Archive for the ‘Retail Supply Chain’ Category

Suppliers, what makes you different?

Tuesday, October 15th, 2013

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

One of the biggest Supply Chain topics for 2013, as it is every year, is the concern over rising costs and shrinking profits, and unfortunately this is the stigma attached to many eProcurement tools and practices.  We tell our customers and the suppliers who participate in our events it is about more than just price; it is about the overall value that is presented.

Today we will be looking at ways that suppliers can distinguish themselves from their competition in areas other than price.

Labeling and Packaging – Labeling and packaging are one of the big expenses in For Resale items for many retailers especially when it comes to Private Label goods.  Suppliers who are willing to work with their customers to develop packaging that will streamline the receiving and sales process can gain a big advantage over their competitors in a way they can leverage to great value.

Training & Professional Services – One of the easiest ways for suppliers to begin to separate themselves from the pack is in the area of professional services and training.  For the supplier these services can generate a value to their customers that far exceeds the actual cost of the service itself.  In this case it is a win-win situation where the customer gets valuable services while the supplier gets an opportunity to continue to build on the face-to-face relationship in a useful manner.

Guaranteed Service Level Agreement (SLA) Metrics – The bottom line in any Supplier-Customer relationship is not just price or “bells and whistles” it is about how well the supplier delivered what they promised, how they dealt with situations when they didn’t deliver as promised and what they are willing to risk if they fail to achieve on the Service Level they promised.  Getting the best price means nothing if the product or service is of low quality or is late.  The best suppliers OVER service their customers and are willing to stake a portion of their cost on their ability to achieve that level of service every time.  These guarantees may not always translate to your bottom-line in a positive way, but not having them in place and receiving poor quality will definitely impact it in a negative way.

For assistance on helping you work with your suppliers on the extra value they can offer you, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

 

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Suppliers, Toot Your Horn! Customers, Let them! Part I of II

Monday, June 10th, 2013

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

One of the biggest gripes that suppliers have about procurement departments and Strategic Sourcing partners they work with is that they only care about getting the lowest cost and nothing about the value of what they are currently or can bring to the table.  Unfortunately there has been a precedent set by the procurement and “reverse auction” companies that has rightfully created this gripe in many suppliers.

Not every strategic sourcing company nor every procurement department sees things like this.  Many want to evaluate everything; the extra services suppliers can bring them, the rush orders at no charge, the extra reporting that is given at 10:00pm on a Friday night, the waived fees, and of course they also want to look at price.  The problem that procurement teams face is that when all they are given by an internal owner or from the suppliers themselves is list of prices and a brochure it makes it very difficult to justify paying 15% more for company A when they appear (through prices and a pamphlet) to offer the same service or product as Company B.

Today’s post is for suppliers and their customers alike because it cuts through the “price is all that matters” conversation to get straight at what matters: value.  Suppliers need to be responsible for proving it and attaching monetary value to it and customers need to put more controls in place to ensure they get it.

The Value of Free – In a  recent post we talked about the cost of FREE.  Today we are talking about the VALUE of FREE.  Every Christmas the newspapers double in size as retailers fight for consumer attention.  When the same exact television is offered by two different retailers for the exact same price a decision must be made and when the consumer sees that one retailer is offering an extended warranty as part of the price the decision becomes easier because there is something free included, but that free has value to the consumer.   Business procurement is no different.  If two companies have the same price for their plastic bags or even if one company is slightly higher but offers to ship directly to your stores and the other will ship just to a distribution center where additional costs to go to the stores are incurred, there is a measureable value to that free service.  What may have been a higher cost for bags is now a lower total cost of ownership because you just dropped your costs to ship the bags to the stores.

At SafeSourcing we are constantly talking to our suppliers and customers about the importance of value and that while cost cannot be ignored, the overall value is what are trying to pinpoint in the projects we run.  The only way to accurately do that is to understand the “extras” a supplier can bring or is currently bringing to the table and attaching value to that.  Only in this way can a true decision that is best for the customer truly be made.  Tomorrow we will take a deeper look into the other ways value can be established.  For more information on how we can help you evaluate your current or future suppliers and the value they can bring you 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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Are you paying to much for your Retail E-Procurement solution?

Wednesday, July 18th, 2012

When you review using retail e-procurement tools you may not always get what you pay for. In fact you are probably paying way too much.

There are too many companies that have been at this for a long time whose pricing formula is way too high in the retail marketplace based on what they provide.

I was speaking to a large retailer recently that had an unlimited use tool in place behind their fire wall from a very large player in the e-procurement space. The recently converted to this companies cloud based SaaS offering without a significant reduction in cost. I asked what type of savings they have been able to achieve and how many additional associates they had assigned to write RFI’s and RFP’s as well as handle events, supplier communication, hosting support, training, report generation, specification building, data collection etc. The answer was a lot.

