Archive for the ‘Procurement Solutions’ Category

What is a Third Party Procurement Company?

Friday, July 20th, 2018

 

Today?s post is written by Heather Powell,?Manager of Major Accounts and Special Projects at??SafeSourcing Inc.

What is a Third Party Procurement Company? The quick answer? We are our client?s right-hand man in procurement.

When speaking to suppliers, on a daily basis, we are asked who are you, why are you working on behalf of so and so, and what does third party mean?

The name third party procurement company has a couple of other names that mean the same thing, but are just as confusing, PSP or Procurement Service Provider.

According to Procurement Service Provider:

A Procurement Service Provider, or PSP, is a third party organization or consultant which is used to supplement internal procurement departments. PSP’s have their own staffing which assist in a variety of tasks for their clients. These tasks include: strategic planning, implementing best practices, supplier rationalization, and supplier collaboration, strategic sourcing and negotiation.

“Enterprises utilizing PSP’s have been able to improve spending coverage, reduce costs for goods and services, employ industry best practices, leverage the latest procurement technologies, and streamline source-to-pay processes – all without taking on the risks and assets required to achieve such results.” Aberdeen Group Research Abstract: You Will Outsource Procurement: Here’s Why and How – October 16, 2002.

SafeSourcing can assist you in exploring your procurement solutions for your business 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.

 

 

Share This Post

Retail collective buyer organizations and consortiums are evolving in order to compete with mega retailers.

Friday, June 15th, 2018

 

These business structures have been around for a long time. Many have evolved to use cutting edge e-negotiation and eProcurement tools. Their retailer members are also benefiting from their use of these tools in order to reduce their net landed costs in many different ways

These types of organization can go by many different names such as wholesaler, collective buyer, consortium, cooperative, share groups and more. They all have one thing in common. They consolidate purchasing volumes for a wide array of groups that may have very similar business structures, but for the savvy consortium can also be wildly different.

In the retail vertical, companies may actually belong to several different buying groups because their primary group does not offer expertise in a certain area.

Consortiums are also evolving and beginning to focus mixed markets where it makes sense. In general consortiums tend to be vertically focused such as a drug industry consortium with the members generally representing the drug industry only. However some consortiums are beginning to market them selves outside of their vertical to retailers or other companies who want to take advantage of learned expertise that the consortium possesses in the categories that are common across more than their own vertical and offer increased volumes. An example might be drug stores sourcing very similar products that health care organizations like hospitals source. Although this may seem like a stretch fro most, it is now very common within retail for non vertical specific players to work together.

Today?s advanced e-negotiation or e-procurement tools make it much easier to accomplish collective buying and aggregating outside of a consortiums initial area of expertise. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers and other companies while also coordinating and participating in collaborative events from hundreds if not thousands of miles away. Suppliers now have an opportunity to earn business they could never compete for in the past.

Retailers should ask their collective buyers how they plan to make the use of these types of tools and what they have to offer in terms of introductions to other companies for increased volume.

We look forward to and appreciate your comments.

Share This Post

What is a Third Party Logistics Provider or 3PL and how do retailers use them?

Thursday, June 14th, 2018

 

If you are having difficulty with your current? distribution model, compress your spend using eProcurement tools and then source a reputable 3PL.

According to Wikipedia a third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or “third party” logistics services to companies for part, or sometimes all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer?s needs based on market conditions and the demands and delivery service requirements for their products and materials.

As such, there are a number of types of 3PL?s within retail that may in fact service a single retailer as well as smaller buying groups of small retailers. All might fall under this umbrella including wholesalers such as SUPERVALU, collective buyers such as TOPCO or even a retailer collaborative that may in fact just coordinate aggregated purchases and in fact pick other 3PL?s to provide warehousing, picking and packing and distribution. Each of these providers may in fact provide some or all of the same services. The later or collaborative of multiple retailers might even be looked at as a non asset based 3PL.

In all categories of third party logistics providers however it is still the end user or retailer regardless of size that determines what products they buy and accept delivery of in their stores. As such, it should be no more difficult for smaller retailers to run e-negotiation events?? There will need to be discussions as to costs that are purely associated with the warehousing, slotting, picking and distribution of products by a 3PL once an e-negotiation event has been planned, but these items should be easy to break out for bid or add to the final pricing prior to award of business as a flat fee. This is a practice that all 3PL?s should be familiar with already. Retailers should anticipate that their existing 3PL depending on services offered would rather not have you conduct these types of events as it negatively impacts their volumes with manufacturers and other providers and as such their company?s margins.

Understanding your options and the flexibility that 3PL?s can provide may actually make it easier for all retailers to use e-negotiation tools to impact their bottom line.

We look forward to and appreciate your comments.

Share This Post

Watch out that your Spend Cube does not overwhelm you!

Thursday, January 11th, 2018

 

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.

Share This Post

Force Majeure

Monday, November 6th, 2017

?

 

Today?s post is?from our ?SafeSourcing?Archives

  1. According to Merriam-Webster, force majeure is defined as 1.?Superior or irresistible force 2.?An event or effect that cannot be reasonably anticipated or controlled.[i]

Force majeure is a French term translating to ?greater force?. Force majeure is a clause included in contracts to remove?legal responsibility for natural and uncontrollable calamities that disrupt the expected course of business and restrict those involved from fulfilling terms of a contract. These events may include armed conflict, labor strikes, and extreme weather.

Due to differing legislation and interpretations of force majeure, it is common in contracts to include specific definitions of force majeure. Some contracts will limit force majeure to ?acts of god? such as floods, earthquakes, and hurricanes while excluding human influenced failures such as terrorist activities and mass failure of communication or electrical systems. The key would be having your contract written to detail the difference between an act of God and the other forms of force majeure.

