – Make sure the RFP/RFI is specific about the types of information requested.  Leaving the document open-ended will result in several completely different responses that will be difficult to compare to each other.

• It’s ok to run an RFx for something you have already purchased.  Many times, especially in technical product purchasing, the landscape can change so fast from contract to contract that running an RFx is not only a possibly but is probably the wisest thing to do especially if the spend is large and/or the contract is longer than a year.

There will be more tips in my next post but if you would like more information about the SafeSourcing Rfx tools and professional services, please contact a Customer Service Representative today.

We look forward to and appreciate your comments.

Are we about to be out of avocados?

Thursday, February 24th, 2022

 

Today’s post is by Troy Lowe; Vice President of Development at SafeSourcing.

This morning I was listening to the radio show that I usually listen to, and they were joking about the ban on avocados from Mexico.  The reason the subject came up is because there was just an awfully expensive commercial that played during the Super Bowl advertising the avocados imported from Mexico.  The ban took effect the day before the big game.  According to reports the U.S. Department of Agriculture and Plant Health Inspection (USDA-APHIS) said it was pausing its avocado inspections in Michoacan after one of its officers received a threatening call to his official cell phone.  Unfortunately, Michoacan is the only Mexican state that is authorized to export the avocados to the United States.  Because of this ban we will now be seeing a shortage of another product here in the states.  It is estimated the over 90 percent of the avocados that we use in the U.S. during the winter months come from Mexico.  Besides Mexico, we also receive avocados from California, but low rainfall has affected the size of the fruit and the size of the crops.  The last time that we saw a shortage of avocados it led to a significant rise in price.  If this ban is not lifted soon avocados will become exceedingly rare and awfully expensive, if you can find them.  If you find yourself not being able to find avocados, below are some alternatives people use instead.

  • Smashed Bananas
  • Hummus
  • Nut Butters
  • Raw Seeds
  • Eggs
  • Olives
  • Pesto
  • Cheese

Interested in learning how SafeSourcing can help your company save money during these and other shortages?  If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

 

Tips To Get More Out from Your RFQ

Wednesday, February 16th, 2022

 

Today’s post is from Dave Wenig is the Senior Vice President of Sales and Services at SafeSourcing Inc

The purpose of a request for quote (RFQ) is typically to reduce costs. Whether you are trying to get the same product or service at a better price, or you are in need of the best pricing available for a new product or service, an RFQ is one of the best ways to get costs reduced.

More recently, that has been challenging with prices for nearly everything constantly on the rise. So how do the best negotiators find success in a challenging market?

Strategy: This may seem basic, but this is often overlooked. The best buyers have a detailed strategy. At SafeSourcing, we create a strategy for every RFQ we deliver, and we create that based on feedback from the markets, from the customers, from the vendor community, and from our own database of RFQ event history. Write out your strategy if you want to be successful. Be specific.

Reserve Prices: Using on online RFQ process like SafeSourcing’s SafeSourceIt™ eRFx tool likely gives you some interesting options. One of those that has been used more heavily recently is reserve pricing. A buyer can set an unpublished reserve price that indicates to the vendors quoting that the customer has a price point in mind and will not be satisfied if that is not met. Make this part of your strategy upfront for best results and set realistic reserves that are tied to a realistic goal.

Be Realistic: However, you feel about it, prices are significantly higher than they were before. If you had a fixed price contract that you negotiated 2 years ago, you are unlikely to get that same price again now. Do not fall into the trap of setting the parameters for your bid too tightly. An example would be setting a max quote based on your 2-year-old pricing and forcing vendors to sit out because they cannot compete. Again, as part of your strategy, you must consider your current price as well as any price increases you have been notified about or are anticipating. That plus the appropriate markets will guide you toward success.

These are just three tips out of many, and we are always happy to share more. Let us know what types of challenges you face, and we will share some guidance!

For more information, please contact SafeSourcing.

 

 

 

Communicating the Good eAuction News

Wednesday, February 9th, 2022

 

An Oldie but goody from our SafeSourcing Archives

While the answer is probably not going to be “I’m going to Disneyland,” the answer from some of the biggest companies in the world, actually because they are the biggest companies in the world, is more surprising than you think.

Companies invest hundreds of hours gathering specifications and employing 3rd party partners to hold RFIs, RFPs, RFQs, and reverse auctions so that, at the end of the day, they can be assured of reducing their costs on the items that they purchase.