After we had discussed at least 20 different categories, it occurred to the both of us that the savings from our cloud based SaaS events were at least a third higher than the savings from the use of the unlimited tool in either configuration.  Even if you added in our fees, the savings were still substantially higher on event by event basis with SafeSourcing. There are a number of reasons for this. One is that to many times when retailers deploy a solution internally or as a SaaS offering they default back to their old way of doing business with a new tool once the solutions provider has left. Obviously staff additions have to be calculated into the ongoing cost. Supplier research is limited, the number of participants is fewer, training is inadequate and the result is lower savings and sometimes overall quality. Older companies also do things in old ways. There are proprietary cost frameworks to the SafeSourcing solution that will also drive higher savings. I won’t share that information here.

Another way that retailers over pay, is when an older company comes in and matches the lower cost of doing business with a newer and better provider in order to win the business. An example of this is the cost of IT infrastructure in an open source world. As such the model will not last because many of these older companies are not structured in such a way that will allow them to absorb these lower fees profitably over time. Over time your price will continue to rise. In fact next year, your price should go down if you are running the same event again. Hasn’t most of the work already been done in the past?

Some good questions to ask your prospective solutions provider would be the following.

1. How many events per month can one associate host?
2. What are you doing to automate your solution in order to take out cost?
3. Will we pay the same in year two as we paid in year one for identical events?
4. What percentage of your associates work virtual?
5. Is your cost higher because of your investment in office space?
6. Is your cost higher because of your headcount required to run events?
7. What are your average savings for events over $100K?
8. What are your average savings for events under $100K?
9. Can you even run events under $100K?

There are certainly more questions but you get the idea. Be careful out there. If you want the lowest cost and the best service in the industry give SafeSourcing a call.

We look forward to and appreciate your comments.

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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.

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Knowing Who Your Suppliers Are – Onsite Visits – Part I of II

Monday, May 9th, 2011

One of the important practices recognized by many successful procurement professionals is that of performing onsite visits to both their new and incumbent suppliers.  So much can be learned about how your suppliers do business that may affect your future decisions and contracts.

Today’s blog will be focusing on visits to domestic suppliers and Part II will have more details on visiting your international suppliers.

If you are dealing with a new supplier and scheduling an onsite visit, this is the opportunity for you to validate all of the details they have presented in their RFP/RFI response or presentation; validating that they have the staff, resources and facilities to handle the demand you are requiring of them.

This will be an opportunity to meet the sales and support team that will be assisting you and your company when the inevitable problem does occur, so take advantage of this time to get acquainted with the supplier’s staff.
If you are dealing with an incumbent supplier, make sure you have thoroughly reviewed your existing contract so that details about the level of service and quality promised can be focused on as part of the visit.  Make sure that you request, in advance, any additional reporting from your IT department or from the supplier on the history of the relationship so far.  This would include quality issues, shipping issues, product delays, inventory availability or any other special circumstance that may have occurred.  This visit will be the right time for you discuss these with the supplier face-to-face.

A final very important area to spend time in your visit, whether new or existing supplier, is the shipping area.  Here you will have a very clear idea of how the supplier is organized and you may even get a glimpse at the companies they get their raw materials from as well as other customers they are shipping too for future reference and follow-up.  Information found in this area will also go a long way when having contract negotiations with your incumbent suppliers for concessions on how your products and deliveries are handled.

Onsite visits are critical to understanding who you suppliers are and can be extremely valuable negotiation checkpoints.  My next blog will focus on the differences and things to consider when visiting international suppliers.

We look forward to and appreciate your comments.

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Why procurement and supply chain professionals need e-procurement tools more than ever.

Thursday, April 14th, 2011

Procurement and other supply chain professionals have developed and nurtured existing relationships within their incumbent suppliers for years and in some cases decades. Too often, this has led to incumbent suppliers becoming to comfortable. The feeling of entitlement begins to creep in and some suppliers feel as though their business will be renewed annually. Too often this is true.

This author has often said that the job of buyers, category managers, procurement executives and other supply chain knowledge workers is the most difficult job in all of retail and retail distribution. These professionals are literally swamped. Quality, safety, environmental issues coupled with the enormous amount of new product offerings is overwhelming. Just conducting the basic research required to identify potential new sources of supply, finding the correct contact information as well as determining if the company has the capability to meet your needs. All of this is before you even sample, price or test new offerings. No wonder it is so easy to just stay the current course. This however would be a mistake.

A general rule of thumb that this author has always ascribed to is if you are doing business with a current supplier for more than three years and are only negotiating with that supplier, your prices are probably too high. The question is how can you find out?

That is where e-procurement tools come in to play. I won’t advertise here, but if you were to Google e-procurement or reverse auctions etc. any number of companies will come up. Or if you were smart, you just click this link and have measurable savings in less than 30 days and often faster. Visit SafeSourcing.

We look forward to and appreciate your comments.

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What impact will the Hours-of-Service (HOS) Proposed Rulemaking have on transportation costs?

