Archive for the ‘Sourcing Strategy’ Category

Happy New Year 2017. This year’s strategic sourcing plan should already be in place

Tuesday, January 2nd, 2018

 

What specific short term tactics will you deploy that support your plan and drive immediate and measureable results.

One example of the above might be to augment the manual processes that many  sourcing professionals use today in order to find new sources of supply interested in bidding for their business rather than continuing to live with the same small, known group of suppliers they have used for years. Historically this has been a very time consuming practice that results in few if any new sources of supply. This represents a great opportunity to deploy a tactic that can have an immediate impact for an organization without the need for the implementation of a complete new sourcing strategy.

There is a specific process to follow that will encourage new sources of supply to want to bid for a companies business beyond just being invited. Simply having your buyer assigned the task of picking up the phone and calling new sources of supply will not result in new suppliers agreeing to bid for your business. There are specific objections to overcome and questions to answer that require a specific skill set.  This is a perfect opportunity for Software as a Service providers that offer supplier research. Skilled providers in this area can provide companies with as many as a half dozen or more willing new sources of supply in as little as thirty minutes  that may in fact reside within a companies existing marketing  area.

Sourcing tactics can be isolated procurement related actions or events that take advantage of opportunities offered by the gaps within strategic plans such as lack of new sources of supply mentioned above.  So our tactic here would be to find additional sources of supply that we can invite to compete for a companies business in a variety of categories. The fact is that additional sources of supply competing for a companies business results in compressed pricing and often better quality products.

We appreciate and look forward to your comments.

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Mistake-proofing your business!

Wednesday, December 27th, 2017

 

 

Today’s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing

All human activities have a percentage of error. For example, out of all the email we send in a day some percentage will have a grammar error, for all the mouse clicks we make in a day some percentage will miss their targets. These “fat-finger” category mistakes are fairly benign, and would take quite a bit of corrective time and effort to reduce. Sure, we could spend an extra 10 hours a week slowing our clicks and typing down to a crawl to make sure they never miss their mark, but most businesses don’t have the spare time or patience to do so. However, when our processes have vulnerabilities built into them, where a stray click can create a lawsuit level problem, the “fat-finger” category of mistakes suddenly becomes a big deal.

Make no mistake, inadvertent minor errors WILL happen, and there’s nothing economically feasible you can do to eliminate them entirely. You CAN however, structure your processes and systems in a way that makes it difficult or impossible for small mistakes to have unforgivable consequences.

Identify your vulnerabilities: Evaluate your systems for what functions are business-critical. What processes, buttons or links have the highest risk associated with their execution? Which ones would buy something your business couldn’t afford, send messages you can’t take back, or delete records you can’t recover?

Create roadblocks: You know those pop-ups that annoy you so badly that say “are you sure?” after you’ve hit the “buy now” link? These intention-checking messages help you slow down your furious clicking, and can prevent execution of an erroneous command.

Improve bad layouts: Do your systems have dangerous buttons/links right next to innocuous links? Maybe your “print” button is next to your “fire everybody” button? Your “Decline award of business” button next to your “buy all” button? Your copy/paste command next to your “wipe database” command? There’s no good reason to build vulnerability into your system layout.

Sensitive Communications: Are you frequently sending sensitive information back and forth over email that you could be automating through a system with protections in place? One mistake and you could send proprietary information from steve@vendorA to steve@vendorB, and you have a breach of confidentiality on your hands. Take advantage of the data segmenting capabilities available in most modern systems.

Even your most talented team member will make a small mistake, and if it’s at the wrong place at the wrong time, or wrong link on the wrong system, it can have disastrous consequences. Don’t get rid of the talent, remove the unnecessary vulnerabilities in your systems, so that your people can focus on using their skills. Your company’s internal processes shouldn’t be its riskiest activity.

For more information on how SafeSourcing can assist your team with this process 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.

