Archive for the ‘Procurement Purchasing’ Category

The Value of Data

Thursday, August 3rd, 2017

 

Here’s and oldie but goody.

Todays post is from our SafeSourcing Archive

Data has a way of sneaking into every aspect of our life. In an article in the Wall Street Journal from 1/14/2012 titled “How Google & Co. Will Rule Your Rep” by Holly Finn, the uses of personal data as it relates to one’s reputation are described. Soon, it seems, data will be carefully analyzed at even the most personal or intangible aspects of life.

With that in mind, it is my belief that as you approach your procurement process, this rings true as ever. Too often in procurement, a purchase decision must be made when there is either no historical data to support the decision or the historical data available is insubstantial.

In these cases, it may seem as though there are no valid options that would help make a purchase decision beyond the data at hand.

In most cases, however, there are more options available. In an example where you do not have adequate historical data to make a sound purchasing decision based on pricing, you may find that it is possible to move forward in your decision with the confidence that you have received the best pricing possible. Ask your strategic sourcing partner to work with you to review your project. In most cases, an RFP can be created and managed in such a way that will provide you with the data that you might not have otherwise. Once completed, a live RFQ can be managed as needed to provide the compressed prices that you seek.

With your new data in hand, you can make your decision with confidence and with the metrics to back it up.

Just think, it used to be enough to want to share an opinion. But now, as we write this, we are hoping that it will be worthy of online comment and reaction so to boost my (quantifiable) reputation.

Please contact a SafeSourcing Customer Services Representative to learn how we can help with your sourcing data needs. You might be very surprised at what we know about you based on what we have learned from others.

We look forward to and appreciate your comments.

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Low Quote does not always earn the Business!

Tuesday, May 10th, 2016

 

Today’s post is from our SafeSourcing archives.

With a title like this, you have got to be thinking that I am nuts! You are probably saying things like “Why would low quote not get the business?” or “Why would someone want to pay more money for the exact same product?” These are all true and valid thoughts, but what I have to tell you is that there are more things involved in a decision process than just the low quote. It’s more about the overall value. The OVERALL VALUE gets the business.

There are many factors that come into play in the overall value. The following are a few to consider when making the decision to buy a particular product or service from a vendor.

Quality: Just because a product is the same doesn’t always mean they share the same quality. For example, if you were looking to buy copy paper, the “House Brand” may be cheaper than the name brand paper, but the quality may be a lot lower, causing constant paper jams in your copy machine. You want to make sure that you get a quality product for the lowest price possible.

Customer Service: You want to make sure that when you consider buying any product, the supplier provides excellent customer service. This is important because if you ever have to contact them for a problem, you want to be confident in knowing that your problem and/or concern will be addressed quickly and efficiently.

Value Added Services: Value Added Services are always a great perk. These are services a company would offer to help them stand out from their competitors. It could be they offer Free Shipping on a product or they may offer one free year of Technical Support on a computer or other type of electronic. Things like this should really factor in because, for instance, a company may provide you the lowest quote on the product, but may charge you a ton is shipping, where the person that quoted a little higher is offering free shipping, which actually makes their product the cheapest.

Here at SafeSourcing, we ensure that you receive the best overall value. We look at more than just the price, but all the other key factors as well. 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.

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The Difference between Procurement and Purchasing and the Primary Role of a Purchasing Department

Tuesday, December 8th, 2015

 

Today we offer a repost  by Ryan Melowic, Vice President of Customer Services at SafeSourcing Inc.

The terms purchasing and procurement are used interchangeably, but despite their apparent similarities they do have different meanings.

Procurement involves the process of selecting vendors, establishing payment terms, strategic vetting, selection, and negotiation of contracts. Procurement is concerned with acquiring (procuring) all of the goods, services, and work that is vital to an organization. Procurement is, basically, the overarching or umbrella term that includes purchasing.

Purchasing, then, is a subset of procurement. Purchasing generally refers to buying things or services – this may include receiving and payment as well.

Because purchasing is a process within the overarching procurement process, both procurement and purchasing are often used interchangeably. In the business world, the practice of using similar terminology seems to work, although it can sometimes be a little confusing.

To sum up:  Procurement deals with the sourcing activities, negotiation, and strategic selection of goods and services that are usually of importance to an organization. Purchasing, however, is the process of how goods and services are ordered. Purchasing can usually be described as the transactional function of procurement for less vital goods or services.

Purchasing departments are responsible for procuring supplies. The development of strategic planning and the arrival of just-in-time purchasing, make purchasing a more crucial business function. Today, purchasing is often referred to as “supply chain management” and the purchasing department has taken on a larger and more vital business role. Purchasing departments often work alongside product development teams to source materials and determine cost of the finished product. Purchasing departments may use e-procurement companies, like SafeSourcing, Inc., trade publications, source suppliers, or go straight to the manufacturer. Finding the correct item at the correct price can be difficult, and purchasing departments may also work to assist suppliers in manufacturing the item needed. This can involve providing considerable assistance to the supplier.