Tuesday, April 5th, 2011

In December of 2010 the Federal Motor Carrier Safety Administration or FMSCA a part of the U.S. Department of Transportation proposed changes to the hours of service for Commercial Motor Vehicle Drivers (CMV) with comments due by March 4th of 2011.

These rules are an example of a good thing and potentially a bad thing for companies that ship or receive overland freight as part of their business. In general when drivers are required to work less hours, more drivers will be required to transport products and more trucks will be required to support the increased driver population. So, more jobs and increased sales of CMV’s; is probably good for the economy. The off side of this conversation is an increase in shipping costs in an industry that has seen prices climb steadily over the last few years that result in reducing their customer’s profit margins.

All companies will need to keep abreast of these potential rule changes, because this author is sure that these expenses were not planned for in anyone’s budgets.

We look forward to and appreciate your comments.

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Choosing the Right Vendor to Reflect Your Company

Monday, March 28th, 2011

In a recent retail headline, Safeway, a California-based grocer with over 1,700 stores, announced their plan to have a channel of fresh and frozen seafood product that is sustainable and traceable, or in a process to reach that goal, by 2015.

It begs the question, “What are your vendors doing to better the planet in a way that goes beyond the products they deliver?  Are their values and Mission Statements mirroring what your business believes?”

In Safeway’s case, they had a strong company belief in sourcing product that came from sources that can maintain or increase production in the future without negatively affecting the environment with which it is coming from.  They also had a strong desire to be able to trace that product back to its source for safety reasons.  These values led them to select a partner who is helping them assure all of the companies they do business with also have these values and practice them in their business.

They are one of the first retailers to make a commitment of this magnitude with more expected to follow.

In order to ensure this same type of synergy between your company its sources, you should ask yourself:

• How much do I know about the core values of the companies I do business with?
• Do my vendors know anything about my company’s core values or Mission statement?
• Are my suppliers doing everything they can to provide safe and green products?
• Are there other suppliers I could be using that are making strides in this area that mirror the things my company wants to do?
• Are my RFI/RFP processes collecting this kind of information from the vendors?

To help you with answers to these questions or to provide you with a deeper pool of environmentally responsible companies with which to work with, please contact a SafeSourcing customer service representative today.

We look forward to and appreciate your comments.

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Collaborative Procurement: No Need to Wait to Buy

Tuesday, March 1st, 2011

Collaborative purchasing and co-op enterprises are concepts that are not new to the business world. 

For decades manufacturers, retailers and consumers have organized associations that allow their members to take advantage of lower pricing than they could normally get on their own due to the increase in the overall purchase amounts made by the collective group.

While this is a great advantage for smaller businesses and retailers, many companies think this is the only way to take advantage of this type of spend. 
Many businesses think that the amount of inventory they want to purchase is just too small to think about purchasing like this and so they wait for a period of time until they think they can justify the amount, all the while losing out on money they could have saved on the product they are currently purchasing.

Luckily for these companies, neither of these situations has to be true for them.   We are conducting regularly scheduled collaborative events, weekly, and are just waiting for these companies to join.  As with any collaborative spend, the more participants involved the better the savings will be and the bigger the opportunity for the suppliers involved.

We are routinely saving customers 10-20% on spends they had previously thought were too small for any type of reverse auction due to the fact we were able to include them in one of these collaborative events.

Call a SafeSourcing Customer Service representative today to see if any of your upcoming spends have associated collaborative events scheduled for the month of March.

We look forward to and appreciate your comments.

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The experts say that the price of everything is going up! Can NAFTA offer a clue as to how to control this?

Wednesday, February 16th, 2011

As oil heads north of $100 per barrel again, the resulting higher fuel costs will again force global trade to focus on such as USA, Mexico and Canada versus the Asia Pacific region which is more than 7500 miles away.

Hopefully we learned our lesson less than three years ago? If so, we should all be aware of suppliers that will not require us to buy goods from so far away that transportation and logistics costs will kill our P&L.

Let’s remember that the North American Free Trade Agreement or NAFTA allows us to not just near shore many of our purchases but to localize them. This reduces transportation expenses. North America is made up of the United States, Canada and Mexico. Although NAFTA is primarily focused on agricultural products traded between North American Country’s it also represents one of one of the most successful trade agreements in history and has contributed  significantly to increases in agricultural trade and investment between the United States, Canada and Mexico. There are plenty of opportunities in the regional low cost manufacturing bases could have a related regional impact on keeping  costs lower on many types of retail products.

Finding tools that can aide our search in finding new sources of supply is imperative as demand rises and causes strain on commodities. Are you aware that a tool like this already exists which can provide data at a glance on 928 general merchandise suppliers located in Mexico, 1,585 Grocery Suppliers located in Canada, and 1,940 Pharmaceutical suppliers located in the United States. If not, please visit the SafeSourceIt Query Tool to learn more. Your P&L will thank you and so will your customers when you don’t raise their prices.

We look forward to and appreciate your comments.

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