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Do you want onion with that?

Monday, May 20th, 2013

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

It wasn’t too long ago that restaurants and quick service restaurants included onions on things they served as part of the package.  If you didn’t want them included you needed to make a special request. Somewhere along the line onions must have gotten a bad name because more and more when you order something they tell you in advance and give you the opportunity to remove them from the deal right then and there.

It occurred to me that I have begun seeing this mindset frequently in the procurement world as well, as departments are now getting to choose when the procurement department gets brought in and at what level they are participating.  Like the onion, I don’t think procurement teams have deserved their new fate, but like it or not, it is the way many companies now operate.

Today we will be looking at some ways to deal with this change using methods not unlike a chef would in order to keep the onions in the dish and keep the customer happy.

Understand the onion – One of  the many  issues that many procurement departments are dealing with is that they do not truly understand the issues other departments have with involving them. Without knowing why someone is hesitant to include you it makes it difficult to counter on why you should be included.  Arguments like “you only care about the lowest price”, “This project is too complicated”, “we are too far along”, “this isn’t a commodity” are common and how they are responded too must be addressed in advance by your team so that you can acknowledge the other departments’ hesitancy.   Please review the SafeSourcing blog on handling objections to help with this.

Transform the onion – In my family I have people who would not touch a raw onion to save their life but have no problem eating onion rings (I know, I don’t get that either).  By transforming the onion it becomes an agreeable object.  There are times when procurement teams need to undergo a similar transformation by assisting departments in ways that help them while still achieving your goals of controlling costs.  Working on requests for proposals that offer vendors a best and final price adjustment can help everyone achieve their goals in a new way that does not threaten the integrity other departments are hoping to keep.

Don’t tell on the onion -  I have watched people cooking meals sneak unwanted ingredients into the recipe masterfully in ways that no one would know only to be undone by feeling the need to tell their secret afterwards.  Telling someone they just ate an onion they didn’t know about rarely leads to them to start liking onions.  For a procurement professional this means when you get an opportunity to help a department like IT run a project on enterprise software don’t ruin it by touting about how you reduced the cost, instead focus on how you helped that team find the best solution for the company while getting the vendor to include free training and a reducing the costs by 12%.   This lets the business owners hold onto the fact that the decision was truly made based on value and not just price which is really how every project should be.

If you are a procurement team struggling to get included in all of your company’s spend projects we at SafeSourcing are constantly helping our customers and can assist you by explaining our recommended strategy for helping departments that historically not wanted “help.”

 For more information on these strategies 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.

Posted in Online Procurement, Procurement Solutions

Watch out that your Spend Cube does not overwhelm you!

Wednesday, March 20th, 2013

Today’s post is by Ronald D. Southard, CEO at SafeSourcing.

I’ve participated  in a lot of discussions lately about spend cubes, which can just as easily be called data cubes, because that is all they really are.

Just what is a spend cube?  In its most simple form it is a data set that includes information that when analyzed as a whole provides a better or more completed  picture of your spend universe such as the expense category.  Spend cubes help to identify opportunities within a broad category of products and services that may require more attention including going to market and ideally, when they should. Because  a spend cube includes vendor data, causal data,  and  other specifics such as commodity pressures relative to the related cost center being impacted, spend cubes by their nature are very complex.

Unfortunately good spend cubes as well as improperly built managed spend cubes can deteriorate over time based on a number of factors. Probably the primary reason is that the originating data was not complete to begin with or scrubbed properly in the first place. This is kind of a one bad apple can spoil the whole bunch issue or the wrong data bumping into the wrong data. Another reason may be that you don’t have all of the data that you need and therefore the result sets are compromised or left to conjecture that creates improperly built and executed sourcing strategies. Additionally there is the analyst’s interpretation of the data and to this author that is really the most important part once you get the data sources right (think ERP). This person or group of persons needs to know their stuff (industry and products) in order for the data to be interpreted properly. It’s pretty easy to read a GL and determine what suppliers you have been spending the most with. It’s an entirely different thing to understand what the market for a commodity that impacts that particular spend was doing during the last contract versus what it is doing now and how it is trending for the future. All of this has to be attached to specific sourcing unit activity. Think of it this way?  If your vendor does not invoice you at the unit level, where will you come up with corroborated unit spend from regardless as to whether it is a can of beans or a fork lift.

Ask your solutions provider where your data should come from, who will be interpreting your data and what data they will be interpreting. Also thinks start small.

If you’d like to learn more about how to optimize your spend data, contact SafeSouricng.

We look forward to and appreciate your comments.

Posted in Procurement Solutions

Make sure that you are not being shunned by your procurement team!

Tuesday, September 18th, 2012

The numbers of words that end in TION are in the thousands . According to Wikipedia to be shunned is to modify the behavior of a member. Another definition that probably better suits the purposes of this post is from Wiktionary is, the act by which something is shunned; avoidance.

