Archive for the ‘Global E-procurement’ Category

The U.S. Consumer Price Index rose 1.5% in December.

Tuesday, February 8th, 2011

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.

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Is there benefit to a large retail supplier database?

Wednesday, February 2nd, 2011

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.

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What information should we know about our supply chain partners?

Tuesday, January 25th, 2011

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.

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Is it time to look at your paper purchases?

Thursday, January 20th, 2011

So what does drive the price of paper? Well it depends on the type of paper you’re talking about. In this case let’s talk about copy paper, receipt paper and the like. What drives the pricing here is the pulp market and specifically the hardwood pulp market. You probably buy a variety of paper products from the same distributor. Your supplier may buy it from a larger distributor who may in fact buy it from a mill.

What the mills buy to make copy paper is hard wood pulp. That market at present is becoming saturated which is a good thing for paper prices. We took an early hit last year due to Mother Natures impact in countries like Chile but global inventories and shipments are headed up which means your prices should be headed down.

Your contract probably has some sort of escalator or deescalator language in that that offers some protection, but excess inventory is always a reason for companies to be aggressive in their pricing.

We look forward to and appreciate your comments.

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Here is how to insure that your e-procurement bids as successful as possible

Tuesday, January 11th, 2011

Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality. Probably one of the most important elements and most overlooked is that of incumbent supplier communication once a bid has been authorized. That is not setting any false expectations with your incumbent suppliers. As you already have a relationship you will most likely receive calls, emails or texts as to what is going on. Your answer has to be that we value our relationship and encourage you to use this process as it is the only process by which we will review bids.. Do not indicate that everything will be ok or that things will work out just fine or any similar language. If you are using a 3rd party, instruct your supplier to provide any questions or communications through the third party only. 

The e-negotiation process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on an equal playing field. Ideally each supplier must bid on the same documented specifications, terms, and conditions for all items. However breaking out individual line items that a specialty supplier can provide bids for can help to reduce the opportunity for suppliers to manage the overall gross margin of their bids and drive higher savings. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest possible price, for the benefit of the host company. Competitive bidding cannot occur where specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding tangible benefit for the host company.

The above message needs to be communicated to any and all associates that are involved in the process and may have a reason to communicate with suppliers.

We look forward to and appreciate your comments.

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Safety and Environmental certifications are not just about food and food born illness protection.

Wednesday, December 8th, 2010

Many times the ideas for my blog posts come from conversations with customers. Often times those thoughts make it into our product development plans. In fact listening to our customers is one of our most important jobs.

During a visit with a customer several months ago, the head of procurement complimented me on our companies efforts related to food safety and in particular commented on the 27 safety certifications we hold our 380,000 global suppliers accountable to in our SafeSourceIt™ Supplier Database. He followed that with the statement that since they did not sell fresh foods, that area of our business did not apply to them.

This particular retail customer does sell food products, cosmetics, private label bottled water and also bags the products they sell to their customers in plastic bags. I think most of you can see where I’m going with this. Plastic bags are a growing area concern for many areas of the country and in fact outlawed in an ever increasing number of areas due to their negative environmental impact. Food packaging can contain BPA. Dog food has contained products such as melamine. Toys have been found to contain lead.

So, let’s see that’s clothing, packaged foods, pet food, toys and beverages. I guess we have to be careful with all of the products we buy. Suppliers need to be held accountable to a variety of standards and certifications while also providing traceability beyond the one forward and one back standard supported in the industry today.

E- procurement solutions  providers need to be prepared to discuss how they intend to accomplish this for their customers in order to limit end user consumer risk, but also limit risk associated with litigation and other recall related costs that have a direct impact on company profit.

At SafeSourcing, all of our associates support our R4 program of Recycle, Reuse, Replace and Reduce and will be glad to have a detailed discussion relative to product safety and environmental impact and how our tools proactively address these opportunities.

