Archive for the ‘E-procurement’ Category
Friday, September 10th, 2010
On demand software or SaaS (Software as a Service) by its nature is an internet based application and as such is accessible from wherever you happen to be as long as you have a network connection. With today’s broad band offerings that literally means anywhere. So the first rule of thumb is that it provides easy access. In addition, since most of the newest versions of SaaS applications are native web based applications, they integrate very nicely with most office infrastructures. With Microsoft being the most deployed environment, data is easily exported or imported to formats that comply with their standards. In many cases these tools can also be made 100% available to you within days of contract signature
Most of us have horror stories about when our PC, Network, Application etc. went down and we were not able to complete tasks at work. When we call our internal service department, the response is normally less than what we would like or hurry up and wait. With a hosted software application, it is the responsibility of the SaaS provider to maintain the application. They know up front that if they don’t do a superior job of support and availability, that you the customer can go somewhere else to find a provider that will. This is not the case with internally installed corporate applications.
Your data at a SaaS provider is also often more secured than the data at your corporate office. Since this is the core business of a SaaS provider, the architecture of the application normally has multiple levels of redundancy, failover recovery and is backed up regularly.
Typically, SaaS applications are easier to change than traditionally installed corporate applications. There are not as many feature upgrade charges with every point release in a SaaS environment because the provider needs to provide these features to continue to attract new customers and to keep up with the pace of the industry.
Finally, the total cost of ownership is much quicker in a SaaS environment than traditional application software installations. Often as much as 100% faster. In fact there are many stories of breakeven ROI’s with your first series of e-procurement events. The biggest question you have to ask of your future provider is are you a true SaaS environment with the newest technologies available or are you a reengineered ASP provider. I’ll comment more on that later.
We look forward to and appreciate your comments.
Ron
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Online Procurement, Online Reverse Auction
Friday, September 3rd, 2010
We’ve all known for a while that our seat partners look over our shoulders to see who we are and what we do. I told him I was reading an Aberdeen business brief and who and what they do. I went on to explain that our company was focused on e-procurement tools for the retailers. He introduced him self as a private business owner with his two brothers and that he had experience biding in reverse auctions with Ariba and Free Markets.
We discussed SafeSourcing’s offerings and ultimately came around to what made e-procurement events successful for his company in the past as a prospective supplier and what would encourage them to participate again even if they did not happen to be awarded the business in a particular event. His take was that this was initially an educational process for their company and ultimately would become a way to do old things in a new way. He also suggested the following
1. Openly communicate with prospective suppliers
2. Make sure they understand everything and comfortable
3. Make sure they have no open questions.
With that as an understanding I offer the following list of sample questions one might consider when inviting a supplier as a new participant.
1. Does the supplier understand that there is no cost to them to participate?
2. Do they understand they will be trained at know charge?
3. Do they understand event timing and requirements?
4. Does the supplier understand the terms being used and how they apply to an e-procurement event such as? In fact, do they understand what a reverse or forward auction is?
a. Reserve Price
b. Proxy Volumes
c. Low Quote
d. Proxy quote
e. Funds
f. Terms
g. Notes
h. Extensions
i. Matching quotes
j. Event rules
k. Product specifications
l. Samples
m. Award of business
At the heart of it, it comes down to something we all know but don’t always practice and as such negatively impacts the sustainability of processes that just make good sense. And that is that the supplier is your customer too and the customer comes first and should be treated the way you would like to be treated.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Retail Supply Chain, Reverse Auction Procurement, Strategic Sourcing
Thursday, September 2nd, 2010
I was reading a blog post from the Doctor over at Sourcing Innovation today titled “A Hitchhiker’s Guide to e-Procurement: Terminology” and I thought it was great as well as very timely.
Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.
This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.
We look forward to and appreciate your comments.
Posted in B2b Reverse Auction, B2b Supply Chain, E-procurement, E-procurement Solutions, E-procurement Tools, E-supply Chain, Eprocurement Auction, Online Procurement, Online Reverse Auction, Procurement Auctioning, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement, Reverse Auction, Reverse Auction Procurement, Supply Chain Procurement
Monday, August 30th, 2010
Here is an example of what might happen or actually does more often than not as result of the actions in Fridays post.
If we come up with the math from Friday’s scenario, it takes a full quarter to execute which is not a stretch at all. Unfortunately your incumbent supplier was not selected and your contract with them expired 5 weeks ago. Now your out of contract costs are now up by 5% for the last five weeks because you are not so important to this supplier any longer. So not only has your existing price gone up for the last 5 weeks, you lost the opportunity to buy the product from your new supplier at 20% less over the same five weeks. These combined costs now erode your total estimated savings with your new supplier who you probably have not even added to your accounts payable system which will also result in late fees.