 

 

 

 

 

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Satellite Versus Cable TV

Friday, December 22nd, 2017

 

 

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

Well it’s been about 6 months since we cut the cord and got rid of our satellite television service.  I’ll have to admit that it was hard at first.  Well, I thought it was hard at the time, but looking back it was just getting used to different types of menus for finding the content that we like to watch.

One of the first things we did was buy a TiVo and an over-the-air (OTA) antenna so that we could record and watch all the local channels for free.  Because we are in the middle of two large cites we are able to receive content from both cities which gave us a few more channels, most of them duplicates.  What we have found from watching the programming on the TiVo with the OTA signals is that the video is much clearer than the satellite picture we were used to.  This is because cable and satellite companies compress the signal and some of the data is lost during the transmission.  The difference in quality to me was amazing, and after months of use I still see the difference when viewing.

When it comes to cable channels and premium channels, the transition was not as easy.  There are a lot of apps available for streaming the channels, but not all of them offer DVR functionality.  Since we do not like watching live TV, this functionality was a necessity.  We had to do a lot of research to find an app that would supply the DVR functionality and the channels that we watch on a regular basis.  Luckily most apps offer a free trial and no long time contracts, so you can install them and test them before you make a decision.  Just like satellite and cable these apps offer different packages that allow you to customize which channels you receive.  So the price will vary based on your options.  One of the negatives, at least for me, that we have found is that most of the apps only stream certain channels at 60 frames per second (fps), the rest are streamed at 30 fps.  This is not an issue for most content except sports.  Some of the apps will stream just the sports channels in 60 fps.  So if you are watching a game on one of the channels, besides the sports channels, the signal will be 30 fps and the video appears to be very choppy.  This annoys the heck out of me but my wife says she cannot tell the difference.  There are some apps that stream all channels in 60 fps, but they either did not have the channels we needed or the DVR functionality did not exist.

All in all, we are happy that we made the switch.  We are still able to watch and record all of the content that we did with the satellite service and our monthly bill is more than half the cost.  If you need help researching an alternative to your service, feel free to contact SafeSourcing.   We can gather all the necessary information for you and help you decide which service meets your needs.

 

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Shipping Lanes and the Fuel-In/Fuel-Out Debate!

Thursday, December 14th, 2017

 

Today’s post is our SafeSourcing Archives

Managing your freight/shipping lanes is a complex process.  There are so many factors that must be taken into account.  Even then, when you have gone through all of the analysis and created projection models and spreadsheets you are still left at the mercy of weather, sales increases and declines and, of course, any possible factor that could influence the price of oil.

Because this last item represents up to 35% of a carriers charge to you, it is one that many companies take very seriously and invest great amounts of time and money in order to help them control.  Some companies take the approach of locking a fuel rate into their cost for as long as they can to help protect against increases.  Many other companies have negotiated their base rates and keep the fluctuations of fuel separate, with controls placed around the formula used to calculate it. Today we will be looking at the pros and cons of both the Fuel-In and Fuel-Out methods.

Fuel-In – Fuel-In strategies are founded on having a final complete rate inclusive of fuel costs.  This is nice for companies who want a fuel cost method that is easy to manage, because the cost of each shipment for the negotiated period should always be the same.  Typically this method will either be re-negotiated at pre-fined intervals, or tied to an oil/fuel related index with language to cap how much the rate can increase or decrease.

While this strategy can be used to help protect a company during periods of time when fuel prices are rapidly increasing, it usually leads to higher overall rates for each negotiated period.  Without the flexibility to adjust with the average cost of fuel, vendors will generally error on the side that protects themselves and deliver higher than normal rates in their proposal.

Fuel-Out – Fuel-Out methods usually include a fuel surcharge that is based on some pre-defined fuel index such as the commonly used U.S. Department of Energy National Fuel Average price.  Using the agreed upon price, most formulas will subject a “trigger” amount which is the rate of fuel above which carriers begin to include the surcharge.  Typically this rate will be between $1.20 and $1.25 per gallon.  This amount is subtracted from the average fuel price and then divided by an agreed upon Miles Per Gallon rate (usually 5 or 6 MPG) which leaves the surcharge per mile charged.

