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If you’d like to learn more about alternative sources of supply around the world or locally, contact a SafeSourcing customer services account manager to learn more about SafeSourceIt™ our 427,000 global supplier database and let us translate it into increased profits for you.
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Here’s another procurement related acronym. This one defines the role of classification of products for tracking in an ecommerce environment.
According to Wikipedia UNSPSC is the acronym for the United Nations Standard Products and Services Code, it is a coding system used to classify both products and services for use in the eCommerce. The UNSPSC was jointly developed by the United Nations Development Programme (UNDP) and Dun & Bradstreet Corporation in 1998 and is currently managed by GS1 US, which is responsible for overseeing code change requests, revising the codes and issuing regularly scheduled updates to the code, as well as managing special projects and initiatives.
UNSPSC was created so that companies would be able to track their purchasing patterns more effectively to ensure compliance with their contracts and also make it easier to conduct high quality catalog research. To that end UNSPC is divided into four areas which are segments, families, classes and commodities and business functions.
Other product classifications that buyers may be more familiar with are DUNS (data universal numbering system), NAICS (North American Industry Classification System) and SIC (Standard Industrial Classification).
By the way, I have never asked a single supplier whether or not the understood or used this code. Have you?
We look forward to and appreciate your comments.
A few weeks ago we talked about the differences between the RFPs, RFIs, RFQs, and Surveys and touched on how they were different as well as when you would use one. What we said then was that you typically want to run one of these events when you have an idea about the basic functionality of a product you need but are not sure who can provide it and what else it is they can bring that you didn’t think of.
In many cases, the road to procuring enterprise software will require one of these tools due, in part, to the fact that software can change so quickly, but also because typical decision factors like price play a much smaller role to the features and functionality of the software.
In preparing to make a major software purchase a Request for Information or Proposal can be a great first step. Here are some things to keep in mind about the solution and the company when preparing for one.
Flexibility – One of the keys in the process of evaluating software solutions and the companies that create them is to gather information about the flexibility of the product. A focus on how configurable the system is and how well a solution can be fitted with your company’s needs and appearance is an important part to building a good software RFP/RFI.
Reputation – A company’s reputation for delivery used to go a long way in the business world but in the wake of a tougher economy price has begun to gain ground. In the arena of software, it is still one of the most important factors to evaluate when selecting a software partner. Building a relationship with companies known for under promising and over delivering on a consistent and referenceable level can be a huge factor in protecting a million dollar investment.
Pricing model – The key here is not in the actual price but how the company prices that is important. Your company’s needs will dictate the pricing model that benefits your company whether for the enterprise; per seat or per user. How a software provider prices and what they charge you for are HUGE factors in determining if they are suited for you and your company. The more information you can gather at the RFP/RFI stage as possible is very important.
Support – There is no more important product to verify good support on than software. As upgrades occur, employees get promoted or leave the company, new employees need training, or issues arise, the level of support a company will commit to is critical to the confidence you can place in them. On top of this, the more mission critical the functionality the software is to support is for your company, the more important the level of support becomes. Any software RFP/RFI you create should have a detailed section to determine what level of support you can expect from each vendor.
For more information on SafeSourcing and how we can provide RFIs/RFPs that help you focus on these important factors, please contact a SafeSourcing Customer Service Representative.
We look forward to your comments.
Variable costs can reap havoc on any company budget, they are more difficult to forecast and prepare for than fixed costs. Throw in large increases followed by unexpected decreases in any given year, and forecasting becomes almost impossible. As commodity prices continue to fill the market with extreme volatility—cotton being the current culprit—manufacturers, suppliers and procurement professionals are struggling to remain competitive.
Is there any relief in sight for the drastic shifts in commodity prices? Cotton, after having a record high price early in the year, now is experiencing a strong drop in price, nearly a fifty percent decrease from the spring. After already imposing a price increase, manufacturers and suppliers are faced with decisions on how to most effectively reflect the price shifts—again.
