Archive for the ‘Product Procurement’ 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.

Do you need a home warranty?

Friday, May 22nd, 2015

 

Today’s post is by Troy Lowe; Vice President of Development at SafeSourcing.

Do you own a home or are looking to buy one?  If so, you may want to consider purchasing a home warranty.  A home warranty covers numerous items around the house with a small service fee.  When you have an issue, you call the company and they will send out one of their approved service providers to diagnose the problem.  If the item can be fixed, the service provider will fix the item and if it cannot be fixed, then it will be submitted to the warranty company for replacement.  If this was a major component, such as a heating and air conditioning unit, having the warranty could save you thousands of dollars.  Below are a few items that may be covered by a warranty.

• Heating and Air Conditioning
• Water Heater
• Plumbing
• Electrical
• Appliances
• Garage Doors / Garage Openers

There are many companies out there that offer warranties, so be sure to read the contracts carefully and that you understand what items are covered and which are excluded.  If you would like some help finding the best warranty for your home, Safesourcing can gather all the necessary information for you and help you decide which option meets your needs.  If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

We look forward to your comments.

Retail spend management basics for e-procurement professionals and knowledge workers.

Friday, March 7th, 2014

Todays post is by Ron Southard, CEO at SafeSourcing.

I meet with buyers, category managers and  other e-procurement knowledge workers on a regular basis that want to know what categories are the best to select in the short term to prove the benefit of e-procurement or e-negotiation tools. This quite honestly is not a bad approach for pilot selection as it creates an almost sure thing that results in a lot of excitement and the energy to move the process forward within a company.

Quite often before meeting with a new client, I will analyze their annual report and their summary P&L to get a good idea of where the opportunities are hiding that can have quick hit impact. However in order to have long term viability as a way to conduct the business of buying, a more detailed analysis is required. Quite frankly before you can even begin to discuss vendor or supplier selection, management or evaluation this process is critical to long term success.

Some of the key data required to prepare you for this analysis can consist of but is certainly not limited to the following. All of this data is readily available from a variety of industry sources. Quite often the data is a year old but you can bet it is better than anything else your customer may be using today.

1. Research and accumulate your specific Industry data
2. Analyze last years P&L, GL and other financial data sources
3. Compare your cost of goods with your Industries averages
4. Compare your gross margins with you Industry averages
5. Compare your net earnings with your industry averages
6. Conduct the same comparisons with selected retailers with whom you compete
7. Compare your departmental sales and contribution margin results to those of your specific industry.
8. Look for department level anomalies
9. Look for specific product anomalies within major and sub departments.
10. Select top categories that are below plan and outside industry average for cost of goods and margin.
11. Select top products that are underperforming to industry averages and plan

An example of the above might be to look at the major department of grocery and the major category of pet care then drill down to the sub category of cat and dog products and a list of all accessories. Now look at what products are underperforming to the industry and plan.  Continue your analysis with other underperforming categories.

Ask your e-procurement provider how they can assist you in accomplishing this with their tools.

Please contact a SafeSourcing Customer Services Account Manager to learn more about our risk free trial and conducting a category discovery on your behalf.

We look forward to and appreciate your comments.

Here’s a repost that still has some legs.

Friday, June 22nd, 2012

I choose to post simply because I can
My wife seems to think it’s because I’m a concerned and caring man.
So why or when to post, just what is my deal
It could simply be that I just had a bad meal
A meal from a food source that was not really safe
That sickened me some
And just could not be traced
It’s origin cloudy I really get ticked
That many more people could also become sick
So I post a few comments on product safety and more
In the hopes that they become part of the cure
Whether near shoring or off shoring and from local suppliers too
We offer opinions hoping they’ll be helpful to you
It’s time that our supply chain start to get the game right
And that will only happen if buyers make the process more tight
With adherence to certifications and timely inspections
That are clearly executed against consistent directions
While we’re at it, it’s important to do and say what we mean
And while we tighten up our processes
Let’s try to keep them focused on becoming more green
With a supply chain that’s safer
And greener to boot
Our new posts can discuss how to reinforce doing both, while still saving you some loot!

We look forward to and appreciate your comments. However, there is no need for them to be poetic in nature.

Should you join a Group Purchasing Organization (GPO)?

Tuesday, June 19th, 2012

According to Wikipedia a group purchasing organization (or GPO) is an entity that is created to leverage the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members.

When is a company a GPO and when are they something else? Many organizations take on procurement functionality based on the spend of their members. They can be industry wholesalers, share groups, consortiums, distributors and a variety of other types of organizations. They may take on all procurement opportunities or specific opportunities like energy. GPO’s can be vertically focused or horizontally focused. They can also be horizontally focused within an industry vertical. An example might be a wholesale grocer that is focused on a retail industry vertical like supermarkets.