Although this means that the price of shipments can fluctuate more often and that companies aren’t protected against a dramatic increase in fuel like the Fuel-In method, they will be able to take advantage of decreases in fuel that the method above doesn’t always allow.  The other advantage with this method is that it allows companies to get much more competitive base rates from carriers who know their fuel costs will be allowed to adjust the changing costs of fuel.

For more information about how we can assist with sourcing your freight lanes, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

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You can procure anything, including Candy Canes Part II!

Thursday, December 7th, 2017

 

Today’s post is from our  SafeSourcing Inc Archives.

What does it take to make a candy cane, package it, market it, and distribution? All of these involve procurement. Today, the candy cane makes up a significant amount of the $1.4 billion Christmas candy market. In fact, billions of candy canes are made and consumed each year.

What raw materials are included to make candy canes from madehow.com

Confectioners have steadily refined candy cane recipes and production methods. By incorporating new information about the characteristics of ingredients and food production processes, they have been able to make candy cane manufacturing an efficient process. The raw materials used to make candy canes are specifically chosen to produce the appropriate texture, taste, and appearance. Sweeteners are the primary ingredients, but recipes also call for water, processing ingredients, colorants, and flavorings.

Candy canes are primarily made up of sugar. When sugar (sucrose) is refined, it is typically provided as tiny grains or crystals. It is derived from beet and cane sugars. The sugar used in candy cane manufacture must be of high quality so that the proper texture and structure will be achieved. It is the unique physical and chemical characteristics of sugar that makes formation possible. When sugar is heated, it melts and becomes a workable syrup. The syrup can be manipulated, rolled, and fashioned. As it cools, the syrup becomes thicker and begins to hold its shape. When the candy is completely cooled, the sugar crystals remain together and form the solid candy cane.

Corn syrup is also used to produce candy canes. It is a modified form of starch, and like sugar it provides a sweet flavor. When it is mixed with the sugar, it inhibits the natural tendency of sugar to crystallize. Crystallization would result in a grainy appearance and a brittle structure. Corn syrup has the added effect of making the sugar concoction more opaque. Without the corn syrup and other ingredients, the candy would be transparent. The corn syrup also helps to control moisture retention and limits microbial spoilage. Beyond sugar and corn syrup, other sweeteners are sometimes incorporated into the candy cane recipe. These may include glucose syrups, molasses, or other crude sugars. Some low calorie candy cane recipes may incorporate artificial sweeteners like aspartame.

Certain ingredients are put in the candy cane recipe to aid in production. To dilute the sugar and make it workable, water is used. During the manufacturing process the water is steadily boiled off, and the end product has much less water than what it started with. Another processing ingredient is cream of tartar. This compound has the effect of producing air bubbles that help expand the sugar loaf and make it more stable. Salt also helps to adjust the chemical characteristics of the syrup. Typically, a small amount is used so that it is undetectable in the final product.

A variety of other ingredients may be incorporated into a candy cane recipe to produce various effects. To give the candy flavor and color, wintergreen or peppermint oils are added. Other natural flavors obtained from fruits, berries, honey, molasses, and maple sugar have also been used in candy cane production. Artificial flavors have also been added to improve taste. Additionally, fruit acids like citric acid and lactic acid can be added to provide flavor. Artificial colors such as certified Federal Food, Drug, and Cosmetic Act (FD&C) colorants are used to modify the color of the final product. In the United States, the federal government regulates these colors and qualifies each batch of colorant produced by the dye manufacturers. This ensures that no carcinogenic compounds are added to food products.

Sugar is a commodity that has a price index that fluctuates with the market increases and decreases. As of December 6, 2013 the market is down -0.10 bring the price per pound to $16.59 per the Sugar, Free Market, Coffee Sugar and Cocoa Exchange (CSCE) contract no.11 nearest future position, US cents per Pound.