We look forward to and appreciate your comments

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Twenty-one reasons why all retailers should use E-Procurement tools.

Monday, November 15th, 2010

 These are certainly not all of the benefits that retailers can drive from the use of e-procurement tools, but it is a good starting point.

Our list is not ranked in order of importance although many might argue that not much is more important than improved earnings.

1. Guaranteed to improve net earnings
2. Guaranteed to improve safety
3. Guaranteed to improve Corporate Social Responsibility.
4. Guaranteed new sources of supply
5. Retail has less spend assigned than any other industry
6. Streamlines the  procurement process
7. Holds suppliers accountable to your standards.
8. Improves quality
9. Cost avoidance in a volatile market
10. Creates a competitive environment
11. Drives reliable market pricing
12. Maintains a reliable history for future comparison
13. Educates suppliers as to how retailers wish to procure products
14. Supplier training eliminates questions
15. Improved and consistent product specifications
16. Improved negotiation.
17. Improve carbon footprint
18. Simple award of business process
19. Frees up time for other tasks
20. Works for procurement of all product categories
21. Provides a detailed audit trail.

This author is not sure why a derivative of this list could not become the mission statement for any procurement department.

We appreciate and look for ward to your comments.

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Sourcing prescription drugs gets a little simpler all of the time.

Wednesday, November 10th, 2010

This was the case years ago, but with the advent of many of the internet based prescription drug sites such as RXlist, Drugs.com and many retailers sites, it is easy to find lists, formulations, directions, dictionaries and generic equivalents. What more could a Pharma buyer ask for. Now all you need to do is use your e-procurement solutions provider to drive your costs down.

According to RXlist, the top twenty prescription drugs in the U.S. are as follows.

1. Lipitor
2. Hydrocodone / Acetaminophen  
3. Hydrocodone / Acetaminophen  
4. Levothyroxine sodium  
5. Amoxicillin  
6. Lisinopril  
7. Nexium  
8. Synthroid  
9. Lexapro
10. Singulair
11. Plavix
12. Simvastatin
13. Hydrochlorothiazide
14. Amlodipine besylate
15. Azithromycin
16. Warfarin sodium
17. Furosemide
18. Azithromycin
19. Levothyroxine sodium
20. Advair Diskus

Let’s hope this  information helps you to drive down your costs.

We look forward to and appreciate your comments

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In other words is just more trade liberalization.

Friday, October 22nd, 2010

The agreements are really just a form of trade liberalization which is how these geographies or countries collaborate to the remove government incentives and restrictions from trade between themselves and other nations or groups of nations. Trade liberalization has always been open to much political debate because of its impact on local economies where jobs or lack of them impact the daily lives of its people.

A subject we are all familiar with that is a good example is that of jobs going overseas from the United States particularly in the area of manufacturing. That subject could be an entire book relative to the impact of World War II on creating breeding beds for new economies based on new technologies that ultimately caused our own manufacturing decline and the need for tariffs in the first place.

This all sounds like a self fulfilling prophecy, but I digress.

We look forward to and appreciate your comments.

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Is comparative advantage important to your procurement practices?

Thursday, October 21st, 2010

Comparative advantage is a theory that advances that in a free marketplace, each entity or country such as the EU or NAFTA or trading countries will ultimately specialize in activities where it has comparative advantage. Examples of such might be technology, natural resources,   local workers skill sets, agricultural advantages, transportation benefits etc.

Sometimes countries create trade agreements that eliminate the comparative advantage they each may have in favor of benefits that both or multiple countries derive from the agreement where one may have an advantage over the other that creates an imbalance in trade. As an example in the NAFTA agreement, Mexico may have a lower cost labor pool than the United States but the United States may have a transportation advantage that could leverage that low cost of labor. These agreements are called Free Trade Agreements in which both parties agree to lift most or all tariffs, quotas, special fees and taxes, and other barriers to trade between the entities to their mutual benefit.

We look forward to and appreciate your comments.

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