Archive for the ‘E-procurement’ Category
Wednesday, September 28th, 2011
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.
We look forward to and appreciate your comments.
Posted in Contract Management, E-procurement, E-procurement Solutions, E-procurement Tools
Tuesday, September 27th, 2011
From a simplistic perspective an index is a system used to make finding 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.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
Friday, September 23rd, 2011
Category discovery is the basis of any quality implementation of an e-negotiation strategy. It is essential that this process be supported by the company’s executive management because they hold the key to unlocking access to data sources across the enterprise. This process will include working with all category managers, buyers, other procurement knowledge workers and anyone that participates in sourcing to uncover what you don’t know in support of your Requests for Information (RFI), Proposals (RFP) and Quotations (RFQ).
The first step in this process is the understanding of where the data is hiding and in most companies large and small it is. Here’s a list to get you started. Data discovery generally comes from two sources; Internal and external.
Examples of Internal and External Data Sources
1. SLRP
2. Budgets
3. General Ledger
4. Detailed P&L
5. Purchase Orders
6. Contracts
7. Detailed Vendor Listing
8. Product List by Vendor
9. Invoices
10. Product cut sheets
11. Copies of orders
12. Brochures
13. Supplier Websites
14. Annual Reports
As always we look forward to and appreciate your comments
Posted in E-procurement, E-procurement Solutions, E-procurement Tools, Eprocurement Auction
Tuesday, September 20th, 2011
So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as MRO or Fleet Maintenance in the distribution space or raw materials used to manufacture components that require special handling, shipping and standards adherence. The amounts of the total spend for an event really has nothing to do with the complexity of the event. The complexity is determined by the data points requiring management in order to drive the best possible value to the buyer and the supplier.
This author would suggest that any event including multiple market baskets, thousands of SKU’s all with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity. This can be further complicated by trying to determine the correct decile based sourcing strategies for the event and including product affinities where they make sense.
The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support complex events, your e-procurement provider needs to have an understanding of the specific market place and practices and processes in place that allow them to drive these activities and bring complex events to market in the shortest period of time. Generally this should occur within less than two or three weeks from event notification to event completion.
Last year, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.
1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who’s the customer and who’s the supplier
9. Sales People
10. Third Party Providers
11. Collaboration complexity.
Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.
We appreciate and look forward to your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
Wednesday, September 7th, 2011
In today’s highly competitive world, businesses often find difficulty navigating and negotiating with the savvy and skilled sales person. This process can be lengthy, and prohibit implementation, quality and monetary gain associated with negotiating new contracts.
E Procurement tools streamline and automate this process for businesses, often returning surprising ROI’s and returning valuable time to understaffed purchasing departments. In fact, numbers don’t lie. Savings of 5-15% from e procurement services can improve profitability by up to 100%.
ROI, however, is not the only reason to use e-procurement services. The transparency of data provided to the buyer allows them to streamline their purchasing process both internally and maximize their relationships with potential vendors while also evaluating meaningful trends.
Based on the above, these types of hosted solutions are undoubtedly amongst the most cost effective and useful tools your business could use.
If you are interested in learning more about how these tools could benefit your company please contact a SafeSourcing Customer Service Representative.
We look forward to and appreciate your comments.
Posted in E-procurement, Eprocurement Auction
Monday, August 29th, 2011
If you’re a business owner, large or small, CEO, CFO, or President of a company you should be asking yourself if your company can benefit from procurement services. Depending on the size of the organization you may or may not be familiar with all the goods and services that your company is purchasing. This is where procurement services can come into play!
According to Wikipedia procurement is “the acquisition of good and/or services. It is favorable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchases in terms of quality and quantity, time and location.”
This sourcing professional believes that if a company were to review at least 10% of their annual spend, they would find many opportunities to improve the bottom line. Below you will see a few of the times that would be most beneficial to take advantage of procurement services.
- 1.Reviewing/Resigning a current contract with an incumbent supplier. – If you’ve been with the same supplier for the length of multiple contracts, it’s time to re-evaluate. You may not be interested in switching vendors, but by taking advantage of procurement tools you will be able to negotiate a better rate for the goods and services that you’re purchasing.
- When you start a new task/department within your business. – Every time your business grows or expands is an opportunity to take advantage of procurement tools. Even if the goods and services that you’ll need to operate this new department are things you’re currently using, the quantity of these items would be a great opportunity to evaluate how much you’re spending to have the goods and services you’re using on a regular basis.
- When you are analyzing you upcoming budget – Each year when your company monitors your profit margin and areas within your budget that cause you concern is a great time to evaluate what procurement services would be beneficial for you. For example, you may find areas of your business that are critical for your end product or service, but you feel that you are spending too large of a percent of your budget to produce such results.
Just think of all the different areas you bottom line is affected by. Each of these is an area for potential savings thru the use of procurement tools. By partnering with a procurement professional, you’ll be able to evaluate more than a few areas of your business where you can start saving for your next purchase or contract for your goods and services.
For more information on SafeSourcing and how we can help you evaluate your savings opportunities, please contact a Customer Service representative.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
Thursday, August 18th, 2011
In this case sustainability has less to do with the environment and more to do with process, discipline and execution. Which can also impact green programs focused on a company’s carbon footprint
According to Wikipedia a simple definition of sustainability, in general terms, is the ability to maintain balance of a certain process or state in any system. It is now most frequently used in connection with biological and human systems. In an ecological context, sustainability can be defined as the ability of an ecosystem to maintain ecological processes, functions, biodiversity and productivity into the future.
Sustainability has become a complex term that can be applied to almost every system on earth.
