Archive for the ‘Sourcing Strategy’ Category

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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RETAILERS! Clean out those back rooms and move your overstock items using a forward auction.

Monday, September 11th, 2017

 

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

Why is it that we never hear of retailers running forward auctions? There are dozens of sources waiting to buy your overstock which all retailers know will reduce shrink and improve bottom line profitability.

If you go to any internet search engine and type in the term overstock, the data returned is in the millions of pages. Many of these links are locations  for Business to Business (B2B) and Business to Consumer (B2C) companies that will gladly agree to participate in e-negotiation events in the form of a forward auction to purchase your overstock or liquidated products for resale through their on line offerings.

Online forward auctions are an ideal way to get the best price for capital equipment, materials, overstock and services you may want to sell, such as when you need to liquidate excess inventory.

There are two basic types of forward auctions. The first is a liquidation auction where sellers are reducing inventory from overstock or liquidation and buyers are seeking to obtain the lowest price for items they have an interest in for resale and other purposes. The second type is more of a marketing auction where sellers are trying to sell unique items and buyers wish to obtain unique items. This is typical of an eBay type of offering.

Much of retail shrink happens in the back room or receiving area of retail stores. It just so happens that this is also the location of much of the overstock in the retail community. Much of this product sits there month after month resulting in significant margin hits to quarterly and annual earnings and as such to a company’s stock price.

Ask your e-negotiation solution provider how they can help reduce your overstock and shrink with forward auction tools, and who they would invite as buyers. You company stakeholders will applaud your efforts.

For immediate help, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.
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Sourcing Temporary Labor, Day Labor and Contingent Work…

Tuesday, September 5th, 2017

 

Todays post is from our SafeSourcing Archives

Sourcing temporary labor is never easy. To begin with you require a clear definition of what type of labor you are planning to source as well as a good understanding of national and local labor laws. Quite often companies fall into the trap of using a temporary labor agencies job descriptions that are not clearly defined and way to broad. In fact many times these descriptions are not more than catchall categories. As an example, can someone please tell me what job descriptions fall into the industrial work category? For each of you that try, we will most likely end up with a collection of descriptions that are several multiples larger than the number of people responding. In fact, this is what agencies are looking for because “One mans meat is another mans poison”. Without a clear definition you are at the mercy of sourcing agencies. An example might be how an agency differentiates between a secretary, administrative assistant and an executive assistant and how they up charge for each.

If you were to visit Wikipedia one of the world’s greatest sources of data and search for the term Temporary Labor, you would receive the following The page “Temporary labor” does not exist.  They would however give you a link on that page to the subject Temporary Work where the following paragraph gets you started with what you are looking for.

Temporary work or temporary employment refers to a situation where the employee is expected to leave the employer within a certain period of time. Temporary employees are sometimes called “contractual”, “seasonal”, “interim”, “casual staff”, or “freelance”; or the word may be shortened to “temps.”

The key when trying to source temporary labor is that if you are looking to source temporary work and do not want to get taken advantage of, your specifications and terms and conditions need to be spot on as to what you are looking for. The more detail you provide the better because grey area is where you will end up paying for more than you are asking for.

If you need help with this category,  please contact SafeSourcing.

We look forward to and appreciate your comments.

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Here is some Lasik for retail e-procurement professionals in order to create better focus.

Monday, July 17th, 2017

 

Here’s and old post that continues to have merit with a link to another resource from FitSmallBusiness.com

Very often this author gets the question as to where to start in the e-procurement process. Too often I read that one needs to do a detailed discovery. The question is of what and how to get to the right place the quickest. So here is some Lasik for you that will help you see a little more clearly.

Using another idiom, and with renewed focus we hope to make it possible to see the forest for the trees by not focusing on excessive detail that is not needed yet.

There are four areas where you should begin your search for an e-procurement starting point and they are pretty simple.

1. Gross Sales
2. Cost of Goods Sold
3. Gross Margin
4. EBITDA.

This is really to say that if you take a look at your top line or Gross Sales and your bottom line or EBITDA and they are out of whack relative to your plan or industry averages you need to look at the above the gross margin line or Cost of Goods Sold or below the gross margin line which is expense related items for as an e-procurement focal point..

As such a couple of terms whose definitions you should be aware of are as follows.