The question is should you join one or many? Maybe you shouldn’t join any. The only way to answer the question is to understand your own organization in terms of its strengths and weaknesses relative to the products or services categories you hope to source. As an example; if you are just buying from a wholesalers price book, it’s a good bet you are not getting the best price. It’s also a good bet that other members of the same wholesaler are getting a better price and they may be smaller than you. However you may also have a huge energy spend and this is something that your product wholesaler can’t help you with. As such, there may be a specific GPO for energy that can offer some expertise.

This author believes that your best bet is to focus on a procurement company that is horizontally focused with specific expertise in a number of verticals such as health care, retail, distribution, financial services etc. I have often seen these companies significantly out perform GPO’s by a significant amount as the overall overlap of expertise across multiple industries suggests a level of creativity that GPO’s may not have.

Ultimately understanding what your company’s limitations are as well as the opportunities that are available to you is a first and important step. After that, it’s who can do the most for you with the least disruption across the broadest area of spend.

SafeSourcing is such a company. Please contact us if you would like further information on how to improve your bottom line in the present quarter risk free.

We look forward to and appreciate your comments.

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.

How many times does someone ask you what does procurement mean?

Monday, January 31st, 2011

It really is a curious question; pretty much along the same line as what is spend management. Well my answer might create more questions, but all of the following job areas within your company are probably involved or impacted by procurement or e-procurement?

1. Finance
2. Purchasing
3. Logistics
4. Manufacturing
5. Warehousing
6. Materials Management
7. Inventory Management
8. Supply Chain
9. Distribution
10. Transportation

There are certainly many more areas of a company that have procurement or  e-procurement connections, but the above probably give you a pretty good idea of the breadth of involvement within any company. In fact, I can’t think of a job that is not impacted by procurement. Maybe I should just say we save every department in your company money every day.

We look forward to and appreciate your comments.

Creating a small business network and collaborating creatively within is a great way to reduce your costs.

Wednesday, September 15th, 2010

So what the heck is collaboration and what are collaborative partners or networks relative to the supply chain. One thing is for sure, these terms roll of everyone’s tongue like we all know what we are talking about. So this author took a look at Wikipedia hoping to gain some insight and clarity.

According to Wikipedia, Collaboration is a recursive process where two or more people or organizations work together toward an intersection of common goals, and
An aggregate is a collection of items that are gathered together to form a total quantity.

Since collaboration only means different groups or organizations working together towards the same goal, that term can apply to just about any business function. However when we combine it with the word aggregate to form the collective e- procurement term Collaborative Aggregation which was coined by this author in 2006; we arrive at something potentially meaningful.

Collective buying organizations and sometimes share groups often combine purchasing volumes of like products to drive better discounts. Large companies often aggregate their purchases among departments and are more often today doing the same thing across different operating group’s or companies within a larger organizations to drive economy of scale in purchasing.

The unfortunate truth is that not much out of the box thinking is going on in this process. We are so involved in the process that we can not see the forest for the trees.

As an example let’s take a look at a small regional supermarket chain. Today they buy their products mostly from regional or national wholesalers who are able to aggregate the volumes of many small to medium size companies in order to earn enough discounts to pass on reasonable pricing to this retailer that is slightly better than the small chain might earn on their own.  The wholesaler also reserves a little for themselves in order to support their business. These products are normally for resale products. In the not for resale area or supplies, the regional retailer usually does business with local suppliers for a variety of supplies that can include everything from cleaning fluids to paper bags. The supplier normally does good job of managing these products against a number different cost structures to maintain a customer margin that is good for them. As an example if the price of oil is up and the resin market high, the supplier might be making less on plastic products such as plastic shopping bags, soup containers, trash can liners etc. The supplier may however also carry paper products and other supplies that can be mixed together to drive a total customer margin that is acceptable for their model. Retailers can do the same thing. Here’s a partial list of how collaborative aggregation can work.

1. Take a good look at the total list of supplies offered from your primary supplier.
2. Compare that to what you are buying from them.
3. Ask your e-procurement provider for a list of suppliers within a 50 mile radius that can provide the same products or some of the same products.
4. Look at local businesses within a five mile radius of your area that are not in your industry but buy some of the same products such as trash can liners, cleaning fluids, paper products etc.
5. Call them and explain how collaborating might save you all money.
6. Ask for the name of their supplier as they might be different from yours.
7. Determine a test group of products to request bids on.
8. Develop a standard specification.
9. Develop standard terms and conditions.
10. Bundle all products into one group.

SafeSourcing has a best practices program for this type of collaborative aggregation that is included in our event fees. For a complete list or more information please contact us at www.safesourcing.com.

We appreciate and look forward to 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.

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.