Archive for the ‘E-procurement’ Category

Why should suppliers want to participate in eRFX events?

Friday, July 30th, 2021

 

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

Quite often when speaking with new suppliers in order to invite them to participate in an eRFX event like a reverse auction or an on line request for information or proposal the question comes up; “What’s in it for me”? This is almost never the case for suppliers that have been involved in the practice before.

Supplier benefits may include but are not limited to the following:

1.  Suppliers can accurately represent their company and its capabilities to a buyer or group of buyers.
2.  Suppliers benefit from reduced cost of new business acquisition.
3.  Suppliers are exposed to more opportunities for new business.
4.  eRFX events bring more potential business partnerships directly to the supplier’s door
5.  eRFX events are transparent and all requirements are clearly defined
6.  Suppliers can have access and compare their offering to the best pricing during the auction, which helps suppliers position themselves correctly in the marketplace
7.  All of the buyers terms and conditions, product specifications, and other pertinent information is clear and concise which allows for accurate quoting
8.  Suppliers are introduced to tools they can use in their businesses in order to compress their pricing.
9.  Suppliers can instantly submit and modify their bids electronically rather than submitting paper bids, providing a faster, more efficient purchasing process.
10.  Suppliers can upload pertinent CRM data that they would like the host company to consider.

The next time an customer sourcing company like SafeSourcing calls you on behalf of their host company requesting your participation in an eRFX events, ask to be added to their database and what you have to do to be invited to all events in the future.

If you’d like to learn more about the SafeSourceIt™ Global Suppler Database, please contact a SafeSourcing Customer Services Account Manager!

We look forward to and appreciate your comments.

What’s the difference between a non-responsible and a non-responsive bidder.

Wednesday, May 26th, 2021

 

 

Today’s post is our archives at SafeSourcing.

The California Court of Appeals offered a good explanation of the difference between responsive and responsible. “A bid is ‘responsive’ if it promises to do what the bidding instructions demand; a bidder is ‘responsible’ if it can perform the contract as promised.” [1]

Non-responsibility is determined based on whether the bidder can actually fulfill the Invitation to Bid (ITB). Does the company have the necessary facilities and delivery capabilities to fulfill the required products? Determining if a vendor is responsible would have you assessing if the bidder is capable of fulfilling the products as specified, not if the bid itself meets the specifications.

Every ITB has product specifications, terms, and deliverables that each bidder must abide by. For a bidder to be considered non-responsive,  they will not conform or meet one or any of these requirements. When determining if a bid is responsive, you would assess if the bid offered meets the product specifications, terms, and deliverables; not at how well the bidder will actually perform.

When a bidder is categorized as non-responsive there are normally three steps. First, you will notify the bidder with indications of their non-responsibility. Second, the bidder will be given the opportunity to contest those indications. Finally the bidder should be permitted to present evidence that they are qualified to fulfill the products.

Please contact SafeSourcing for any needs with your non-responsible and non-responsive suppliers. We enjoy bringing this blog to you every week and hope you find value in it. For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to your comments.

[1] http://law.justia.com/cases/california/court-of-appeal/3d/195/1331.html

Understanding the Relationship Between Procurement and Marketing

Thursday, April 8th, 2021

 

Todays post is from our SafeSourcing Archives

The relationship between a retailer’s Marketing and Procurement Departments has been one struggling to maintain cohesiveness in many companies for quite some time.

While the Marketing team is continually trying to find creative and cutting-edge ways to increase sales within a retail organization, Procurement is constantly looking for ways in which to not only reduce costs, but find the best fit of suppliers with their company.

In many cases, marketing will expend a good deal of effort to find vendors to work with them on projects that when turned over to the procurement team can’t even be considered because their price is too high.  In the end this costs the company money, creates continued division between departments, and causes unnecessary lost time and sales.

Studies and reports have shown, and we at SafeSourcing agree, that the involvement of the Procurement department, even at the most basic level, into marketing projects can reap huge benefits as both departments work toward finding partners in their suppliers to achieve both their marketing and procurement objectives.

Retailers whose Marketing departments can leverage the database of the Procurement department’s suppliers will find a positive effect on their spend while achieving the ROI they are looking for on their campaigns and will create a better team environment within the company to achieve like-minded goals.

For more information about how the SafeSourcing database of known suppliers can help your company’s marketing and procurement departments work together to achieve these goals, please contact a Customer Service representative today.

We look forward to and appreciate your comments.

What Procurement KPI’s are on your dashboard?

Friday, March 26th, 2021

 

Todays post is by Ron Southard CEO at SafeSourcing Inc.

At a minimum the following data fields; start date, event date, award date, letter of intent date, contract date, initial delivery date, total low company quotes, total all low quotes, award of business quotes are the basis for e-procurement KPI’s that will help to measure how your procurement department is performing and progressing over time and where opportunity for additional savings exist.

Wit the above data you can measure the following daily by department and associate assigned to that project. You should be able to actually click on any of the KPI’s to drill down for further analysis and causal data.

1. Opportunity lost cost results
2. Timeline analysis of a project launch to event, letter of intent and contract
3. Low quote company versus all low quotes or missed savings
4. Average days to complete event
5. Average days to complete award
6. Average days to complete LOI
7. Analysis of supplier count and line item count versus where savings were maximized.
8. Number of events occurring above and below average.
9. Average or mean performance by KPI
10. Deviation or the best and worst events by KPI

If you had these KPI’s on your desktop of mobile dashboard, how much easier would it be for you to manage your business? If you don’t have this data please contact a SafeSourcing?Customer Services Account Manager to find out just how easy it is to retrieve.

We look forward to and appreciate your comments.