Manufactures of candy canes can source their sugar directly from manufactures or wholesalers. This can create extra spend or savings depending on which source you purchase from. Typically through distributors and wholesale companies, there is additional shipping, handlings, and middle man fees included in the purchase price.

Whether you have been purchasing from the same source for years or you are just starting your business, running a Request for Proposal will help you understand who the companies are, where they source their sugar, what their pricing structure is, what price index they use (this will help you determine historically any increases or decreases), and any additional fees they may include.

SafeSourcing, Inc. can help you source your goods, create and run a Request for Proposal and compress the suppliers pricing by running a Request for Quote. 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.

Tomorrow we will discuss how to make candy canes and package them and how SafeSourcing can help in these areas.

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Are Your Vehicles Winter Ready?

Friday, December 1st, 2017

 

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

Winter is quickly approaching and it is time to start getting your vehicles ready for the harsh weather.  One thing that always seems to get me every year is lack of windshield washer fluid.  You’ll be driving along on snowy day and the salt and water from the road splash up.  You turn on the wipers only to realize it smears on the windshield causing next to zero visibility.  Washer fluid is definitely needed to remove this kind of grime.  Make sure to keep an extra container available in the vehicle.  When purchasing windshield washer fluid, make sure to get an all-season washer fluid so that it does not freeze during the frigid temperatures.  While you’re at it, go ahead and check the washer blades for wear and tear and replace as needed.

If your battery is a few years old, it would be a good idea to have it tested.  Colder weather is much harsher on a battery and a weak battery can become a dead battery very quickly.  Take a look at the terminals and remove any corrosion to ensure a good connection.

If you have not had the coolant changed according to the manual recommendations, you may want to consider a flush and fill.  If the maintenance is up to date, you should still check for leaks, check the coolant level, and top it off if needed.  This is very crucial because the coolant, also called antifreeze, keeps the engine from freezing during the cold temperatures. Another important item to check is the tires.  Worn tires are very dangerous during the winter months.  Make sure that the tread is fine and that there is no uneven wear.  Check the tire pressure and make sure that it is set to the manufactures’ recommended pressure.  This is important and should be done about once a month.  While you’re doing this, do not forget to inspect the spare tire as well.

You may also want to consider keeping a survival kit within the vehicle in case of breakdowns.  This should consist of items such as blankets, flares, gloves, flashlight, first aid kit, jumper cables and cell phone charger. Driving in the winter is much more dangerous. To keep things safe, you may also want to inspect these other things as well:

  • Brakes
  • Lights
  • Oil
  • Filters
  • Heater and Defroster

If you need help finding a licensed maintenance company to maintain your vehicles, feel free to contact SafeSourcing.   We can gather all the necessary information for you and help you decide which company 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.

 

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Choosing the Best Forklift for Your Needs

Monday, November 20th, 2017

 

Today’s post is written by Ivy Ray, Account Manager at SafeSourcing Inc.

Finding the right forklift for your operation can be a challenge. You may have a good idea of what your capacity needs are, but there are many options from which to choose. How do you select the best piece of equipment that fits your needs and your budget?

  • Electric forklifts are clean, quiet, compact and nimble with charging constraints.
  • Gas forklifts are best performers and have indoor/ outdoor flexibility.
  • Diesel forklifts are best outdoors and cheap to run.

Electric

Battery electric forklifts are the most environmentally friendly, and quiet. They are fume free in operation, giving off no harmful emissions. Powered by large, heavy lead-acid batteries, electric lifts typically provide enough power for one standard eight-hour shift or about 5 to 6 hours of continuous use. One of the main disadvantages is that electric fork lifts are not really suitable for prolonged use outside in wet weather, because the damp atmosphere cause problems with wiring circuitry and electrical components. The two biggest advantages to this system are that it produces zero emissions, a necessity if the lift is operated indoors, and is highly economical in terms of fuel.

