Archive for the ‘Sourcing Strategy’ Category

Fail Quickly!

Tuesday, August 31st, 2021

 

Today’s post is from our SafeSourcing Archives.

Those of us who are too afraid to fail, inherently play things safe. Those of us who play it safe, don’t set “unachievable” goals.  Those of us who don’t set “unachievable” goals, don’t rethink our mental models of what is possible for achieving success.

Of course, no one will say failure doesn’t hurt. However, it doesn’t have to be crippling, if we approach it correctly. In weightlifting we have to allow the uncomfortable microscopic tears in our muscle fibers to occur before those cells can rebuild bigger and stronger. In our personal lives, it we have to be challenged and tested, and shown where our blind spots are before our character can be improved. In business, sometimes we need to surpass our own expectations of what is possible, and test that with both success and failure, before we will know what we or our organization is truly capable of.

Nathan, my second youngest brother, is more of a risk taker than I am, and I suspect there’s a lot I could learn from him. He’s traveled extensively, goes sky diving, purposely seeks out random strangers in public to sit and have lunch with, and generally is always trying new things that I’d rather not.  But he has a method about it; If the only reason he doesn’t want to take a risk is apathy, he takes it anyway. However, if the risk is so great that failure would be unrecoverable, he doesn’t go through with it. He has a lower and upper threshold for the risks he takes, so that he’s never too inactive, but also never betting more that he can afford to lose.

The point of failing quickly is not to take on gargantuan risks. In other words, we don’t go out and bet the farm just to prove a point. There are foolish ways of taking on excessive risk of course.

The point of failing quickly is to expand our self-imposed limitations of what is possible within the proving grounds of activity that we can quickly recover from should the experiment be a failure.

Please contact SafeSourcing if you’d like to discuss how this strategy can help your sourcing projects.

We look forward to and appreciate your comments.

Overcoming Cognitive Dissonance in Purchasing

Wednesday, August 4th, 2021

 

Today’s post is  from our Archives  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.

Here’s how to ensure your services sourcing projects results Up Front!

Friday, July 23rd, 2021

 

Todays post is by Ron Southard, CEO at SafeSourcing Inc.

Awards of business, contracts and statements of work are all important after a services event has taken place. However, if you want to ensure the savings associated with your new services contract make sure you identify or reference a structured change of control process in your terms and conditions.

Change happens. It can result from poorly designed specifications, terms and conditions, quoting instructions and other data related to a bid. The normal process for managing these changes is a change of control process which governs how any changes to the services being provided as identified in the actual bid.

The change of control is normally managed as a request that communicates the requested changes to the services deliverables. Normally the change request will describe the following at a minimum.

  1. The change
  2. The reason for the change
  3. The effect the change may have on the existing Statement of Work.
  4. Impact on cost or savings

In most cases a project manager or the associate with responsibility for managing the program deliverables will be required to submit a written change request to the contracted or warded supplier.  The supplier will then develop and return the response to the contracting company.

The contracted supplier and the contracting company will then review the proposed change request and either approve it, modify it, or reject it. When approved the contracting company as well as the contracted supplier must sign the change request to authorize the work as well as the implementation of the work and its potential impact on the existing project plan or project timeline.

If you do not want erosion in your savings, make sure you spend the time to cover this process in your bid parameters.

In order to learn more, please contact a SafeSourcing Customer Services Associate. Be sure to ask them about our Risk Free Trail Program

 

 

 

 

Procurement As A Service (PaaS)

Thursday, July 22nd, 2021

 

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

In the past, we’ve talked repeatedly about how SafeSourcing delivers our services in a Software as a Service (SaaS) model. As a refresher, here is a post from 2014 that details our SaaS software suite. We also often talk about how we treat our SaaS offering as full-service and have done so for a long, long time. Here’s another quick read from 2017 talking about our full-service approach. The way we combine our tools with our expertise and the way we actually deliver the services to achieve our customers’ goals have pretty well always been what you might describe as procurement as a service (PaaS).

I mention this because it seems to me that I am hearing more and more about PaaS recently as if that is a new or emerging trend and it surprises me greatly. SafeSourcing has always operated as an extension of our customers’ own procurement capabilities in order to allow them to outsource much or all of their needs to us. We’re comfortable delivering against this model and we rarely operate outside of it.

The entire procurement process can be managed by SafeSourcing beginning with spend analysis. In all reality, the process never really ends because procurement is truly cyclical. There are other buzzwords as well and just like with PaaS, there will be a marketing campaign that will rise to the occasion. As a term like PaaS gains momentum, more and more companies will roll out their offering. While there isn’t anything wrong with that, it can make it harder to identify which companies are actually experienced in delivering a PaaS offering.

Anyone interested in offloading more of their procurement function should be careful to find a partner that can truly take on the load in a SaaS model. Many lack the expertise needed in their services teams to truly deliver on the wide variety of categories that need to be addressed. SafeSourcing has this expertise and delivers strongly in the as a service model. To be effective you really need a partner that has the people, the intellectual property, and the software to drive savings in an efficient outsourced model.