Ask your e-procurement solution provider how they can help you with this process.
We look forward to and appreciate your comments.
Posted in Business Sourcing, E-procurement, E-procurement Solutions, E-procurement Tools
Friday, August 27th, 2010
This is actually a great questions and a tough one to answer if in fact it has not been planned for during the planning process. We all know that there are all sorts of saving figures quoted in the e-procurement industry for just about any product or service available.
There are a number of areas necessary to consider when trying to figure out not only your ROI on these projects, but more importantly how much of the savings made their way to the bottom line and what is your leakage percentage. Some of those are as follows.
1. How long did it take you to award the business?
2. How long did it take you to test samples?
3. How long did it take you to sign a contract?
4. How long did it take you to accept your first delivery?
5. Was the first invoice for the exact price you contracted for?
6. Was the shipping and handling exactly as bid?
7. Were there and SOW change requests that raised pricing?
8. What P&L period are you reporting against?
9. What was the budget for this product or service?
10. Can you trace the spend to a specific P&L line item?
Can anyone guess what the results of these actions are? Check back with us on Monday find out in Part II.
We look forward to and appreciate your comments.
Posted in Business Sourcing, E-procurement, E-procurement Solutions, E-procurement Tools
Monday, August 23rd, 2010
This author has republished this post in a variety of formats at least 8-10 times as the question never seems to go away when I meet with retailers and other companies interested in successful e-procurement implementation.
Here you go!
1. Executive sponsorship is mandatory.
2. This is required at the CEO and CFO level.
3. Get the entire buying organization together for a kickoff session.
4. Provide an over view of what you are going to do and the impact it can have on the company.
5. Use company financial models to reinforce result opportunities.
6. Discuss and agree on success criteria in advance.
7. Understand that every event will not be a homerun.
8. Singles and doubles score runs.
9. Create a fun environment such as a savings club
10. Consider prizes for the most creative use of auctions.
11. Use scorecards by department with percent of savings.
12. Discuss the meaning and importance of corporate aggregation.
13. Hand out event templates to gather existing product specifications.
14. Put a time requirement on data collection.
15. Don’t overlook any department, product or service.
16. Gather an accurate list of your present suppliers.
17. Work with your sourcing company to identify a top 100 list of events.
18. Calendar the events based on contract status.
19. Prioritize by dollar value, date and strategic value.
20. Conduct department level discovery meetings of 30 minutes to an hour.
21. Investigate existing contract language.
22. Look for auto renewal (evergreen) language roadblocks.
23. Determine alternate sources of supply with your sourcing company.
24. Develop an event rules and instruction template and post with each event.
25. Develop a clear terms and conditions template.
Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
Monday, August 16th, 2010
Further more; your buyers can not save you as much as you might save if you used these types of tools. So when and if you do, make sure you measure and understand the true savings.
There are all sorts of e-procurement companies. Not all focus only on retail. However, all of them have web sites and all of the web sites tout savings that are all over the map. The question is what type of savings are they talking about. Following are some of examples.
1. Total low quote savings.
2. Total low quote company savings.
3. Total savings awarded companies.
4. Total realized savings.
5. Total savings versus budget period to date.
6. Total category savings.
7. Total savings year to date.
8. Total annual realized savings.
9. Total potential savings.
Companies really have to be specific as to what they ask each company relative to savings opportunities and make sure they have a formula in place for calculating savings over the course of the contract period for which the products are being sourced. There are all sorts of missed opportunities associated with actual event based low quote savings that can be created by lengthy review periods, delays in sample evaluation, extended award time periods, delays in contract dates, switching costs within the finance department, delays in shipping, specifications not being matched and specification creep that results in adding more expensive non specified items.
The bottom line is that you may have had low quote savings of 28% and that’s great. You may have had net realized savings of 18% and that’s great too. However if you don’t have a plan as to how you will measure savings you won’t know what caused the leakage and it can’t be fixed.
We look forward to and appreciate you comments.
Posted in B2b Reverse Auction, E-procurement, E-procurement Solutions, E-procurement Tools, Eprocurement Auction, Online Reverse Auction, Reverse Auction, Reverse Auction Procurement
Thursday, August 12th, 2010
Due to consumer concern about the toxic effects of BPA, Japanese manufacturers voluntarily reduced the use of BPA in packaging between 1998 and 2003.