According to two separate sources, Wikipedia and FitSmallBusiness.com  Cost of Goods Sold or COGS is a financial accounting  term which includes the direct costs attributable to the production or procurement of the goods sold by a company. This amount  can include the materials cost used in creating the goods along with the direct labor costs used to produce the m. It excludes indirect expenses such as distribution costs and sales force costs. COGS appear on the income statement and can be deducted from revenue to calculate a company’s gross margin.

Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA which is an approximate measure of a company’s operating cash flow based on data from the company’s income statement. EBITDA is calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.

Based on the above a lot is determined by who built you annual plan and how realistic it was to begin with.

Tomorrow we will review what underperforming these measure means and how it should point you in the direction as to where to begin your e-procurement focus.

We look forward to and appreciate you comments.

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Overcoming Cognitive Dissonance in Purchasing

Monday, June 12th, 2017

 

Today’s post is  from our Archives by Michael Figueroa then an Account Manager and now Assistant Director of Customer Services at SafeSourcing

Cognitive Dissonance is the state of having a set of beliefs, attitudes, and ideas, and being faced with information that conflicts with those concepts. Leon Festinger’s Cognitive Dissonance theory holds that all people attempt to keep all of their beliefs, attitudes, and information in harmony. The problem that often comes up, however, is that we sometimes unconsciously suppress or modify correct information in order to avoid having that information conflict with what we already believe.

An example of this in purchasing would be when a procurement decision is made, and the project turns out badly. Often times the decision will be defended and even REPEATED, rather than the decision maker admitting fault. Why? Because most people automatically feel they need to defend their decisions in order to preserve what they believe about themselves. If you believe you are a great decision maker, you will look for information that supports that belief, and avoid information that conflicts with that belief. Here are a couple of ways to help avoid pitfalls on both sides of the purchase:

The Enthymeme

An Enthymeme is a truncated form of syllogism, where a premise or conclusion is left out of the argument. It is always easier to let someone convince themselves of something than it ever will be for you to, even if your audience’ belief is fallacious. When we pose a logical argument, but don’t explicitly state the conclusion, we allow our audience to extrapolate on their own instead of risking putting them on the defensive because we are demanding they believe what we are advocating. Example; “XYZ Company isn’t certified and the manufacturing process requires certification”. This type of statement can be much more effective than shooting straight for the conclusion “Don’t go with XYZ Company.”

The Ben Franklin Effect

When we do a favor for someone, we tend to justify our actions to ourselves that we did the favor BECAUSE we liked them. We naturally tend to avoid Cognitive Dissonance by changing other beliefs, in favor of holding onto beliefs we have about ourselves. Be on the lookout for people who would use this concept against you; how often have you heard a sales pitch that starts off by asking you for a small favor? It’s a commonly used tactic to use your beliefs against you in order to obtain something the sales-person wants.

For more information on how SafeSourcing can assist your team 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.

We look forward to your comments.

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Failure to Communicate

Wednesday, June 7th, 2017

 

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

The importance of clear and concise communication should never be underestimated. We live in a time where, more than ever, we are receiving multiple streams of communication on a continuous basis.

Failure to communicate in a concise manner can result in an outcome that ranges from minor delay, to missed opportunity, or even major destruction; as in the case of the 1981 skywalk collapse at the Kansas City, Missouri, Hyatt Regency Hotel.

In the collapse, the structural failure was due to a change in the initial design drawings, by the fabricator, which the design engineer reviewed and returned to the fabricator, stamped with the engineering review seal, authorizing construction. The fabricator built the walkways in compliance with the directions contained in the structural drawings, as interpreted by the shop drawings. The change was not clearly communicated through all channels of the construction team, and the load capacity was never tested.

There have been publications and lectures which have come from this unfortunate incident, such as, “Avoiding ‘Failures’ Caused by Lack of Management” and Gerald W. Farquhar’s “Lessons to be Learned in the Management of Change Orders in Shop Drawings.”

When working with or clients for national and international associations, from various time zones, communication tends to be done through email.  People are busy. According to a report prepared by The Radicati Group Inc., in 2015, the average business professional received/sent 125 email messages in one day. This is one reason why long, rambling emails have become such a scourge. Providing a clear concise message will help a person use their time wisely while managing their in-box. Simple, direct language keeps people tuned in to what’s important. These are things that need to be considered when sharing information via email with a group of people working together on the planning of an event.

The 7 Cs provide a checklist for making sure that your meetingsemailsconference calls, and reports, are well constructed and clear – so your audience gets your message.