Procurement as a service isn’t a new concept and we like to think we’ve been doing this all along. Personally, I would be leery about choosing any provider that talks about PaaS like it’s a new concept. If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

 

 

 

 

We Can Source Anything Part I

Wednesday, July 21st, 2021

 

 

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

Usually when we start talking to someone about eProcurement, they think of commodity items like copy paper or other somewhat boring examples of what they think you can source with a reverse auction. Do not get me wrong, if you are buying copy paper for your enterprise, there is no better way to get a better price than to use an online bidding event like a reverse auction. You will be glad you did.

What is often underestimated is just how many different areas within your spend you can use this process. Here is a first look at a couple of examples of how we have taken that to new heights.

I would bet that when you think of SafeSourcing and eProcurement, you probably do not think of aviation. Yet our services have been successfully employed to get deep discounts on our customers’ aviation needs. Sure, we have managed travel services and booking, but that is not really that interesting.

Believe it or not (believe it, it is true) we’ve separately sourced both jet fuel discounts and chartered jet services. So, whether your company manages its own fleet of jets, or you find it more economical to go the chartered route, we are proud to report that we can get you a really great discount on either using our eProcurement tools.

The point is that SafeSourcing’s services should not be limited to mere supply categories. We do so much more than that. Check back in the future for part 2 and I will share more examples of some out of the ordinary sourcing activities.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

 

 

 

 

 

Warehouse Prices Spurred by Demand

Tuesday, July 20th, 2021

 

Today’s blog is by Gayl Southard, Vice President of Administration at SafeSourcing.

Due to the surging e-commerce purchasing, warehouse distribution centers are jockeying for limited space.  Competition is driving up industrial rents as retailers and logistics providers look to get goods closer to the consumers, resulting in bidding wars in coveted locations.  Businesses are looking to get their goods to consumers as quickly as possible.  “Demand for industrial real estate is so strong that taking rents — the initial base base rent agreed on by a landlord and tenant — are rising faster than rents, according to real-estate firm CBRE Group Inc.  Industrial taking rents were up 9.7% in the first five months of 2021 compared with the same period last year, while industrial asking rents rose 7.1% according to CBRE, which tracks 58 U.S. markets.”1

Logistics space, close to cities and ports, and for big-box warehouses like those used in online fulfillment operations, prices are rapidly increasing.  In Northern New Jersey, first-year base rents  jumped by a third year-over-year through May, while Southern California’s Inland Empire rose 24.1%, according to CBRE.  It is creating a similar situation as the housing market, where the demand is greater than the market.  The pandemic lockdown and store closures have pushed retailers into online marketing.  E-Commerce will account for 26% of all US sales by 2025.  Companies are also looking into keeping more inventory on hand in order to avoid shortages.  Goods need to reach consumers faster, as well as cut down on the transportation costs.  The amount of available industrial land for new warehouses near urban centers fell over the past decade.  This adds to the pressure on supply of warehouses for larger buildings with higher ceilings and adequate parking that will accommodate e-commerce fulfillment centers.   In turn, this will push more development out to secondary markets.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

References………………………………..

Jennifer Smith, WSJ, 6/23/2021

 

 

 

 

 

 

 

Sourcing Team​

Friday, July 16th, 2021

 

 

Today’s blog is by Margaret Stewart, Director of HR, and Administration at SafeSourcing Inc.

Wherever you spend majority of your time and effort, whether it is at home, school, or work, there are prevailing themes that you may notice. The biggest and arguably the most necessary is teamwork. Within a family, teamwork could mean a number of things, from sharing in the chores and housework, chipping in on bills and expenses, or simply working together to make things interesting and fun. Schools often use teamwork, not only in sports, but also through collaborative classwork or group projects. This type of teamwork is an important learned skill because it will ultimately affect every person later in life, especially at work.

Work environments rely heavily on teamwork in different, yet equally important, ways. Teamwork allows employers to play to the strengths of their team. For instance, if one person is great at organizing and finding files, they may help other employees filing tasks so they can focus on work that align with their strengths. In addition to utilizing stronger areas, employees can share workload when a task becomes more daunting. For instance, if a project suddenly becomes more complex than initially thought, others on the team can help to either get the larger task done or work on the smaller tasks, allowing for more focus on the larger tasks.

Whichever way your business team supports each other and finds success, there is another way to utilize teamwork and that is through a procurement partner, like SafeSourcing. SafeSourcing can help your team and assist in their procurement efforts or take them on entirely so your team can focus on what they do best. Procurement partners can help find the vendors you need, services you need, or the supplies you need and often at rates lower than expected.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

 

 

 

Creating our own limitations.

Tuesday, July 13th, 2021

 

 

Todays post is from our SafeSourcing Archives.