They replaced EXR coating with PET film lamination on the inner surface of cans or used an EXR paint that had much less BPA migration into food instead.
And following these reduction and replacement moves, a team of assessors claim that virtually no BPA is found in canned foods and drinks in Japan now.
I hope everyone caught the fact that this was done between 1998 and 2003 and we are still discussing this problem six years later. The fact is that some of the same companies we are speaking of also sell products in Japan.
So what might enlightened leaders do? Following is a very high level less than all inclusive examples.
1. Accept the fact that there is a problem.
2. Conduct research from other sources such as Japan that have eliminated BPA leakage.
3. Author a plan to replace existing products with new ones that are safer.
4. Willingly incur the added expense to retool processes and manufacturing products that are required to support the change.
5. Author a marketing campaign to tell consumers what you have done on their behalf relative to product safety.
6. Let consumers know what your competition is not doing.
A leader behind this plan might in fact increase market share and also sleep better at night.
We look forward to and appreciate your comments.
Posted in E-procurement, Sourcing Safe Foods, Sourcing Safe Products
Wednesday, August 11th, 2010
As a refresher, this author used the following example of less than stellar industry leadership during yesterdays post. I was reading an article recently Titled “Firms aim to fight BPA ban” by Lyndsey Layton of the Washington Post. A quote from the article that follows speaks volumes to the lack of leadership in solving this problem. “Frustrated industry executives huddled for hours Thursday trying to figure out how to tamp down public concerns over the chemical bisphenol A, or BPA”. You have to be kidding me.
So, let’s dig a little deeper into this article and suggest how industry leaders should be looking at this as an opportunity and how they can help buyers from all companies source products that are safer and have a better impact on the environment instead of continuing to follow the same practices they have been since the 1950’s.
The firms we are talking about are manufacturers of canned beverages and foods. This includes well known industry giants. A sampling of the creative strategy they came up with was based on the believe that they needed to have a legislative approach (lobbying) and a grass roots outreach to mothers and students between the age of 21 and 35 from someone in the age group. They also considered using fear tactics or telling consumers you will have to pay a higher price for these products. I won’t go on. Simply stated this is poor leadership based on a traditional business model with very little thought as to anything other than business as usual. At the end of the day, the product is not safe and needs to be replaced or outlawed.
Last year, scientists from the US National Toxicology Programme said that effects on reproductive development from BPA in packaging cannot be ruled out and a study released last year by UK scientists linked the chemical to diabetes and heart disease.
This is in addition to the 100 other studies that have found the chemical to be an endocrine disrupter or damaging to behavioural and neural development.
Michael Brown, President of chemical consulting firm StrategyMark said, alternatives such as acrylic, polyester, and polypropylene are worthwhile exploring in a number of applications such as non-packaging water sports bottles, baby bottles, water dispensing bottles, appliance containers (e.g. food processors), etc.
Of course it makes sense, but even a consulting firm that supports this industry won’t come right out and say this is a required and mandatory action.
Tomorrow in Part III of this post we’ll take a look at how another country dealt with the same issue.
We look forward to and appreciate your comments.
Posted in E-procurement, Sourcing Safe Foods, Sourcing Safe Products
Thursday, August 5th, 2010
Just because you need to buy a product or service does not mean that you will receive the optimal price for that product. For certain products there are better times to run e-procurement events and if you miss that opportunity by even a couple of weeks the lost savings could be astronomical.
Some consumers give this considerable thought when they buy products like cars, computers, televisions, furniture and even certain food products. Retail buyers should be doing the same. If you are the poultry buyer planning for Thanksgiving, you do not want to be buying your frozen turkeys in July and quite frankly if you buy them in March you are probably going to miss out on some savings. The same could be said for just about any type of fresh produce. You can certainly get everything in today’s world at any time of year, but there are better times to do it than others.
A couple of tangential examples that require careful thought would be landscaping services and snow removal services for store parking lots and distribution centers. The services for the most part may be provided by the same suppliers. The optimal time to source landscaping may be the month of March while the optimal time for sourcing snow removal services may be September. These months also mark the beginning and end of the respective service seasons for each service. Even though you may get the service from the same provider, keeping the services separate leaves the leverage with the retailer when you source the other service for the upcoming season. This is also the time when the suppliers are looking for business that will sustain them through the upcoming season as another winds down.
Make sure you ask your e-procurement solutions provider to assist you with the apropriate timing to source your goods and services.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Online Reverse Auction, Procurement Auctioning, Reverse Auction, Reverse Auction Procurement
