Archive for the ‘E-procurement’ Category

It goes well beyond the savings.

Tuesday, October 9th, 2018

 

Today’s post is from our SafeSourcing Archives

When running an eRFX event there are many benefits that go far beyond savings. Most all benefits will eventually save you money, but it has value-added benefits that won’t show savings right away.

During the sourcing process it is best to establish goals that your company wants to achieve. What part of the current process is costing you money, where is there room for savings? The following goals are achieved when running a sourcing event.

Fewer Suppliers– Managing suppliers can be very costly to your company. All suppliers come with different invoices, contracts, contacts, and terms. The amount of time it takes to manage all the different suppliers will hinder any savings you originally planned on receiving. Lower the amount of suppliers will be great value in minimizing time with managing them.

Location– Are your shipments coming from across the country because the cost was so low? But are you washing away those savings in expediting shipments due to a current process and standard freight takes too long. Finding suppliers within closer proximity will save you shipping time and result in savings.

Standardizing Items– When sourcing item(s) in the customer-facing industry it is best to have a standard appearance and be able to control costs with identical item at a larger volume. Whether it is for new construction or remolding, standardizing the specifications and gathering a quote on the total volume/spend can save your company money.

Here at SafeSourcing we will work with achieving all your goals, however many there may be, and we can also help you create goals for sourcing events.

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

Sunday, October 7th, 2018

 

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

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

Lets 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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Ingredients for a successful RFQ.

Thursday, September 27th, 2018

 

Today’s Post is by Eli Razov, SafeSourcing  Account Manager.

What do you need to run a successful RFQ? This is a question I am asked a lot. I would have to say it starts with data. Good data can make or break what can be considered a “successful RFQ”. So what do I mean by good data? It helps to do some market research to see where it stands at the time. Knowing this will help you understand if there will be an increase in price or if this is the right time to take this to market. The first step is to know what it is you are looking to procure.  Full specifications, annual quantities, how often you order, and any manufacturer SKU’s is good information to have on hand. The second most important piece of data is current pricing, any recent invoices or quotes are best and the more recent the better. By knowing a current price of a good or service will show you true savings. Once you know what it is you need, how many you need, and how much it currently costs, the next step is finding out who you can get it from. This is personally one of my favorite steps, vendor research! The internet is a great source of information on this. Using a search browser, simply typing the good or service you need, will give you a list of companies in whichever area you are looking for. Sometimes this step can be difficult for specialty products or services. A good trick to use, if you know only one supplier or vendor name, is to use that name and type “competitor” after it. You will be given a list of companies that are in the same market. Be sure to contact these companies and “vet” them to know they truly provide what you are looking for. Once you know what you need, and who to get it from, now it is time to run that RFQ. Typically you contact the vendors, send in a request via fax or email, and wait for them to reply with any questions or modifications. Once all the questions are answered, they will give you a price based on their margins and send it back to you. From there you must decide if you need to order samples or decide purely off of price. Of course this is just a simplified version of the process; there are many more working parts behind the scenes. Once all of these steps are complete, you should have found a new low price for what you need. But what would you do if I were to tell you there is a simpler way of doing this? By using SafeSourcing, we do all of the leg work for you! From gathering data and building specification documents, to our vast list of vendors and suppliers, we ensure you get the best price for your needs without having to stress and spend your time on it.

For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Representative, we have an entire team waiting to assist you today.

 

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Establishing and Maintaining eProcurement Momentum​

Monday, September 24th, 2018

 

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

Momentum is important in eProcurement. Without establishing and maintaining momentum, even the best planned cost savings initiatives will stall out and possibly fail. In my experience, the greatest enemy of any cost savings initiative is the lack of momentum. When an organization is starting their eProcurement journey, momentum has typically not yet been established. So, the question is; how do you get momentum? One of the best ways to establish momentum is through getting a successful start to eProcurement. At SafeSourcing, we typically start with a no risk Pilot Agreement so that an organization can both assess the value of such a program and also share the results to create excitement about cost reductions.

Let’s assume that to ensure enough momentum, we’re looking for both mass and velocity and consider what each of these looks like in eProcurement. Both are critical to build and maintain momentum.

We might look at mass as the scope of the project. To build momentum, include as many spend categories as is possible. To identify categories for eProcurement, an organization might consider a spend analysis service like SafeSourcing’s SafeSpendAnalysis which will review the organization’s annual spend and identify opportunities for cost reduction.

