Archive for the ‘Procurement Outsourcing’ Category

E-procurement.What’s in a definition?

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.

E-procurement.What?s in a definition?

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.

Retailers; can you compete with these top ten retailers in your market?

Tuesday, July 20th, 2010

Every one of the companies listed below use e-procurement tools to lower their cost of goods and services. They probably don?t even need to based solely on their sales volumes, but the do anyway and as a result get even better pricing.

1.?Wal-Mart
2.?Kroger
3.?Target
4.?Walgreen
5.?Home Depot
6.?Costco
7.?CVS
8.?Lowe?s
9.?Sears
10.?Best Buy

The reality is that you can?t compete with them on price alone. What you can do is improve your own margins and earnings so that you can stay in business and focus on what you do well. The ten retailers listed above cover every type of format and every type of product offered in retail from fashion to fuel.

So what can you do? First, try conducting a spend analysis of your detailed profit and loss statement and compare it to the industry leaders and other retailers in your market area. Look for anomalies where you may in fact have an advantage based on product mix and then try to figure out how to exploit it. Second, use e-procurement tools for existing and new products and services sourcing. Third, use contract management software to make sure that the savings you generate make it to your P&L.

Ask your e-procurement solutions provider how they can help. If you don?t get a good answers call SafeSourcing at 1-866-623-9006 or visit our website www.safesourcing.com and click on Contact Us.

We look forward to and appreciate your comments.

Yesterday’s post created a lot of questions relative to attacking Gross Margin!

Wednesday, June 30th, 2010

The following position was offered relative to the title. “This has always been a great question for retailers”. Should we attack the bottom line by focusing on shrink, cost of goods or gross margin?

During the post we answered the areas of shrink and cost of goods and services. The question now is how would we focus on gross margin and what would the bottom line impact be?

Let’s begin by restated our gross margin assumption. If we assume that COGS or cost of goods and services is about 75% of top line revenue that would result in a simple gross margin of 25%. Now that we know our gross margin, it is pretty simple to measure the impact. The first step is to look at the categories which generally fall into gross margin reduction such as the expense category. Examples might include employee benefits, construction, insurance and not for resale purchases etc.

We already know that our gross margin dollars are equal to 25% of our fictional company’s sales of $1B or $250M. Therefore the impact to the bottom line at most could be a percentage of $250. The next logical step is to look for the largest category spends with in the gross margin area. Let’s assume that employee benefits are 15% of payroll costs and that payroll costs for our fictional company are 15% of revenue. For our $1B retailer payroll would be $150M and benefits would be 15% of that or $22.5M. If we attacked health benefits costs and were able to reduce them by 20% the improvement to the bottom line would be $4.5M or 45%. This would certainly be a worthy target, but would not impact net profit as much as our shrink or COGs models as discussed yesterday. To summarize the impact to net profit as discussed in both posts.

1. COGS  up to 300%
2. Shrink up to 100%
3. Gross Margin up to 45%

Please remember these numbers are fictitious.

We look forward to and appreciate your comments.

This is Part III of an III part post series titled ?Technology Drives E.Procurement Acceptance? focuses on Reasons to Use E-Procurement.

Monday, May 24th, 2010

?Part III Reasons to Use E-Procurement

Sometimes an explanation can be lost in translation so we have developed the following 20 reasons why utilizing the technology-based e-procurement process can provide significant benefits to you and your company. These are certainly not all of the benefits that can be derived from the use of the e-procurement process, but it is a good starting point.

While this list is not ranked in order of importance, many might argue that not much is more important than the #1 item which is improved earnings.

? Improve net earnings
? Enhance safety
? Reinforce corporate social responsibility
? Find new sources of supply
? Streamline the procurement process
? Elevate supplier accountability to meet your standards
? Improve quality
? Reduce costs in a volatile market
? Ensure a competitive environment
? Buy at market pricing
? Maintain a reliable history for comparison
? Educate suppliers as to how you wish to procure products
? Eliminates questions through effective supplier training
? Maintain consistent product specifications
? Improve negotiation
? Improve carbon footprint
? Simplify your ?award of business? process
? Free up time for other tasks
? Process works for all product categories
? Provide a detailed audit trail

E-procurement offers many benefits for a broad range of companies in a variety of industries, assuming that the process selected is a high quality system with an extensive supplier database. We must also assume that the e-procurement process is implemented properly with the purchasing company and that the experienced e-procurement system provider works in concert with the buyer in order to realize optimal cost savings.