For more information on how SafeSourcing can help your Purchasing Department procure goods and services please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to and appreciate your comments

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If you are not sourcing your services with eProcurement tools you are missing the boat!

Monday, February 16th, 2015

 

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

Professional services represent one of the fastest growing procurement areas for thousands of companies. The reason for this growth includes reductions in staff, efficiencies through outsourcing non-core competencies such as IT, and cost reductions for service on demand versus full time internal resources.

SafeSourcing has completed hundreds of professional services sourcing events resulting in the following overall statistics:

Number of Service Providers Invited:  5 to 9
Average Suppliers Participating:  6
Project Timeframe:  < 30 Days
Average Savings:  24%

Here is a list of 25 of the more popular services sourced using our eprocurement tools!

1. Employee Automobile Reimbursement Plan
2. Accounts Payable Recovery
3. Event Planning Services by Location
4. Armored Cars Services
5. Audio Conferencing
6. B2B Payment Solutions
7. Background Screening Services
8. Customer Satisfaction Program Provider
9. Customer Satisfaction Program Provider
10. Customer Statement
11. Disaster Response (Emergency Cleanup)
12. Event Services
13. Facilities Asset Management
14. Temp Labor
15. Jet Charters
16. Legal Services
17. Managed Print Services
18. Payroll Services
19. Recycling
20.Waste Management Services
21.Lawn Care Services
22.Snow Removal Services
23.Environmental Services
24.Construction Services (General Contractor)
25.Logistics

If you’d like to learn more about how to reduce your current costs for services or get a savings estimate on a specific services category, please reach out to a SafeSourcing Customer Services Associate.

We look forward to and appreciate your comments.

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Procurement can help your company beat the averages!

Friday, February 13th, 2015

 

Today’s post is from the SafeSourcing archives.

When you see a chart, often times the lines it contains represent some sort of average.   A chart in an article in the Daily Chart section of Economist.com titled, “Taxing for some” illustrates how procurement fits into where companies place in these averages.  The article is specifically about how corporate taxes have plummeted since the 1950s.  No, the author does not mention procurement, but what is great about charts like this is that they can mean so many things depending upon what the author wants to highlight.

Here, the author is trying to highlight that corporate tax rates have plummeted, insinuating that this is somehow a negative phenomenon.  The chart indeed does show that as a percent of GDP, corporate tax rates have dropped since the mid-50s.  What is really interesting to me in this situation is a second line above the corporate tax line.  It shows corporate profits as percentage of GDP.  Here profits hover above 10 percent in the mid-50s and are peeking over 12 percent today.  The years in the middle, however, show a bunch of zigzagging with a bottom of around 6 percent.

Being an average, the chart line represents both companies whose profits were above the line and those whose were below the line.  Why did some fall above that specific point and some fall below?  Certainly, there are innumerable factors.  I just have to ask myself what role procurement played.  Even back then, I have to believe that some companies were good at procurement and others were not so good.  This article does not tell us why some companies were above the line and why some were below it, but procurement was certainly a factor.  Profits being profits, they boil down to revenue minus expenses.  I have to wonder how many of the companies who were bringing the line up in the 50s were doing so partially because a savvy procurement department kept expenses in line with the current costs of goods and services at the time.  That being said, is your company above or below the line in today’s economy?  Regardless of if you find yourself in the 50s, the 70s or the 2010s, you can always strive to do things better? 

If you’d like to keep your expenses in check, please contact a SafeSourcing Customer Services Account Manager. 

We look forward to and appreciate your comments

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So just what is a Category Manager?

Tuesday, June 24th, 2014

Todays post is by  Ronald D. Southard, CEO at SafeSourcing Inc.

The job postings have been in the Financial Services and the Pet Food retail area. Now, someone might point out that pet food is a category by itself within a number of retail verticals. With that said, it is also a category within a category killer format.

The good news is that many companies are getting to the point that they understand the benefit of having categories managed strategically. This takes into account the mix of the category within the scope of its contribution to the entire company from a financial, strategic and tactical perspective. It also requires specific business acumen that combines the jobs of the historical buyer, subject matter expert, marketing professional and financial business analyst. The position originated in retail but continues to evolve into many businesses with certification and education programs to support the skill sets required.

According to Wikipedia, Category management is a retailing and purchasing concept in which the range of products purchased by a business organization or sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product categories (examples of grocery categories might be: tinned fish, washing detergent, toothpastes). It is a systematic, disciplined approach to managing a product category as a strategic business unit.

The question is, are your buyers acting as category managers, do they have the skill set to do so and if not, how efficient is your procurement department.

If you lack any of these skills on your team,  please contact a SafeSourcing customer services account manager to see how we can help elevate the performance of your procurement team.

We look forward to and appreciate your comments.

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When using e-procurement tools to source services make sure you have a well defined change of control process.

Wednesday, June 4th, 2014

Todays post  is from Ron Southard, CEO at SafeSourcing Inc.

Awards of business, contracts and statements of work are all important after and event has taken place if you want to maintain your hard earned savings.

If you want to ensure the savings associated with your new services contract make sure you identify or reference a structured change of control process in your terms and conditions.