Opportunities to learn are everywhere but can be used either to improve or damage your capabilities. For example, any married couple knows it’s not easy to have two flawed individuals share life together. However, even in less than ideal situations, there are opportunities to learn that you will never get anywhere else other than a situation where someone’s soul is borne to you in ways neither individual can hide from. There will be opportunities to learn how others think and operate, and to discover your own biases and shortcomings. However, there will also be opportunities to hide your insecurities, deny your flaws, blame shift, and stubbornly hold fast to your own LIMITATIONS. This is typically what people do when meeting viewpoints different from their own: We get defensive, myopic, and squander an opportunity to better ourselves.

Whether we like it or not, character traits like humility, and work ethic, will profoundly influence how well we perform our professional activities. No one promoted this fact more heavily than the author of. The 7 habits of highly effective people.

Stephen Covey proposed that maturity is a continuum from least to most mature by the steps of Dependence (reliance on others), to Independence (reliance on self), to Interdependence (Independently chosen reliance on others, to accomplish cooperatively what we cannot independently). This is counterintuitive because we typically think of Independence as being the most mature, in the form of the lone wolf leader, or the maverick who does things his/her way. But the truth is it’s far more difficult and beneficial to assume someone else might know something you don’t. By definition, this means you have to let other people make decisions out of their unique perspective and expertise that you WOULD NOT, or else you’ll always be LIMITED by your own understanding, and no organization will ever be all it can be without utilizing the collective expertise of the group.

Are your limits strictly determined by how hard you work? How fearless you are? How smart you are? What if you’re limiting yourself by making assumptions about how much value other individuals or organizations can contribute to your business? Do we have the strength of character to admit there are individuals or organizations that can perform certain tasks better than we can? Leaning on other’s expertise isn’t an insult to your capabilities; it’s a means of interdependent improvement.

There are variables in our lives we genuinely can’t control, and we shouldn’t want to, especially when it comes to learning through how we work and relate with other people. If we truly want to extend beyond our current limits, we have to allow external factors to force us to explore outside of our current paradigms, and deliberately chose to EXPAND, not LIMIT, our understanding through it.

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.

We look forward to your comments.

 

Twelve areas to consider in your spend analysis if you don’t want to lose your hard earned savings.

Wednesday, July 7th, 2021

 

Todays post is a favorite by Ron Southard our CEO from our SafeSourcing Archives

Our answer was that is actually a great questions and a tough one to answer if in fact it has not been planned for during the strategy process. We all know that there are all sorts of saving figures quoted in the e-procurement industry for just about any product or service available.

Here are 12 areas of focus to consider when trying to figure out not only your ROI on these projects, but more importantly how much of the savings made their way to the bottom line and what is your leakage percentage.

1. How clean was your GL data?
2. How clean were your specifications?
3. How long did it take you to award the business?
4. How long did it take you to test samples?
5. How long did it take you to sign a contract?
6. How long did it take you to accept your first delivery?
7. Was the first invoice for the exact price you contracted for?
8. Was the shipping and handling exactly as bid?
9. Were there any SOW change requests that raised pricing?
10. What P&L period are you reporting against?
11. What was the budget for this product or service?
12. Can you trace the spend to a specific P&L line item?

It would not be too hard to add another dozen items to this list. The answer here is that proper planning helps eliminate savings leakage. Don’t plan and it will hurt or erode some or all of your potential savings.

If you’d like to learn more, please contact us any time!

In Negotiations, Price Matching Barely Scratches the Surface

Wednesday, June 30th, 2021

 

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

Every day, I talk with buyers of all sorts about their procurement processes. While I do get to hear some really interesting perspectives, I also get to hear some really old perspectives over and over again. One of the worst and oldest offenders is price matching.

It goes like this:

A buyer feels that the price she pays for her product or service is higher than it should be. So, she asks a competitor to provide her with a quote. She then takes that quote to her incumbent vendor and asks them to beat or match the price. It’s simple, and it is technically successful, because it delivered savings. I hear that this often generates 5-15% discounts. I’m not impressed by this.

What to do instead?

Testing the pricing in the market by asking for a quote is alright. So is asking your incumbent vendor to sharpen their pencil. But, it’s at this point that there is room for improvement. Any time your vendor signals that they are willing to offer a better rate like in the example above, they are tipping their hand. We now know that they are willing to reduce their margin to keep your business and that they do, in fact, have margin to reduce. It’s at this point, that we recommend applying a lever in the negotiation. An RFQ is a great lever because it creates an environment where the vendors are forced to compete live against each other for the lowest cost. Why have a vendor match a price and manually facilitate this slow type of back and forth? Let the vendors duke it out until they are done. Go grab some popcorn watch it happen. This will probably increase your savings by at least double.

Whatever you do, don’t settle for negotiating tactics that should have died with the dinosaurs. Modernize and use the tools at your disposal to win better.

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.