Numerous technology advancements have streamlined the e-procurement process and made it more user-friendly and less expensive. A company today can expect to reap significant benefits from e-procurement, including: saving money on purchases, reducing the time involved in the purchasing process, tracking current and archival activities and results, eliminating waste and improving the overall efficiency of the supply chain.

?Take advantage of the technology advancements and don?t overlook the benefits of implementing an e-procurement process to strengthen your company?s bottom line.

To download copies of this entire article please use the following link.

We look forward to and appreciate your comments.

This is Part III of an III part post series titled “Technology Drives E.Procurement Acceptance” focuses on Reasons to Use E-Procurement.

Monday, May 24th, 2010

 Part III Reasons to Use E-Procurement

Sometimes an explanation can be lost in translation so we have developed the following 20 reasons why utilizing the technology-based e-procurement process can provide significant benefits to you and your company. These are certainly not all of the benefits that can be derived from the use of the e-procurement process, but it is a good starting point.

While this list is not ranked in order of importance, many might argue that not much is more important than the #1 item which is improved earnings.

• Improve net earnings
• Enhance safety
• Reinforce corporate social responsibility
• Find new sources of supply
• Streamline the procurement process
• Elevate supplier accountability to meet your standards
• Improve quality
• Reduce costs in a volatile market
• Ensure a competitive environment
• Buy at market pricing
• Maintain a reliable history for comparison
• Educate suppliers as to how you wish to procure products
• Eliminates questions through effective supplier training
• Maintain consistent product specifications
• Improve negotiation
• Improve carbon footprint
• Simplify your “award of business” process
• Free up time for other tasks
• Process works for all product categories
• Provide a detailed audit trail

E-procurement offers many benefits for a broad range of companies in a variety of industries, assuming that the process selected is a high quality system with an extensive supplier database. We must also assume that the e-procurement process is implemented properly with the purchasing company and that the experienced e-procurement system provider works in concert with the buyer in order to realize optimal cost savings.

Numerous technology advancements have streamlined the e-procurement process and made it more user-friendly and less expensive. A company today can expect to reap significant benefits from e-procurement, including: saving money on purchases, reducing the time involved in the purchasing process, tracking current and archival activities and results, eliminating waste and improving the overall efficiency of the supply chain.

 Take advantage of the technology advancements and don’t overlook the benefits of implementing an e-procurement process to strengthen your company’s bottom line.

To download copies of this entire article please use the following link.

We look forward to and appreciate your comments.

This is Part II of an III part post series titled ?Technology Drives E.Procurement Acceptance? focuses on Getting Started!

Friday, May 21st, 2010

Getting Started

First and foremost in getting the e-procurement process right is to select a solution provider or partner that knows what they are doing and is willing to work closely with you during the early part of the process. The e-procurement plan for each company will be somewhat different in order to meet the specific needs of the company. There is however a general order to things that will provide the best opportunity for success.

To realize the most benefit from your e-procurement process, you will need to:
? Develop your strategy
? Complete a detailed discovery
? Learn to understand how to set up your procurement events, even if handled by your provider.
? Use a provider with a high quality process and an extensive database for sourcing suppliers
? Clearly communicate how events will be run or executed to all involved parties ? Review the process for sustainability and adjust as necessary
?
As mentioned earlier, it is incumbent upon your e-procurement solutions provider to be able to assist you in completing these tasks in a reasonable period of time. You should be checking the background of the team and the leadership that will be assisting you to ensure their understanding of your industry such as operations, technology, procurement, warehouse management, logistics, transportation, loss prevention, store management and other functional areas of your business that will be sourcing products and services. It is all about detail because knowledgeable attention to detail will improve quality, reduce costs and ensure the success of your company?s new e-procurement process.

Please join us for part III of this post series on Monday titled Reasons to Use E-Procurement.

To download the entire article please use the following ?link.