How can you protect yourself from the risk in the commodity market? Planning is a crucial step. With the uncertainty in not only the commodity market, but the financial market as well, the best defense is to develop a strategic plan for potential macroeconomic risks that could affect your company.
Possessing a detailed forecast of the global economy in any given time horizon will not only keep you relevant, it will allow you to have steps in place to overcome any potential unforeseen events. Along with a strategic plan, implementing escalator and de-escalator language into contracts for those products most affected by commodity risk will ensure that you are more protected from drastic market shifts. Unexplained market volatility and unforeseen events have the potential to seriously damage and sometimes destroy a company; take the steps today to implement a strategic plan to shield your company from market uncertainty.
For more information on SafeSourcing and how we can assist with this process, please contact a Customer Service Representative for more information.
We look forward to and appreciate your comments.
It’s hard to believe that The North American Free Trade Agreement went into force on January 1st of 1994 or seventeen years ago. This agreement covers a trade bloc consisting of the United States, Mexico and Canada.
How well this agreement has worked is a completely different subject at least in part. Can you believe that it took until this year for the governments of the United States and Mexico to agree to let each countries trucks travel on each others highways. Arguments, tariffs, security issues and other concerns have kept this vital part of any free trade zone from working as designed.
Maybe we have it right now and sourcing products from our free trade zone partners will be a bit easier.
We look forward to and appreciate your comments.
To the above point, this author has never seen a single category or product that can not be sourced using a reverse auction. And, I know many will argue this point with me. My answer however is a little more complex and is based on the evolution of original reverse auction or e-negotiation tools. As these tools have evolved, so have the processes associated with them whereby today’s tools have many features that support the entire RFI to RFP process within the same toolset resulting in a final compression event of reverse auction?
The process is really what determines the success of your e-negotiation event and that includes the determination of what it is you are looking to measure. Simply indicating that you want to reduce last year’s price or the price from your last contract is not always a fair analysis. Markets fluctuate daily and a year after your original contract, markets that drive the product you are sourcing may not be favorable to reducing your current price. However utilization of these tools may be able to help you reduce prices you might have to pay while prices are rising or put another way help you avoid costs. Cost avoidance is a good thing, particularly if your competition is not doing the same thing.
In many cases, if your contracts are not current and you have not used these types of tools to negotiate your current pricing and you do not know where to find alternative sources of supply; you will most likely see savings during the first year. After that the category and commodity driving it will determine further compression, holding prices constant or cost avoidance. All are a benefit of todays best of breed e-negotiation tools.
We look forward to and appreciate your comments.
The idea is that you hope this will allow you to compete with larger companies that have been sourcing lower cost products from these regions for years. So how can you catch up in a much shorter period of time?
If you’re dead set on moving forward and adding this strategy to your tool kit, the first and maybe most important step is to make sure you are working with a quality e-procurement solutions provider that should already have relationships in place with agents, 3PL’s and other companies that can manage much of this process for you and at a fraction of the cost of doing it yourself.
The National Customs Brokers and Forwarders Association of America www.ncbfaa.org can put you in touch with customs brokers and freight forwarders who can help you import your goods. Many of them offer informational websites that contain what is required in order to find the right customs broker or freight forwarder for your shipments. Your e-procurement solutions provider can also help you manage this process with third party logistics providers or 3PL’s in areas like ocean bound freight and national and local delivery and distribution that you may not have any experience in.
Companies can also visit the following website www.aapa-ports.org (American Association of Port Authorities) for assistance with the technical aspects of the logistics industry including directories of custom brokers and freight forwarders.
This process is fraught with risk, but for growing companies that plan properly and use the right resources, there is profit to be made.
We appreciate and look forward to your comments.