From a corporate perspective many investors look at sustainability as a framework for disciplined and responsible management, a key success factor in achieving economic gains. Relative to e-negotiation this means being able to run the same process (events) over and over again quarter after quarter and year after year as the standard way in which a company endeavors to improve quality, workflow and compress prices. To the extent that this process supports companies social initiatives relative to the environment and humanity new terminologies such as the term triple bottom line are emerging in discussions at the board level.
The Global Sourcing Council tells us that although sustainability has found its permanent place in corporate boardrooms, execution is still a challenging journey. Implementing sustainability in global sourcing operations becomes even more complex as it creates its own unique challenges.
Global service providers that subscribe to sustainable strategies will benefit by gaining competitive, green advantage with the global organizations.
Ask your e-negotiation service provider how they intend to implement a sustainable program for your company.
We look forward to and appreciate your comments.
Posted in E-procurement, Sourcing Strategy, Strategic Sourcing
Wednesday, August 17th, 2011
That is if you want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time; and have a sustainable process moving forward.
The question one needs to ask is; what type of event services does my e-procurement provider offer? If your company is deciding to try self service, which is to be 100% self-sufficient, you need to know if your provider offers readily available classroom education that can be conducted on-site in order to train your team in all the nuances of event creation and support. These skills are the foundation that allows e-procurement providers to support large volumes of events in a full service mode, which drive greater savings over the long term. Knowledge transfer in this area is one thing; the passion, skill and headcount to carry out these practices on a day by day basis are what drive results.
Typically event services falls into two broad categories:
1. Event management
2. Event monitoring and support.
Event management provides end to end e-sourcing support that begins with a companies overall strategy and ends with the actual execution of the e-procurement event. This is a true cross category effort that includes a rather lengthy list of services that may include buyer training, supplier selection, category discovery, supplier communication, data analysis and the overall strategy for taking a specific category to market including timing, training and overall supplier expectation management.
Event monitoring and support is actually the tactical implementation of the over all e-procurement event management process. This may include all communications with suppliers on the day of an event including making sure they have access to the system, get logged in properly, don’t have problems placing quotes, monitoring supplier and buyer system communications techniques during an event such as notes and texting and being available post event for questions as needed.
These services are normally provided by people behind the scenes with a very specific skill set. If you plan to do self service it would be very wise to make sure you have them covered at the same quality level.
We look forward to and appreciate your comments.
Posted in E-procurement, E-procurement Solutions, Sourcing Strategy
Friday, August 12th, 2011
Let’s first try to understand what analytics actually is. According to Wikipedia’ a simple definition of analytics is “the science of analysis”. A practical definition, however, would be that analytics is the process of obtaining an optimal or realistic decision based on existing data. Business managers may choose to make decisions based on past experiences or rules of thumb, or there might be other qualitative aspects to decision making; but unless there are data involved in the process, it would not be considered analytics.
So why can’t many companies afford analytics? The answer is because they are complex. In my early days of selling data warehouses with one of the industry leaders, in fact the best in the space today the combination and analysis of data from disparate functional areas of a business were nearly impossible. As such if a company was advanced enough to have this type of information it most likely existed in islands that evolved into departmental data marts like category management systems. These data marts ultimately evolved to complex databases with relational data models that allowed access of data contained in these disparate systems and then into on line analytical systems capable of managing massive amounts of data .
It’s probably no surprise that the early adopters of these technologies were the biggest of the big companies and governments. So when we get to analytics that support e-procurement systems or procurement systems in general, the systems that provide the analytics have to reside within a company’s corporately supported data model. If not, they initially at least have to have a procurement data model that supports data contained in ERP systems, Financial systems etc. Since the trend is not a backwards direction of recreating islands of information, pilots of these systems that show significant benefits, will only end up as a corporate roll out through integration within the corporate framework and data model.
I could go on to explain the expense and time associated with these implementations, but there is a reason that these solutions are not readily implemented within lower tier one and tier two retailers. Number one is that many still do not have easily accessible corporate views of data. Number two is the cost; resources and time to implement them are difficult for these companies to justify.
As such there continues to be a need (niche) for providers that understand retail from an operational and financial perspective that know where to look, what to ask for and can assemble, analyze and report on data the old way to support the procurement data requirements of mid tier one and tier two retailers.
We look forward to and appreciate your comments.
Posted in Business Sourcing, E-procurement, Procurement Solutions, Procurement Tool, Sourcing Strategy
Monday, August 1st, 2011
All Retail industry leaders know for a fact that e-procurement improvements can directly improve their bottom line as well as positively impact shareholder and stakeholder equity. In many cases in upper tier companies significant strides have been made to this end.
In mid tier markets, it’s an unfortunate circumstance that procurement departments or purchasing as it had traditionally been known has not evolved significantly beyond its traditional functionality in many cases. Many mid tier companies will introduce you to their category managers. However, it very quickly becomes clear that although many have strong backgrounds as product buyers; very few have been exposed to the most current e-procurement tools available today. This is in no way the fault of the purchasing department or of the retailer. Reduced staff counts and the aforementioned lack of attention from software and consulting providers as well as a lack of near by formal e-procurement training programs combine to make the transition to e-procurement tools difficult.
What can retailers in the mid tier markets do? The answer may be working with boutique software houses that have no where near the overhead of the largest companies in this space. The largest well known companies in the e-procurement space may dominate your web based searches because they can afford to pay for large numbers of key words used in web searches. It may actually pay to drill down a few pages beyond your original search to find companies that have unique e-procurement software offerings that are often developed by highly skilled entrepreneurs that know the retail procurement business and can offer e-procurement solutions for a fraction of the cost associated with the better known legacy providers. The risks associated with this approach are minimal as most offers in the e-procurement space are offered as a hosted service today. All that is required on the retailer’s part is internet access. You might even get treated more like a customer to boot.
We look forward to your comments.
Posted in E-procurement, E-procurement Solutions, E-procurement Tools