We look forward to and appreciate your comments.

This is Part II of an III part post series titled “Technology Drives E.Procurement Acceptance” focuses on Getting Started!

Friday, May 21st, 2010

Getting Started

First and foremost in getting the e-procurement process right is to select a solution provider or partner that knows what they are doing and is willing to work closely with you during the early part of the process. The e-procurement plan for each company will be somewhat different in order to meet the specific needs of the company. There is however a general order to things that will provide the best opportunity for success.

To realize the most benefit from your e-procurement process, you will need to:
• Develop your strategy
• Complete a detailed discovery
• Learn to understand how to set up your procurement events, even if handled by your provider.
• Use a provider with a high quality process and an extensive database for sourcing suppliers
• Clearly communicate how events will be run or executed to all involved parties • Review the process for sustainability and adjust as necessary
 
As mentioned earlier, it is incumbent upon your e-procurement solutions provider to be able to assist you in completing these tasks in a reasonable period of time. You should be checking the background of the team and the leadership that will be assisting you to ensure their understanding of your industry such as operations, technology, procurement, warehouse management, logistics, transportation, loss prevention, store management and other functional areas of your business that will be sourcing products and services. It is all about detail because knowledgeable attention to detail will improve quality, reduce costs and ensure the success of your company’s new e-procurement process.

Please join us for part III of this post series on Monday titled Reasons to Use E-Procurement.

To download the entire article please use the following  link.

We look forward to and appreciate your comments.

Was the recent e.coli settlement a supply chain problem?

Friday, May 14th, 2010

We have posted many time on the need for a traceable supply chain and the need for better due diligence throughout the procurement process including plant, farm and other source inspections. Keeping this data in a format that is searchable in the supplier vetting process is paramount to mitigating risk to consumers, suppliers, manufacturers and other areas of the supply chain is just to great without it.

Cargill Inc. which is a great agribusiness announced yesterday that they were responsible for the life shattering injuries suffered by Stephanie Smith by eating a contaminated burger in 2007. The parties agreed to settle the law suite and the terms were not disclosed beyond that Cargill agreed to cover her care for the rest of her life.

The debate on food safety continues and as it does drives the need for compliance at all levels of the supply chain from the farm to the table and the capability of tracing finished goods from the consumer to the source in order to. Without these tools issues like this will continue to happen.

We look forward to and appreciate your comments.

Safesourcing Inc. completes a successful year two.

Friday, May 7th, 2010

It hardly seems possible that we launched our company two years ago. At the time there were indicators for those paying attention of trouble in the global economy but know one had any idea just how bad it was going to get. In hindsight what a time to launch a company. When customers and business partners asked me why, my response was if you are doing what you believe in and the results you promise are true, then there really is no bad time to launch a business.

Our promise has been the same from day one, to reduce the cost of goods and services regardless of a company?s size or the size of the category being sourced. And, while doing so improve quality, safety and environmental focus. Today, two years later our customers will attest to the fact that we have held true to that promise.

Following is a short list of accomplishments that we are very proud of.

1.?Over 700 educational blog posts relative to e-procurement issues of importance.
2.?Over 1500 useful procurement related wiki terms and definitions.
3.?Added an average of more than one new customer for every month in business.
4.?Grew our supplier data base to greater than 380,000 retail suppliers
5.?Sourced 100?s of categories from commodities to finished goods and services.
6.?Sourced categories as small as $5K with savings > 30%.
7.?Sourced categories as high as $80M.
8.?Never held an e-negotiation event that did not result in savings.
9.?Conducted every process in e-procurement including RFI, RFP and RFQ.
10.?Installed our product in Asia in a multi lingual implementation.
11.?Averaged over 24% savings over two years.
12.?Developed a unique process for sourcing small spends for the retail mid market.
13.?Grew our database to over a terabyte of data.
14.?Helped companies source with environmental and social consciousness
15.?Today released SafeContract? a fully featured hosted Contract Management System.

To our customers thank you for your support. We endeavor to earn your business every day. To our business partners thank you for your guidance during a tough economic period. To the retail industry our goal is to be your best vehicle for reducing costs and improving earnings with an increased focus on corporate social responsibility.

Thank You.