The reason for my play on words (SHUN versus TION) is to call attention to a similar practice of continually offering objections to processes that are advanced, modern and return greater results than more traditional procurement methodologies. Think of it as a form of enlightenment, which in its own right caused a lot of the other type of shunning over the course of history.

You might even call these OBJECTIONS. Have you ever heard any of these?
1. We don’t believe in Reverse AUTIONS
2. This process does not support our TRADITIONS
3. We only have one or two OPTIONS
4. We have no SPECIFICATIONS
5. They don’t understand our CONFIGURATION
6. We have never been good at COLLABORATION
7. We already know how to get the best QUOTATION
8. We have the best prices in the NATION
9. We are under no OBLIGATION
10. We already have a handle on the best VALUATION
11. You can not guarantee our SATISFACTION
12. We know what we are doing and don’t need any procurement EVOLUTIONTION
13. This is nothing more than useless IMPROVOSATION
14. We won’t get better pricing just by  category CONSOLIDATION

There will always be people on your team that fight progress, don’t let them TION you. If you’d like someone to change your PERCEPTION, call a SafeSourcing customer services representative of an INTRODUCTION.

We look forward to and appreciative your comments

Posted in Procurement Solutions

SafeSourcing recently released its entire Software Suite as a CLOUD based solution.

Friday, July 27th, 2012

It’s a brave new world and changing every day. Solutions take less time to get to market due the open source alternatives to traditional development methodologies. The fact is you simply do not need the IT staff from the past to develop and support applications today.

SafeSourcing recently released our Procure to Pay Suite of applications under the SafeSourceIt™ banner as follows.

1. SafeSourceIt™ eRFX tools including Reverse Auctions
2. SafeSurvey™
3. SafeContract™
4. SafePO™
5. SafeCatalogue™
6. SafeSourceIt™ Global Supplier Database
7. SafeSourceIt™  Product and Services Specification Library

All of the above solutions are offered as a SaaS based cloud offering and can stand alone or function as a sophisticated integrated solution. Customers can buy and use what they need when they need it at the lowest costs in the industry

If you’d like to learn more about our tools or our customers please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

Posted in Business Sourcing, Procurement Outsourcing, Procurement Solutions, Procurement Tool

I could not believe the question, but it was asked in a category manager meeting.

Wednesday, March 28th, 2012

Google or Bing certainly might help here, but in the old days we needed to know this stuff. So let me give you an old fashioned answer.

Typically this author thinks of this process in the six steps that follow

   1. When buying a product or a service a decision is required to do so.
   2. Once the decision has been made, analysis of what you are currently  buying in what volumes for use in what locations that will continue to satisfy your needs to be completed.
   3. Your purchase offer is submitted to a supplier or suppliers in order to collect pricing and other information such as the Terms and Conditions required in making your decision.
   4. A contract is signed for the product or service that outlines the responsibilities of the involved parties as well as remedies if contract terms and conditions or volumes are not met.
   5. A purchase order is issued with the appropriate approvals that match to the specifics as outlined in the contract in order to properly manage the contract.
   6. Payment is generated based on the purchase order submitted against the contract.

Sometimes there is a steep where an LOI or letter of intent is issued between step 3 and step 4 in order to take advantage of contract terms earlier in the cycle.

So now what happens if you don’t have a contract management system or a purchase order management system? Generally it’s referred to as leakage. In about 12 months you will be very familiar with it.

Contact SafeSourcing and let’s see if we can help you out with our procure to pay solutions.

We look forward to and appreciate your comments.

Posted in Procurement Auctioning, Procurement Company, Procurement Outsourcing, Procurement Purchasing, Procurement Solutions, Procurement Tool, Product Procurement

I’m proud to be a Veteran

Friday, November 11th, 2011

The background for my career began in base supply in the U.S. Airforce during the Vietnam era. My AFSC was that of an inventory management  and logistics specialist. I still use those tools today and think often of all the brothers and sisters in all branches of the service both past and present on this day.

Thanks to all of you for what you have done  and continue to do for our country.

We appreciate all of your contributions.

Posted in Procurement Solutions

Sourcing Options for Large Variety Categories

Tuesday, September 13th, 2011

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.

There are thousands of categories that businesses purchase every year that are “complicated” to say the least.  Categories like office supplies, for instance, involve thousands of individual items that a company must purchase in order to do business, but that can be very difficult to source in a manner that provides the best benefit to the company.

Let’s take a look at the process of sourcing these types of categories from one extreme of the complexity spectrum to the other with a couple of options that meet towards the middle.

Sourcing the market basket – The first end of the spectrum is to take the entire collection of all items in the category and source them as one large market basket that will be represented by a discount off of the vendor’s list pricing.  One obvious pro of this approach is that it is easier to collect and manage an overall discount from a supplier than anything else and is one reason why procurement departments sometimes take this approach.  On the downside this approach does not allow you to focus on items that have higher spends and because each vendor will have different beginning list prices, an overall discount can sometimes be misleading when comparing vendors side by side.