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 of your savings, make sure you spend the time to cover this process in your bid parameters.

If you’d like to work with project managers that are not looking to increase the cost of doing business with their company at every turn, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

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The Factors that People Love

Monday, June 2nd, 2014

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

Last week, Marketing Daily, released 2014 survey results on the top loved grocery store chains in America.   Personal attention, cleanliness, speedy checkout, and low prices were just some of the reasons the top chains scored well.  Overall, however, customers scored their desire to actually DO grocery shopping relatively low, creating potential for improvement for everyone in the space.  Many of these reasons mirror the same areas for dissatisfaction that departments within an organization tend to have with their internal procurement team and we will look at some of these today.

Long Checkout times – Nobody likes to wait, and waiting at grocery stores would probably top many people’s list of frustrations.  This frustration can also present in the procurement process as understaffed procurement teams takes months to complete even the most straightforward projects.  Best practice procurement processes are important and once standardized can save a company much pain and frustration, but without the flexibility to adjust those processes to each individual project, however, projects that should take a few weeks can last months.  Balancing the expected results and cost savings with changeover costs and time to contract must happen with each project in order to allow other departments to get what they need in a way that provides the most overall value to the company.

Inability to get what you want – Many companies’ procurement departments tend to be nothing more than price negotiators and contract executers.  They let the others departments do their own research, find their own products and select their own suppliers.  Because many of the people being allowed to make these decisions have little to no procurement experience, the end result for the company may not be beneficial, especially if that department is having difficulty finding the right service or product to fill their need.  When a procurement team can use their experience and internal or 3rd party research team to assist other departments, it is possible to provide them with several options to choose from that will give them more flexibility and provide greater overall value to the company.

Poor Service – This failure by businesses is a universal problem and a universal frustration to their customers.   No matter what is being sold, no one likes poor customer service and many times it is this reason that causes people to switch their loyalty from one store or supplier to another.  Virtually every successful procurement team around the world has one thing in common; they view the rest of the organization as their customer; they market to them; they sell to them; they service them; and  they assist them when emergencies arise.  Many of these successful teams have been given staffs to accomplish this and others have 3rd party vendors to act as an extension of their team.  By treating the rest of the company like a customer, these teams consistently achieve procurement goals, get better value for their organization and develop a stronger rapport with the rest of the company.

For more information on how SafeSourcing can assist you in creating a procurement team that provides great service to your internal customer 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.

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It’s Cookout Time!

Tuesday, May 13th, 2014

Today’s post is by Margaret Stewart, Executive Assistant at SafeSourcing.

The weather is warmer, Baseball season has started, and the scent of burgers and hotdogs fill the air. It can only mean one thing. Summer has arrived and so have the cookouts!

Before any good cookout, you need to get supplies from the store. Recently, I was at my local grocery store picking out some bratwurst and beef patties for my own cookout. I was in luck too, because beef patties were on sale. As I looked though, I noticed one brand was cheaper than the rest, but it didn’t say much on the front except “Beef Patties”. I was expecting some sort of grade or percentage of fat content. This struck me as odd, so I turned to the back and I was shocked that it had a list of ingredients! Beef was not the first or even second one listed. I decided to get a different kind of beef for my cookout and wound up spending a little bit more, but this one had only one ingredient – beef!

So, how aware are you of what is going into the products you buy? Do you know where your food is coming from and what it has in it? At SafeSourcing, we research the products you buy and will not settle for less than the quality you expect. You may see prices advertised as much lower, but that product may very well be beef patties that don’t really have much beef in them.

If you would like more information on how SafeSourcing can help you find the products you need at the right price without sacrificing quality or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

We look forward to your comments.

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What’s important to you in the development of your negotiation strategy?

Wednesday, April 9th, 2014

Todays post is by Ron Southard, CEO of SafeSourcing Inc.

What is your procurement organizations overall procurement strategy? All to often, when this author asks this question, the response I  get is  that deer in the headlights look that says to me there either is not one in place or the person I’m asking the question of has know idea how to answer the question. If there is no procurement strategy, there certainly is no supportive negotiation strategy because how companies negotiate should support their overall procurement strategy or at least it should.

The cause for the above is quite often that there is no formal procurement organization in place to begin with or the function is lost within a supply chain organization, logistics organization or finance organization. And sometimes it is even located in operations and as a result spread all over the place depending on the size of the company.

It’s a good bet that  if there is no well defined procurement organizational structure within a company that there are many maverick negotiations going on and that many of the associates conducting these negotiations are not skilled at doing so and don’t  have any advanced tools other than spreadsheets, email and telephony to conduct the negotiations with.

The result of the above is a lack of collaboration and well thought out aggregation, maverick buying, expired and or ever greened contracts and much higher than needed cost structures.

So before you can negotiate effectively you will have to go back to the drawing board and develop a procurement strategy. Once that’s in place negotiation best practices can follow.

If you’d like to learn how to do this quickly with executive office support and begin reducing costs in the current accounting period, please contact a customer services representative at SafeSourcing.

We look forward to and appreciate your comments.

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