Internal combustion

Internal combustion (IC) engines run on a variety of fuels including gasoline, diesel fuel, liquid propane gas (LPG), or compressed natural gas (CNG). The main benefits of an IC forklift are the ability to operate them in any environment, a far greater capacity for weight (120,000 lbs. for diesel vs. 12,000 lbs. for an electric), and the ability to be refueled on the fly. They also have a slightly higher reach, usually capping out around 36 feet in comparison to electric lifts that typically don’t go higher than 30 feet.

Their upfront price is the inverse of electric, making them initially cheaper than electric models, but they cost more per hour to run. In fact, you can plan on paying about $30 to fill a 7-gallon diesel tank and $25 to $35 to fill a 33-lb propane tank. If you refuel the tanks twice a day, this equates to a yearly fuel cost of $1,500 for electric, $15,000 for diesel, and about $12,500 for propane.

Dual fuel – a happy median

With the cost of diesel rising, dual fuel engines are becoming the preferred engine type for forklifts and similar industrial equipment in the United States. Comparable in terms of output to single-power options, they provide the cost-saving ability to combine gas and liquid propane or diesel and electric operation, switching between the two modes when power needs change.

In addition to the cost-saving benefits achieved through fuel conservation, dual fuel systems do not require spark plugs or an ignition system, eliminating a good chunk of the maintenance associated with traditional IC engines and boosting overall ROI.

For more information on how 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.

Resources—————————————————

http://www.bendigomitchell.com/kb/forklift-power

 

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Reduce Capital Expenditures

Wednesday, November 15th, 2017

 

Today’s post is by Dave Wenig, Vice President of Sales and Services at SafeSourcing.

Many of our clients find great success in significantly reducing their indirect spend. The typical expense categories that are sourced are always winners and are often the first categories that come to mind when selecting which categories will be sourced using eProcurement tools. As nearly all of our clients know from first-hand experience, these categories have earned this reputation for good reason. The average savings for Supply categories, for example is in excess of 21%. This is relatively well known and is only the start of what is truly possible with eProcurement.

What is less known, and too often overlooked, is that this same eProcurement methodology can very easily be applied to your capital expenditures. At a time when many of our clients are preparing for the coming year, I wanted to point out that you should not forget to leverage eProcurement for your capital expenditures.

At this point, you may well have a very clearly defined sourcing plan in the form of next year’s budget. My suggestion is simple – remember to review that identified spend with your eProcurement provider. You’ll be glad you did.

I would encourage you to also keep an open mind as you decide which of these capital expenses you would identify for eProcurement. You might be surprised to know that our clients have had success in areas where most clients don’t even consider. In one example, we were able to successfully take just one panel van out to market as an RFQ. Inside of days, the client saved many times more than could ever be saved negotiating with dealers using traditional methods. In another example, we achieved 30% savings on two towable generators.

Many of our clients, whether retailers or otherwise, will be working on construction such as opening new stores and remodeling old stores in the coming year. I propose all of that related spend should be sourced using eProcurement. If it is not competitively sourced, you will overpay. Before you build that new carwash, you should know that we do that too. Recently, we achieved over 10% savings on the building and over 34% savings on the installation portions alone for a client.

In this short post, I’ve listed only a few examples out of many, many more and I have not even mentioned your cost of goods or cost of sales. I hope, however, that my main premise was clear. If you have budgeted for capital expenses, you should consider eProcurement to reduce the cost of those expenses. You’ll likely find that you’re able to accomplish much more in the next year based on the savings generated by eProcurement.

For more information, please contact SafeSourcing.  

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The Importance of Having a Positive Attitude

Monday, October 23rd, 2017

 

Today’s Post is by Eli Razov, SafeSourcing Account Manager.

A positive attitude can take you to another level. In many aspects of life, the mindset of success will bring those results to you. There are many ways to define success. Is it the car you drive or maybe your title? Maybe it is a little simpler than that. What about the small things we overlook or take for granted? Everyone has their own struggles and day-to-day battles. Maybe you have more than you can handle at work or school is starting to take its toll. Perhaps you play in a competitive sport and the big day is upon you. Or maybe you just cannot relax at home because everyday pressures haunt you.