Unfortunately, great prices are only good if the rest of the company knows that they should all be ordering from the vendor that guaranteed and was contracted to deliver those low prices.

By not doing so, your company can actually lose money twice; once for the lost savings you could have received but didn’t because the company ordered from other, more expensive companies, and twice because many of these great deals are made on the premise that a certain volume of purchases will be made from that supplier.  If that level is not met, worst case scenario is that there will be financial penalties associated with the lack of activity, but you are at least looking at a situation where that vendor will not offer those same discounts again.

Communicating this information is not as difficult of a task as it may seem, so make sure you have a channel for everyone to go to that will let them know what items are affected by these contracts and who they should be purchasing the items from.

Many times, a company will have an intranet that can be used for this purpose.  In other cases, you may choose to employ a third party to host this information securely for your company.  If the latter is of interest to you, contact a SafeSourcing Customer Service representative today to speak about the options available to you in this area.

 

Retailers it’s really pretty simple; just look at your Gross Profit.

Wednesday, January 26th, 2022

 

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

How many times do we hear all of the reasons for a retail company’s performance being off? It’s the cost of doing business over seas, the economy, the cost of fuel, heath care costs etc. How often do we hear, that we are doing better than the same period a year ago or we are exceeding plan. All of that is nice stuff, but the bottom line is your bottom line. If you top line sales are up and your net profit is up it does not necessarily mean that you have all of your procurement issues under control.

Let’s start with some numbers you might want to look at. Don’t just assume that profit is a good thing because profit could be caused by an imbalance in your category margins.

Here are a few good questions to ask yourself.
.
1. How do your cost of goods compare to the rest of the industry for a chain of your size?
2. How do your operating expenses compare to other chains of your size?
3. How do your gross margins compare to other chains your size?

All of the above can be good indicators of overall company health and certainly procurement health. If your cost of goods is higher than industry averages for a chain of your size, why is that? Is there a specific category that is causing the issue? Do you know how to isolate the problem and then eliminate it?

If you don’t have or know this information, you should ask your e-procurement provider if they have it, because they should if they want to model an improvement plan for you.

As an example, here is an example of a previous years U.S. based convenience store chains targets for non fuel.

1. Cost of Goods Sold should run somewhere around 71% or 72%
2. Gross Profit should run around 28% to 30%
3. Operating Expenses should run around 26% to 29%
4. Net Operating Income around 2%

While these numbers are certainly off based on Pandemic issues, product  or services mix, you can build a case model on them to compare before and after for you company. That is if you have a tool like SafeBIM™ from SafeSourcing. BIM stands for Business Impact Model.

If you are way out of balance with these numbers and want to understand how to rebalance them, contact a  SafeSourcing Customer Services Associate.

 

Procurement Planning​

Thursday, January 20th, 2022

 

Today’s blog is by Margaret Stewart, Director of HR and Administration at SafeSourcing.

As companies get the new year underway, there are likely a whole slew of things they are going over, from modified budgets to new processes. One key aspect that should be on everyone’s list are areas to examine for procurement. Setting up a list of 10, 25, 50, or even 100 different product or services that your organization could take a closer look at can be a great jumping off point to begin with your procurement team or procurement partner.

When reviewing the initial list, a procurement team or a procurement partner like SafeSourcing will look at a number of different aspects around those products or services. Price increases are one aspect that can be reviewed and addressed when undergoing a procurement process. Perhaps the incumbent vendors you have worked with for many years has regular price increases built into a contract that grow despite what market conditions do. This is another great reason to have your procurement team review what options you have for sourcing.

If your organization wants to get started with procurement efforts but isn’t sure where to begin or which categories, they should look at first, talk to SafeSourcing. We can analyze your spend and invoices and begin researching areas that would benefit your organization the most – a truly custom fit dependent solely on what your company hopes to gain and fitting your own goals.

When reviewing data, a procurement partner like SafeSourcing can set timelines that are timely, but do not short any essential aspects along the way. Using a procurement partner can free up your own procurement team’s time to focus on other important roles within your company, all while still delivering the service and value you expect from your own.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

 

 

 

 

 

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

Tuesday, January 11th, 2022

 

Today’s post is an oldie but goody by Ronald D. Southard, CEO at SafeSourcing

The answer to this posts byline is of course all three!

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 industries reports we are also safe using a shrink number of 3% of top line revenue.

This author is aware that there are a 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.