Archive for the ‘Retail Supply Chain’ Category

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.

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.

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.

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.

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.

Winter Storms Wreak Havoc in the Land of Sourcing!

Monday, February 7th, 2011

Last week more than one third of the United States was hammered by a winter storm that left hundreds of people stranded in airports, without power and without the means to conduct their normal lives.? This storm comes on the heels of what has already been an extremely bad winter for much of the northern and eastern part of the country.

The question lies, what type of impact do storms like this really have on the business world and the activity surrounding the sourcing of goods and services.

Any time retailers have to go more than 2 or 3 days with no or very limited sales the impact is enormous.? That is lost revenue that cannot be retrieved; not to mention the waste involved for perishable products that were not sold.? Loss of this nature must be recouped somehow and often that is in the form of an increase in prices.

The service industry is also affected as poor travel conditions and canceled flights lead to lost revenue in many sectors while some sectors such as snow removal, roof repairs and maintenance companies can barely handle the increases they see.? Companies without a good procurement process and or have negotiated strong contracts are left waiting or paying extreme premiums to get attention.

Lost man hours due to driving conditions and increased illness are also a major impact of a storm like last week that certainly affects the areas being hit, but it also affects companies in other parts of the country as they suffer the pains of canceled meetings and delayed activity in the aftermath of the storm.? All of this ends up meaning one thing, lost revenue and time that usually leads to increased prices and shorter supply levels.

Whether this storm dramatically affects the slight economic upturn being displayed before it hit remains to be seen but one thing is sure; the ripple effect of the storm will be felt for weeks to come.

We look forward to and appreciate your comments.

What information should we know about our supply chain partners?

Tuesday, January 25th, 2011

With the number of food born illness issues during the last couple of years, one area that is difficult to keep up with is food industry safety.

The SafeSourceIt? Supplier Database has grown to over 380,000 global suppliers. During the same timeframe the number of certifications we monitor for these suppliers has also grown. In the food space three standards that are regularly adhered to are ISO 22000, SQF and GFSI? So, what?s the difference?

In essence, SQF and GFSI are programs administered by two separate organizations CIES and FMI that are supportive of each other and use ISO 9000 and its derivative ISO 22000 as standards guideline towards driving food safety in the global supply chain.

According to Wikipedia, ISO 22000 is a standard developed by the International Organization for Standardization dealing with food safety and is a general derivative of ISO 9000 which sets standards for quality management. As such, ISO 22000 guides food safety management systems – requirements for any organization in the food chain. Since food safety hazards can occur at any stage in the food chain from production to consumption it is essential that adequate control be in place that by the ISO are referred to as Critical Control Points or potential points of failure in the supply chain that when managed properly can mitigate the risk associated with the hazard ever taking place.

The ISO 22000 international standard specifies the requirements for a food safety management system which SQF and GFSI are that involves interactive communication, systems management and prerequisite programs and the principles of Hazard Analysis and Critical Control Points (HACCP).This is a systematic preventive approach to food safety which addresses physical, chemical and biological hazards as a means of prevention rather than finished product inspection which could be much more costly.

Think of the ISO as a standards creating body, and SQF and GFSI as programs that at a minimum focus on holding the entire food supply chain accountable to those and other standards.

We look forward and appreciate your comments.

Is it time to look at your paper purchases?

Thursday, January 20th, 2011

So what does drive the price of paper? Well it depends on the type of paper you?re talking about. In this case let?s talk about copy paper, receipt paper and the like. What drives the pricing here is the pulp market and specifically the hardwood pulp market. You probably buy a variety of paper products from the same distributor. Your supplier may buy it from a larger distributor who may in fact buy it from a mill.

What the mills buy to make copy paper is hard wood pulp. That market at present is becoming saturated which is a good thing for paper prices. We took an early hit last year due to Mother Natures impact in countries like Chile but global inventories and shipments are headed up which means your prices should be headed down.

Your contract probably has some sort of escalator or deescalator language in that that offers some protection, but excess inventory is always a reason for companies to be aggressive in their pricing.

We look forward to and appreciate your comments.

My supplier tells me the cost of paper is going up; what should I do?

Wednesday, December 22nd, 2010

The question this begs, is the statement true? The answer is more complicated than just saying the cost of pulp is going up or down because there area variety of pulps and the same pulp is not used for making copy or print quality paper as is made for making paper grocery bags or paper wraps. The type of pulp used for making copy or print quality paper is hardwood pulp. Hardwood fibers are suited for producing smooth papers for printing and writing. They also can achieve good stiffness and bulking ability, but this depends on the tree species and refining conditions.

The trick with the above scenario is that depending on the tracts lumber companies are harvesting there may or may not be a robust availability or supply of hardwood pulp at any given time. And as such we enter the entire supply versus demand equation.

So is it possible to conduct your own research to qualify the statements of your supplier? It is depending on how far you want to go in doing what commodity traders do every day of the week in order to time their investment with market movement.

CME Group is a good site that would allow you to follow futures on a variety of products. The following link will take you to the hardwood pulp futures market which at the moment is trending down.

Let information be your friend, and if you don’t have time call your e-procurement solutions provider.

We look forward to and appreciate your comments.

Corporate Social Responsibility and the procurement process

Tuesday, December 21st, 2010

The following is taken directly from a great website “The CPO Agenda” and specifically from an old article  titled “How the Stars Shine Brighter”.

The entire article is a great read as to the positive impact that best in class procurement companies can have on their company’s results even during these tough economic times. The specific information I found interesting was a sub section that relates directly to yesterdays post on supplier score cards and is titled.

Sustainability and corporate responsibility.

These have emerged as significant issues for the procurement function and are now factored into most companies’ corporate goals. However, there is still a long way to go until these goals are formally embedded into procurement strategies. Finding the right balance between economic viability, environmental awareness and social well-being is a significant challenge, but a competitive advantage can be gained by companies that locate intersection points for all three.
 
For Wal-Mart, sustainability has broad economic and social components, including healthcare, economic opportunity and the quality of life of the people who make the products it stocks. The company’s commitment to sustainability centers on three aggressive goals: to be supplied 100 per cent by renewable energy, to create zero waste, and to sell products that sustain natural resources and the environment. The key focus areas for its sustainability efforts include paper, packaging, textiles, jeweler, electronics and chemical-based products – categories selected based on a combination of consumption and the volume of product sold.
 
Wal-Mart helps its suppliers to develop goals and set expectations, assist with knowledge around sustainability practices, and evaluate and manage results. Suppliers are expected to “do right” by workers and the environment, examine the entire product lifecycle in order to develop sustainable merchandise and significantly increase energy efficiency throughout the supply chain, especially in the area of logistics and shipping.
 
Key scorecard metrics include greenhouse gas emissions produced during manufacturing, the product-to-packaging ratio, packing cube utilization, recycled material usage, renewable energy use at supplier facilities and raw material recovery rates. The involvement and commitment of the world’s largest retailer toward sustainability practices throughout the supply chain will accelerate the rate at which many companies come to adopt sustainability-focused practices.

As always, we appreciate and look forward to your comments.