Negative thoughts breed negative feelings and that can turn to a negative attitude. Those around you can see and feel that attitude or possibly read those feelings. From there it’s transference of negativity which can sabotage even the smallest of encounters. In business and sales, it is said to always smile even when you are on the phone, it can be heard in your tone. When you greet an old friend or a stranger for the first time, always smile because that will have a long lasting effect. But what happens when all of the negativity weighs you down so much you cannot bare it anymore and you simply cannot fake the smile?

While the term easier said than done may be applicable to anything in life, in most experiences that is just negativity rearing its ugly head. So start by trying the thing that sounded so hard or felt impossible. Break the stride of the impossible. How you ask? Know that you can do it. Easier said than done right? No it is that simple. While this isn’t a cure-all, maybe this will help you on your way. Everything we do on a daily basis is a new experience, even if you have had the same job for 30 years and you have been typing the same reports or pressing the same buttons the entire time. There are always outside contributors to the outcome of daily life. So how does the positive attitude work? As simple as it sounds, apply it to these everyday tasks. The simple tasks no matter how menial, know you will succeed. After a while of knowing and seeing your success you will begin to apply it to larger tasks. Maybe you are having a bad morning, spilled your coffee on your shirt or someone cut you off in traffic. Do not let that affect your demeanor. Take your two minutes of inner dialogue and vent. Now focus on your tasks. What do you have next? Simple or tough as it may be you cannot avoid it. So visualize what it will feel like when it is complete …the feeling of success. Feels pretty good right? Keep that mindset the whole time. You worked hard for this and you are ready. This will give you confidence and people will sense that. With that mindset and confidence you have already won half the battle, now comes the easy part. Just do it!

For more information on SafeSourcing and how we can help you with your sourcing needs, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

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Never Too Late to Revaluate

Wednesday, September 13th, 2017

 

Today’s post is from our  SafeSourcing archives.

Several years ago lawmakers introduced a bill (HR 5255) the purpose of which is to reorganize how the federal government purchases IT product and services.   In the face of the highly questionable success of the newly launched federally operated health insurance exchange website, many believe that the government is stuck in a pattern of buying technology that is not current, solutions that are not the right fit, and running projects that take years to implement once they have begun.   While this bill focuses on federal government and IT categories the reason for its need could easily be applied to other companies and categories.

Complex procurement processes  – One of the main reasons this bill was introduced was the complexity of the procurement process adopted by the federal government.  Its voluminous RFPs and RFQs are so difficult and confusing to complete that only very large companies with staffs proficient in submitting federal RFP responses are competing for the business.  This leavesmany quality, capable suppliers out of the mix.  What is usually left to choose from is not necessarily the “best of the best” it is more like the “whose left that has the resources to respond?”  Like the federal government, the question companies should being asking themselves is “How easy are we to do business with?”

Rigid guidelines – Along the same lines of complexity is the problem of being too rigid in the procurement guidelines that have been developed.  Even companies with streamlined procurement processes can run into challenges if they are not willing to slightly adjust those processes from project to project as the need fits.  An example of this would be a company that has a strict rule not to take spends less than $100k through their normal procurement processes.  They become so entrenched in the letter of the rule that they fail to go further.  They never explore that $80k spend that could begrouped with either another category serviced by the same suppliers or grouped with another company to get a larger spend as an impromptu GPO.

Build Champions – HR 5255 would have a narrower focus of a roll-out starting with only 5 government agencies participating.  This approach is similar to one that any company should follow when making changes to how they procure goods and services.  Start with departments that need procurement help the most and that are open to having the procurement department and/or 3rd party sourcing partner assist them.  Focus on some projects that can build momentum in the way saving time, money or resources with the outcome.  Once the initial departments are running and satisfied with the process it will be much easier to take that process to the rest of the departments in the organization.

SafeSourcing helps our customers every day develop new sourcing strategies and examine the processes that have grown “long in the tooth.”  For more information on how we can help your team 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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