We enjoy bringing this blog to you every week and hope you find value in it.?? 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.

____________________________________________

[i] ?”Force Majeure.”?Merriam-Webster.com. Merriam-Webster, n.d. Web. 14 July 2016

Share This Post

The Central Procurement Function!

Thursday, October 12th, 2017

 

Today?s post is from Ron Southard, CEO at SafeSourcing Inc.

As you can imagine the answer to this question could actually be pages in length. However the following is directionally correct based on the question and minus the organizational structure and alignment.

The Central Procurement Function in responsible for the procurement of goods, services and capital projects by an authorized group within a company?s hierarchy. Central procurement in a best case scenario includes the financial decision making authority specific to that procurement on behalf of the entire company for reuse or resale from an approved list of vendors or suppliers. In some cases the budget for a specific spend may reside within another functional area? where central procurement collaborates and negotiates on behalf of?that areas subject matter experts but the subject matter experts approve the final vendor selection.? In the case of manufacturing company?s? this function also includes the purchase of commodities used in the manufacture of finished goods.

The central procurement function is typically authorized within a company in order to insure consistency thought-out the organizations procurement process by eliminating the potential negative effects of non-collaborative, non-aggregated purchasing by multiple divisions, departments and other corporate entities that can support rogue or unstructured buying.

Measurements of a central procurement organizations success can differ widely from company to company depending upon where they fall relative to a procurement maturity model. Typically these organizations are measured by overall procurement Key Performance Indicators or KPI?s at the procurement department level that usually includes the following at a minimum.

1.? Percent of spend under management
2.? Price Improvement
3.? Quality Improvement
4.? Safety Improvement
5.? Reduction in Carbon Footprint
6.? Service Level Improvement
7.? Distribution Flexibility
8.? On? Time Delivery Improvement
9.? Supplier Management

Management of these KPI?s is intended to insure that? companies have a defined? processes in place so as to promote a fair and open competitive model for the supplier community that?s? interested in soliciting their business.? This also minimizes the opportunity for fraud and collusion while insuring the best possible product or service is purchased at the best possible price and overall value to the company.

If you’d like to learn more about the central procurement function, please contact SafeSourcing.

We look forward to and appreciate your comments.

Share This Post

Retailers; is your sourcing transparent enough?

Friday, July 1st, 2016

 

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

If you are not sourcing at least 30% of your cost of goods and services using e-procurement tools, you are lagging your industry leaders as well as being significantly behind other industries. As such; you are not getting the best costs and not driving the best margins for your company.

Reverse auctions since their inception more than a?16 years ago haven driven healthy competition amongst supplier companies. As such the results of a reverse auction can provide a great benchmark for both the buyer and the supplier. For the buyer the results can be used as a tool to evaluate how to best source other products and services. Additionally suppliers that are not the low quote or winning bid now have the opportunity to evaluate why that is and what they need to do in order to improve or to be more competitive in the market place. This of course is all happening without the need to collect, collate, compare or negotiate during the process. In other words it is happening transparently to the normal sourcing process. I watched a reverse auction today where 4 suppliers placed 180 quotes for a dozen line items in under 30 minutes. No buyer can do that. Additionally reverse auctions provide the opportunity for suppliers that are outside of your business area or knowledge base to bid for your business.

Possibly the single largest area of benefit to reverse auctions outside of price compression? for? procurement professionals? is that it offers? a significant opportunity for process improvement since most solution providers offer a standard process for hosting reverse auctions. Everything is done in one place using standard processes in building the event to the final analysis of the bids collected. Information availability is immediate for evaluation and is archived for easy access in the future. This reduces the overall procurement life cycle, eliminates or reduces the opportunity for human error, and provides a standard way to conduct and award business.

Please contact a SafeSourcing Project Manager in order to learn more.

We look forward to and appreciate your comments.

Share This Post

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

Friday, April 8th, 2016

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

Share This Post

Lean business practices create a weighty issue.

Tuesday, May 6th, 2014

Todays post is from Ronald D. Southard, CEO of SafeSourcing Inc.

This author tires of the desire of businesses that are trying to reinvent themselves and in so doing constantly coming up with new buzz words, industry terms and business jargon in order to try and prove that they are thinking differently and as such should be trusted to be on the right path. Maybe their original business plan was just flawed and they are not deserving of our trust.

Lean in any functional area of a business simply means producing more or getting more done with fewer resources. I?m not sure this is a great message for companies that are just launching, trying to grow or improve. If you?ve been around for while, and your customer reads between the lines properly, this may just mean that you did not plan your launch properly or react properly to market indicators in the past.

We all know that lean practices were originally a move to reduce costs in the manufacturing process and since it worked for manufacturing where we are typically talking about thousands if not millions of pieces and parts, other companies began to think why not for our business. As such let?s apply the term lean to the supply chain or the procurement space. Any one that knows the procurement space already understands the lack of resources.

The goal of every business should be to provide the end user or customer with what they want or what you have promised them at a fair price. If you do so, that customer and others that hear about that customers experience should buy more. When this happens, if the business plans appropriately they should grow and grow profitably. And this should create new and sustainable jobs. So, how is this any different than the way businesses were run 50 years go or even 100 years ago? The truth is that it?s not.

The decision to not hire, to try and do more with less and to reposition resources rather than firing someone is a better way to run a business. Unfortunately they do not teach this in business school. This author has been through many mergers, acquisitions, downsizings and the like over a lengthy career. One thing you can always count on in these scenarios is let?s cut expenses. You can call it lean, but it?s not.

So, let?s not hide behind the term lean or other business jargon or buzz words.

If you’d like to learn more about how SafeSourcing can help you reduce costs without reducing headcount, please contact a SafsSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

Share This Post

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

Friday, August 9th, 2013

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.

Share This Post