Velocity is equally important because the organization will need to complete projects frequently and with regularity in order to keep the hard earned excitement. Without velocity, the cost savings initiative is at risk of being forgotten or pushed aside in favor of faster moving projects.

With both mass and velocity present, creating a high level of engagement within the organization will be relatively easy. Momentum will naturally be present and will be continually fueled by the overall scope and success of the cost savings initiative.

I believe that Newton’s law of motion applies in eProcurement. An object at rest stays at rest and an object in motion stays in motion. It’s better to stay in motion.

For more information, please contact SafeSourcing.  

 

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Planning for Your Next Procurement Hire

Friday, September 7th, 2018

 

Today?s post is?from our?SafeSourcing Archives.

As the landscape of the corporate world continues to change to adapt to changes in the economy, procurement departments are being asked to expand their areas of support throughout the organization.? This expansion will require that procurement staffs begin to look for specialized expertise to augment their current staff whether in the form of temporary, permanent or 3rd party help.

In today?s blog will be look at three areas of expertise that will be important to procurement staffs in the future.

IT ? Historically, most companies have let their IT department?s research and negotiate their own hardware and software deals due to the level of expertise needed to understand the company requirements.? This process is beginning to shift as companies are looking to compress the pricing they receive after the RFP process has been narrowed down and the short list of vendors has been selected.? To do this requires staff or a 3rd party vendor who can help facilitate this process, speaking with the vendors at a technical level everyone understands.

Hired Services? Hired services are can be complex categories to understand within an organization and the larger the company the more complex the process to procure these services can be.? Many teams are looking for support help from the administrative and Human Resources departments to understand the scope and SOWs the company needs as well as looking to 3rd party vendors such as Managed Service Providers to help them with this process.

Transportation/Logistics ? Very few spends within a large organization are as complex and as mission critical as the freight lanes they use.? Late product is unacceptable and can result in customers changing to the competition.? While they critical to the business they can also be very complex as the fuel prices fluctuate and as regulations, especially of the international variety, seem to change constantly.? Looking for new permanent or temporary staff that have a background in logistics can go a long way to helping your company put programs in place that are flexible enough to adjust with the market but protect you enough to budget the spend.
For assistance in filling some of these areas of expertise in your organization, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

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Procurement after a Natural Disaster

Monday, August 13th, 2018

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Today?s repost is?from our ?SafeSourcing?Archives

To be prepared is to not forget!

During 2017 both hurricane Harvey and hurricane Irma? wreaked havoc in Texas and Florida, 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

Monday, August 6th, 2018

 

Today?s post is?from our ?SafeSourcing?Archives

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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Sourcing Corrugated Boxes

Friday, August 3rd, 2018

 

Today?s post is?from our?SafeSourcing?Archives

When companies are looking to save money, they often look in places that have the largest spend, but also the greatest fixed costs. Sometimes the most commonly used items represent the best opportunity to compress spend. In today?s case, we are going to look at Corrugated Boxes. Don?t be fooled though by this deceptively simple item. If you aren?t intimately familiar with what your company buys today, especially if you have multiple Distribution Centers, developing a new RFP can get complicated quickly. Here are a few specification considerations to understand about this category that might save you some frustration before you get too far into the project:

Dimensions (Inside or outside?): Sometimes your invoices will give you measurements different than what you would measure yourself simply because the invoice gives interior measurements and you are measuring the outside. Make sure you indicate whether your specified sizes are interior or exterior. Also make sure you are consolidating box sizes where you can. If DC1 uses the exact box DC2 uses with a 1/16th inch difference, is there a good reason? You might be able to save a lot of expense by getting your DC?s all on the same program with a limited variety of box types.

Grade:?The most commonly used measurement of corrugate strength is the Edge Crush Test (ETC). For example, an ETC of 32 would mean a box could withstand a maximum load of 40 lbs. Suppliers would need to know this requirement in order to gauge how to construct the box in terms of its flute size, number of walls, etc.

Coatings:?Your intended use will determine the type of coating requirement you will have. For instance, food safe boxes may require non-stick surface coating, and boxes with marketing information may be colored white with logo printing. But for basic usage to fulfill your supply chain and distribution needs, the unaltered brown standard color is the cheapest, and the term for it is ?Kraft?.

Printing:?A print design can be both functional, or marketing related. Meaning, you may need certain marks for optical machine box loading, barcodes for tracking, or simply logos for easy retail identification. Either way, you will likely want to provide detailed drawings and artwork along with dimensions, and precise color in order to end up with what you intended.