Communication needs to be:

1) Clear

2) Concise

3) Concrete

4) Correct

5) Coherent

6) Complete

7) Courteous

“Simple messages travel faster, simpler designs reach the market faster and the elimination of clutter allows faster decision-making.” – Jack Welch

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.

References:………………………………………………

http://www.engineering.com/Library/ArticlesPage/tabid/85/ArticleID/175/Hyatt-Regency-Walkway-Collapse.aspx

https://www.mindtools.com/pages/article/newCS_85.htm

http://www.radicati.com/wp/wp-content/uploads/2011/05/Email-Statistics-Report-2011-2015-Executive-Summary.pdf

 

 

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Procurement is a science. Retail procurement needs to be an exact science.

Friday, June 2nd, 2017

 

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

I was talking to a meat buyer recently and it sounded more like talking to a commodity trader. In fact, that is exactly what they are. Data is important, and the breadth of data they need to watch is amazing.

Without getting into detailed spend management, strategic sourcing or analytics, a very simple example of what a retail meat buyer goes through every day should shed some light on the need for talent in the sourcing area.

Consider the following nine questions that a meat buyer might have to consider every day.

1. What is my companies demand for beef products?
2. What is the price of corn?
3. What is the price of diesel?
4. What is the price of plastic?
5. What is the price of paper?
6. What is the price of ink?
7. How do all of these products or interact to impact the price of beef?
8. How do I keep track of all these moving parts and what if I don’t?
9. Is there an index for each of these I should be watching?

That sounds like a commodity trader to me.

One place a meat buyer might turn for help is to their e-procurement solution provider and if they already have a partner and these questions have never come up, maybe it’s time to change solution providers.

If you’d like to learn more about the resources we use at SafeSourcing when developing the strategy for our customers e-procurement events, please contact a SafeSourcing customer services account manager.

We look forward to and appreciate your comments.

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You just got a great price on an inventory of goods; now how do you protect it?

Friday, May 5th, 2017

 

Today’s post is from our SafeSourcing Inc. archives

One of the many ways that SafeSourcing helps its customers is to find ways to allow them to reduce their Cost-Of-Goods by sourcing smarter through the use of tools and services that give them total insight into what they are purchasing and from whom.  As is often the case, customers are able to find a vendor they feel comfortable with (many times the incumbent) at prices that help their bottom line.  The issues lie once the contract is signed, the new pricing is in place and the product begins to get scheduled for delivery.

Today we are going to take a look at some of the potential supply chain holes and what you can do to ensure that the great deals you have completed are not offset by process, theft and damage problems that can be monitored and controlled.

Vendor issues – One of the common misconceptions about Loss Prevention professionals is that they primarily deal with activity that is fraud or theft when in reality it is often honest mistakes, but mistakes nonetheless, that contribute much of the loss when product comes from a vendor.  One of the best ways to combat this is to engage a Loss Prevention software company to analyze the data of what is being delivered (which includes quality control) against the invoice in an automated system that allows for real-time analysis.  Ensuring that the product quantity, style, and quality is what you paid for is the first step to plugging your supply chain holes.

Transport issues – Transportation is becoming one of the most alarming areas of loss of your product, especially in bigger cities where organized crime is routinely stealing entire trailers full of merchandise.  RFID and GPS pallet monitoring are two of the ways that companies are using to monitor their shipments from the time they leave the vendor until they arrive at their warehouses.  Speak with your transportation company about new ways to monitor shipments and controls your loss in theft and damages and if you are approaching a contract, now may be the time to begin seeing what other companies are offering by running an Request For Information.

Internal Issues– If you can get your shipments to your offices or warehouses without much damage or loss then you have only won half the battle, especially if the product you received will need to go from a warehouse or distribution center to another location.  CCTV systems are regularly employed in warehouses to monitor the flow of goods coming and going but require an employee or service to assist in the effective monitoring.  Many times the practices you enforce for the workers in your facilities can be an effective tool as well such limiting the access an employee has to their purses or bags until they are in a secured area. Monitoring what happens to the product you purchase once you receive can be just as important as making sure it gets to you safely.

The supply chain can be a place full of pitfalls for your purchased goods if you are not monitoring it properly but you have many good options and tools to help you do that. When you build your T&C’s, list the policies and tool requirements that you want your vendors to adhere to in order to mitigate after the negotiation leakage.  For assistance in finding companies and products to help do this, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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