Getting Savings Through the Learning Curve

Thursday, March 18th, 2021

 

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

Learning is a topic that has no shortage of sayings and idioms, and common phrases that refer to it. To name a few…

  1. “You learn something new every day”
  2. You can “learn the hard way”
  3. You can “learn from your mistakes”
  4. And, of course, you may experience a “learning curve”

The list could go on, but the point is that learning is a fact of life. In eProcurement, you will likely find plenty of opportunity to learn, but there are a few things that you can do as you get started to make sure you learn quickly and that you’re able to enjoy the benefits of your eProcurement process even as you’re learning. Here are a few thoughts on the matter so that you can learn from the experience of others.

The first one  I’ll share is that it is absolutely possible to learn as you go with eProcurement. In fact, the best way to learn how the process works and what works best for you is to select some categories to start with and to begin sourcing. With SafeSourcing, we help our customers get off and running very easily because of our full-service SaaS model. That eliminates many of the typical barriers to entry that would prevent a new user from experiencing how eProcurement works and from getting the immediate value created when we reduce costs in those early categories.

Secondarily, I would note that you don’t need to learn anything the hard way. For customers willing to embrace eProcurement and are willing to be open minded in their learning, SafeSourcing can offer much guidance. From experience, the more closely you are willing to work with us and communicate regularly, the better your learning experience will be. We’d rather help you learn from the mistakes of other than your own and we’re going to guide you around the types of challenges and pitfalls that exist.

Like any subject, learning in eProcurement is an entirely subjective experience. From our perspective as the eProcurement provider, we can make learning a very easy process, but everyone learns their own way. No matter your learning style, just know that we’re here to make sure that you succeed.

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.

 

 

 

Looking for a new Procurement Service Provider? Look no further!

Wednesday, March 10th, 2021

 

Today’s post is our archives at SafeSourcing Inc.

SafeSourcing, Inc. is here for you, where we focus on YOU and YOUR needs, and not just sell you a tool, we provide you exceptional service!

10X

 

 

 

 

About us:

Just in time, an innovative alternative has arrived. SafeSourcing is loaded with efficient and comprehensive tools and programs that turn the procurement process into a highly productive endeavor. SafeSourcing® is, literally, a one-stop shopping center.

At SafeSourcing, we focus on safety and security. All our vendors are part of a high quality supplier database with many associated tables that support security and safety in the supply chain. SafeSourcing’s suppliers are also checked for their support of socially responsible initiatives including their eco-friendly practices.

To that end, our SafeSourceIt™ Supplier Database of over 427,000 global suppliers contains over twenty-five unique certification standards that are supported by our best practice initiatives such as GFSI, ISO 22000, Green Seal, ECO-LOGO, Fair Trade, SQF and Certified Humane Raised & Hand-Fed.

The SafeSourcing objective is to help buyers save considerably on costs. History shows that in selected categories, buyers have saved as much as 30-40%. Auction events can literally be set up in minutes, creating a significant efficiency improvement over traditional offerings. Studies have shown that a 5% saving in procurement costs translates into an effective increase in sales growth of 30%.

“As our technology advances, new companies are given the tools to do business in a better, smarter, more streamlined and cost effective way. SafeSourcing is one of those companies and delivering these advances to the procurement community is why we are here.” Ron Southard, CEO, SafeSourcing.

SafeSourcing is committed to proactively supporting safety and environmental standards in the global supply chain. We donate a portion of our net profits to retail education, green and safety initiatives.

Are you interest in learning more about SafeSourcing and how we can help your company? 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.

 

The Central Procurement Function!

Tuesday, March 9th, 2021

 

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. However, it is this authors firm belief that Procurement should ultimately report to Finance. Example: CPO reports to CFO.

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.

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

Wednesday, March 3rd, 2021

 

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

Todays post is a little long in the tooth, but still relevant for sourcing professionals.

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

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

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

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

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

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

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

We look forward to and appreciate your comments.

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

Wednesday, February 3rd, 2021

 

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.

 

Part II of here is some Lasik for retail e-procurement professionals in order to create better focus.

Thursday, January 28th, 2021

 

During yesterdays post Here is some Lasik for retail e-procurement professionals in order to create better focus we discussed the following four retail P&L measures and how to use them to pin point a starting point for e-procurement evaluation and events. They were

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

Also in yesterdays post, we promised to review what underperforming the above measures means and how careful evaluation will point you in the direction as to where to begin your e-procurement journey.

Here you go!

If your EBITDA is low, and your top line sales are in line with your plan, it is pretty clear that you have either an expense problem or a cost of goods problem. If the problem is expense related the first indicator is that your gross margin is most likely in line and your costs of goods are ok relative to your plan. In this case since the issue looks like it is below the gross margin line you have an expense problem. This does not always mean that the issue is your largest expense category like health benefits. Often times the problem can be caused by mid level expense related categories particularly categories that are hard to monitor and as such hard to control like hired services. A few examples are items like landscaping, snow removal, pest control, window washing and other similar types of expenses. These expenses have multiple invoices from multiple suppliers multiple times each month and are approved at store level. As a result, eProcurement results for these categories return impressive results while also streamlining suppliers as well as the process. With out going into to much detail the exact same process works if you turn this issue around and sales are near plan and gross margin is out of line, you most likely have a cost of goods issue.

A caution that procurement professionals should be aware of is that of measuring yourself solely against your own plan. You may be achieving your plan, but underperforming the industry you serve. This author believes that this is the 2nd level of analysis required once you have addressed the items indicated above and want to take the next step in creating a sustainable e-procurement process.

I hope this helps and allows you to use the lyrics from the 1972 song by Johnny Nash titled ?I can see clearly now? as your sourcing mantra.

If you’d like to discuss further how I can personally help your company, please use our contact page as I get the updates as soon as you submit it.