The Usual Suspects:?All of the typical concerns within any given sourcing project still apply, such as:

  • Shipping terms: If delivered to multiple DC?s, you?ll probably want separate quotes per location. However, if you don?t need delivered pricing, obtaining FOB quotes can save you a lot of headaches.
  • ?Volume: Unit of measure, lead time, delivery schedule, must be indicated, and under the correct annual multiplier.
  • ?Current cost: Is it inclusive of any promotional allowances, taxes, freight, etc and are you asking for quotes to include all of the same factors for accurate comparison?
  • Always run through a sample process before approving a large production run. A mountain of useless boxes would ruin anyone?s day.

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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eProcurement Planning

Tuesday, July 24th, 2018

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

In this post rerun, Dave discusses eProcurement Planning.

We often talk about how an organization can utilize various eProcurement solutions to drive savings and find safe, qualified sources of supply. We also commonly talk about the results of eProcurement efforts derived from the same. These are two incredibly important pillars of any organization?s eProcurement strategy and are certainly deserving of the attention paid to them. That said, there is another eProcurement strategy pillar on which I?ll elaborate. This pillar, often overlooked and infrequently discussed compared to its counterparts, is eProcurement planning.

eProcurement planning can be done in any number of ways either with an organization?s own internal resources, external consultants, or some mix of both. In the remainder of this post, I will discuss the approach which SafeSourcing recommends. We offer this approach as a spend analysis service called SafeSpendAnalysis?.

When we engage with an organization to deliver a SafeSpendAnalysis?, we are looking to analyze 100% of that organization?s spend for a 12-month period at minimum including all capital, cost of goods, and expense spending.

The SafeSpendAnalysis? service compares your spend data to the SafeSourcing database. The spend data is run against our SafeSourceIt? Supplier Database of over 432,000 global suppliers to fully identify the companies within. Then that augmented spend data is compared to historical SafeSourceIt? Events to identify appropriate supplier categories and subcategories. We then run that data set against the SafeSourceIt? historical Events to establish potential savings based on category averages.

The output of SafeSpendAnalysis? is a detailed presentation with an in-depth category analysis; recommendations, questions, and savings opportunities identified in several key areas such as high spend categories, high supplier count categories, and quick wins.

During the SafeSpendAnalysis? review with the leadership team and the teams responsible for the various spend categories, SafeSourcing works with your organization to identify appropriate categories for which you will utilize eProcurement in the future. It is common for SafeSpendAnalysis? to identify tens of millions of dollars in potential eProcurement savings and offers the deep insight required to prioritize resource planning for maximum impact in the minimum amount of time.

Dave Wenig is a Regional Sales Manager at SafeSourcing. Dave or any member of the experienced team at SafeSourcing would be happy to discuss how SafeSourcing can help you with SafeSpendAnalysis?. For more information, please contact SafeSourcing.

We look forward to your comments.

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eProcurement Time to Value

Thursday, July 5th, 2018

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Today?s post is by Dave Wenig,?Vice President of?Sales and Services at SafeSourcing,

In eProcurement, one important, yet often overlooked measure of success is time to value. Of course, one of the primary goals of any eProcurement strategy is to reduce spend for the goods and services that an organization requires.

For the sake of this post, I am defining time to value as the time between when you determine that you would like to host an eProcurement event, such as a live Request for Quote (RFQ), to the time that you can begin ordering with the newly negotiating pricing from that eProcurement event. I tend to see that we focus heavily on the savings result, but far less on the amount of time that was required to complete that project. The reality is that those two goals are both important and actually complement each other. The sooner you conclude your eProcurement event, the sooner you are able to realize the savings.

There are several key reasons why an organization needs to monitor time to value closely. A contract expiration date is one factor that creates pressure to attain results quickly. When a contract is set to expire or to automatically renew, it is important to negotiate quickly to avoid any unfavorable outcomes. Another factor is seasonality. For certain products and services, the negotiation must be done in advance of a particular season. For example, in northern climates, snow removal contracts should be in place well before the possibility of snow.

Every organization will set its own time to value success criteria. I always advise that projects should typically range from four to six weeks and that clients should expect to see significant savings that can be achieved and realized in the current quarter.

Dave Wenig is a Regional Sales Manager at SafeSourcing. Dave, or any member of the experienced team at SafeSourcing, would be happy to discuss how SafeSourcing can help you achieve faster time to value in your eProcurement efforts. For more information, please contact SafeSourcing.

We look forward to your comments.

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