Sourcing every item – At the other end of the spectrum is the approach of gathering pricing and proposals on every item in the category.  The advantages to this approach is that it allows you to show where your purchases are heavier for the vendors and it gives you absolute pricing and comparison of the group across all proposals from the vendor community.  The trouble with this approach is that when you are looking at 4,000 items this can be a time-consuming task for the vendors to complete and for your team to evaluate at the end, and in some cases vendors do not have the capability to provide unique price sheet pricing on a customer by customer basis.

Group Discount Sourcing – In the group discount approach you collect discount pricing off of list on a product group by product group basis which allows you to split your spend into smaller areas for the vendors to focus on providing more competitive quotes in the areas you need them most.  Also, many vendors support this approach in their internal systems much easier.  The downside in this approach is like the first approach where the list prices of the vendors can vary a great deal making a straight discount to discount comparison more difficult to evaluate. 

Hybrid Sourcing – The final approach is one that takes the positive elements of all three and blends them together.  This approach leverages the individual focus pricing on items making up the majority of your spend.  From there, the majority of what is left is split into product groups market baskets, with a final market basket of products gathering a discount off of list representing no more than 10% of the spend.  The advantage for your company is that you have the focus in all the areas you need and discounts on areas that aren’t as large.  The downside is that many vendors are not generally equipped to handle this approach on an account by account basis so it may require more effort on their part in order to support you and the hybrid pricing model. 

Regardless of how you choose to source these types of categories there is a model that fits for you and your business.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative. 

We look forward to your comments.

Posted in Business Sourcing, E-procurement Solutions, Procurement Solutions

“The Negotiation Began Long Before the Quote. Or, Make a Plan and Stick with It”

Friday, September 9th, 2011

The answer may be surprising. One may assume that the negotiation begins when the vendors begin quoting. This is a reasonable assumption, but I know that negotiation begins long before this point.

Often, in procurement, a negotiation can begin with the writing of the specification. I find that when the host organization is writing their specifications, they are forced to rely on their incumbent vendors for details about the products or services that they are providing. During this process a vendor may have the upper hand and, as a result, may influence the specification in a way that will benefit them throughout the process. Not so long ago, a specification was written for a fairly simple manufactured product. The specification for this product dictated the use of stainless steel. This would not have been an issue, except that only one of the vendors was able to meet the specifications. It turns out the use of stainless steel was patented in this case.

Even more often, this type of influence can be felt in the days leading up to an RFQ. Typical vendor negotiation tactics during this timeframe may include calling on the sourcing partner or host organization directly to try to get time extensions or to attempt to implement last minute specification changes as discussed above. Worse yet, they may also use this time to negotiate for higher prices. If a maximum has been set for price submission, it is not uncommon to hear feedback that these prices are too low. While these complaints may be valid, the timing seems suspect. In these last minute cases, it is important to react carefully and avoid being forced into a decision that you would not have made two weeks ago.

So, how do you sort through the feedback and specification input (solicited or not)?

You have to make a plan and see it through. Your strategic sourcing partner has experience navigating vendor communications. They are actively tracking the feedback and working with the vendor community make the journey from planning an RFQ to awarding business go as smoothly as possible. Place your trust in both your partner and the process and you will find favorable results.

We look forward to and appreciate your comments.

Posted in Procurement Purchasing, Procurement Solutions

Many Mid Tier One and Tier Two retail companies can not afford advanced analytic software! The truth is they also can’t afford to not have it! So what to do?

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

Hey buyers! The economy is still terrible. Maybe now is the time to finally try reverse auctions.

Wednesday, August 10th, 2011

However, we continue to see a reasonable uptick in the use of e-negotiation tools in retail and this author believes that some of the following quotes from a retail CEO and his team  that watched their first  reverse auction last week may be the reason why.
1. “This was pretty simple to do”
2. “If we hired someone we could do these ourselves with you guys”
3. “This is fun”
4. “You mean the reports are already available”
5. “I love the sports concept”
6. “It was easy to follow the marquis and what was going on from one screen”
7. “The multiple color schemes were great”
8. “I can’t believe how fast you guys set this up”
9. “We saved that much money and only have to pay what we discussed”
10. “Can we do another one today”
11. “I may get a promotion out of this”
12. “I love that calculator at the end of the bid process”
13. “I like all of the supplier data that was accessible during the auction”
14. “Now I know how the big guys get the pricing they do”

Why not join others that have come a little late to the party. You can still benefit because today’s tools are easier to use, more interactive, maintain your attention during an auction, integrate gaming technology to keep it fun and are lower cost than their predecessors. If you happen to have already been doing this for years, why not find an easier way or do it less expensively.

If you would like to have fun, save money and do it quickly, please visit us at www.safesoucing.com.

We look forward to and appreciate your comments.

Posted in Eprocurement Auction, Procurement Solutions, Procurement Tool, Reverse Auction, Reverse Auction Procurement, Sourcing Safe Products, Sourcing Strategy

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