For every commodity that rises there are also commodities that fall. For every company that raises their prices to their end user be it consumer or company, there are others that want your business bad enough to keep prices stable if not lower them. The issue is that companies have to be willing to put the work in if they want to keep prices down. Too many companies continue to operate in a business as usual manner. It’s pretty easy to spot when individuals or companies operate from the “this is how I learned it and this is how I do it” point of view. Some clues are;
1. They buy from the same suppliers over and over again.
2. The do not have a view of their contracts.
3. They do not have a view of their performance against those contracts.
4. They do not have a view of additional sources of supply.
5. They do not put their products and services out to bid on a regular basis.
6. They do not have basic specifications.
I was reading an article in U.S. TODAY last Friday February 4th titled Prices starting to creep higher By Paul Davidson. The sub title was Businesses hit point where they can’t absorb higher costs. The article sited several manufacturers and retailers that were raising their prices as a result of increased costs.
Here’s a promise. If you can’t figure out how to keep your costs down, call us at SafeSourcing because we can. As a matter of fact call me personally 480-773-7524 or email me at ronsouthard@safesourcing.com.
We look forward to your comments.
Reviewing why retailers do not have continuing success when running prior e-procurement events over again, one area of commonality is a lack of new suppliers. Another is the price being too high for the same event that has already been built and will result in lower savings the 2nd and 3rd time around.
There is a proper way to insure the sustainability of your reverse auctions going forward. Following these guidelines will also encourage senior managements consideration of placing more spend under the control of e-procurement tools and specifically reverse auction tools.
Once you are armed with a robust retail supplier database and related tools such as the SafeSourcing® SafeSourceIt™ tool set:
1. Conduct a detailed category discovery
a. Learn all there is to learn about the retailers way of doing business.
b. Walk distribution centers and warehouses
c. Walk an array of stores and understand all formats of the enterprise.
d. Compile a list of all corporate categories
2. Rank categories by
a. Total spend
b. Importance
c. Sourcing frequency
d. Quality objectives
e. Look for aggregation opportunities
i. Lighters, lighter fluid, flints, fire sticks.
3. Conduct supplier discovery
a. Rank suppliers
i. Size
ii. Experience
iii. References
iv. Environmental certifications
v. Safety Certifications
4. With all of the above in hand; develop a three year game plan
a. Identify suppliers for each event over the three years
b. Develop savings targets by category
c. Develop a three year time line for all categories
5. Role Play internally the first year for a test category
a. Ask the following questions
i. How will you award the business
ii. Review alternate scenarios
iii. Review savings by scenario
iv. Determine which suppliers will be invited back
v. Determine what new suppliers from your database search will be invited next year
We look forward to and appreciate to your comments.
With the number of food born illness issues during the last couple of years, one area that is difficult to keep up with is food industry safety.
The SafeSourceIt™ Supplier Database has grown to over 380,000 global suppliers. During the same timeframe the number of certifications we monitor for these suppliers has also grown. In the food space three standards that are regularly adhered to are ISO 22000, SQF and GFSI? So, what’s the difference?
In essence, SQF and GFSI are programs administered by two separate organizations CIES and FMI that are supportive of each other and use ISO 9000 and its derivative ISO 22000 as standards guideline towards driving food safety in the global supply chain.
According to Wikipedia, ISO 22000 is a standard developed by the International Organization for Standardization dealing with food safety and is a general derivative of ISO 9000 which sets standards for quality management. As such, ISO 22000 guides food safety management systems – requirements for any organization in the food chain. Since food safety hazards can occur at any stage in the food chain from production to consumption it is essential that adequate control be in place that by the ISO are referred to as Critical Control Points or potential points of failure in the supply chain that when managed properly can mitigate the risk associated with the hazard ever taking place.
The ISO 22000 international standard specifies the requirements for a food safety management system which SQF and GFSI are that involves interactive communication, systems management and prerequisite programs and the principles of Hazard Analysis and Critical Control Points (HACCP).This is a systematic preventive approach to food safety which addresses physical, chemical and biological hazards as a means of prevention rather than finished product inspection which could be much more costly.
Think of the ISO as a standards creating body, and SQF and GFSI as programs that at a minimum focus on holding the entire food supply chain accountable to those and other standards.
We look forward and appreciate your comments.
