Archive for the ‘Sourcing Strategy’ Category

Better Business Outcomes

Tuesday, April 23rd, 2019

 

Today’s post is from Alex Borbely, Vice President of Sales at SafeSourcing, Inc.

Over 30 million Americans don’t have access to modern broadband. The Federal Communications Commission announced that it would hold the biggest spectrum auction in U.S. history, aimed at bolstering 5G network deployment. The bidding will see roughly 3,400 megahertz across three spectrum bands auctioned off for commercial use. The auction is scheduled to start in December 2019 and may be the largest in the country’s history. The FCC also stated that there would be more auctions after this one. Three rounds of clock-phase bidding will be held each day at this stage in the auction. The clock auction format being with a “clock phase” that lets participants bid on generic blocks in each Partial Economic Area in successive bidding rounds, followed by an “assignment phase” that allows the winners of the generic blocks to bid for frequency-specific license assignments. Thirty-eight bidders qualified to participate in the auction.

In an auction, the activities are targeted towards researching/inviting suppliers and ensuring that any existing supplier has an opportunity to propose keener prices and better terms. The auction is usually held via e-procurement and has a number of activities concluding with a short time period with dynamic bidding ensuring the pricing moves rapidly downwards. This type of auction provides any number of advantages including:

  • Suppliers are encouraged to bid low and provide good terms in order to win the contract.
  • The process is seen as a fair way of awarding government contracts as well as those from large monopolistic companies.
  • It is a low cost, much quicker method of finding new suppliers.
  • Negotiation costs are almost zero.

SafeSourcing eProcurement, particularly reverse auctions, is a relatively new way to increase your bottom-line and enhance the spend process. Utilizing new technologies will add profit dollars without selling one new customer buying your products or services. The savings are traditionally 10X your investment in e-Procurement tools. You’re just accepting a different way to silicate bids/pricing even with your incumbent vendors that you currently work with.

For more information on how SafeSourcing can help in your procurement efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service Representative

 

 

 

 

Part II of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

Tuesday, April 16th, 2019

 

Todays post is by Ron Southard, CEO at SafeSourcing

Yesterdays post reviewed why and how this author felt that reverse auctions were potentially good for both the distributor and the retailer alike. So just what is cost plus?

According to Wikipedia  Cost-plus pricing is a pricing method used by companies. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that one first calculates the cost of the product, and then includes an additional amount to represent profit. It is a way for companies to calculate how much profit they will make. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.

Once unit level cost has been established for the distribution of products it’s easy to turn that into a percentage and add it to the price of a product coming up with a distributed unit price or category price. The most important part of this pricing exercise for the distributor is to get the distribution costs correct. This can include price of storage, freight, length of travel, driver cost and any number of other costs. This is an area where a distributor can lose a lot of money if they are not very careful.

So, are revere auctions a tool that can help distribution companies?  The answer is a clear yes both above and below the gross margin line. If you like to know more please contact me at ronsouthard@safesourcing.com.

We look forward to and appreciate your comments.

Part I of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

Monday, April 15th, 2019

 

Todays post is by Ron Southard, CEO at SafeSourcing

A lot of distributors have told this author that reverse auctions don’t apply to them because they use the cost plus model and as such they just add their price or profit margin on top of the contract price with their source to drive their distributed price.

The fallacy in this thinking is that it may make buyers and category managers lazy in their approach to driving margin within the categories that they manage. This results in a higher price to the retailers they distribute to and ultimately to the consumer or their customers customer. A worst case scenario is that the consumer stops shopping at their customer’s store which reduces overall volume and further increases prices by not meeting volume incentives. It’s a slipper slope.

Off course this argument is relatively easy to overcome when we get around to discussing capital goods and expense related products and services area. These areas have an impact on the distributor’s net profit. And I’m sure that many of you will agree that just because one says they are a cost plus provider does not necessarily mean it’s true in the most pure sense of the definition.

Check back tomorrow and we’ll review what the real definition of cost plus is in part II.

We look forward to and appreciate your comments.

How to tell when you need to simplify your processes

Wednesday, April 10th, 2019

 

Today’s post is our archives at SafeSourcing

Finding the right balance of complexity in your processes is a tough thing to juggle for businesses large and small. I’ve worked in companies where you literally had to read through and comply with hundred page manuals for every email sent, phone call made, or lunch break taken. On the other end of the spectrum, were companies who had so little structure that no one had any idea what standard procedures were, roles were not identified, and whether or not you were performing well was determined more by the owner’s mood than any objective metric.

The problem is similar to the dilemma of Emergent vs. Deliberate strategy[1]. Each side of the argument carries its own merits; highly process oriented organizations are usually highly efficient, and low risk. The tradeoff however, is that adaptability and innovation suffers. The more flexible and open ended your process, and the more you give your team the authority to deviate from those processes, the more they are able to deal with crisis, unexpected changes, or to innovate in order to meet the needs of the business. So how do we determine if our organization is leaning too far in one direction?

A basic rule of thumb is:

If the cost of your process > the value of the process, you may need to re-balance.

This of course, requires that you have a correct understanding of the cost of all your processes.

Many businesses have a hard time wrapping their heads around the true process capacity of their workforce. Typically this results from not having an up to date or objective measurement of all processes rate of finite resource consumption. Do you have an accurate listing of every activity performed by each member of your team? Have you found averages for all costs of each of these activities, in time, money, and materials? Most likely each of your team positions specializes in a certain activity, and will be aware of activities associated with executing that position that no one else is. Performing this evaluation will identify your process capacity “budget” if you will. And of course, all things that consume finite resources must have a budget of that resource.

Once you have a clear and objective picture of your activity costs, you can evaluate the costs and value inherent in your processes. Do you have redundant processes that only add marginally increased value? Do you have processes so narrow in scope that a large number of activities get bypassed? Do you have activities whose execution is so sensitive that a miss-step would shut down your business? You may need to add processes or capabilities that eliminate these risks (For more on that topic, see my blog “Mistake-proofing your business”).

In summary:

  1. Objectively measure your organization’s process capacity
  2. Evaluate the cost to benefit balance of your processes
  3. Appropriately budget your process capacity to maximize overall value/decrease risk

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.

[1] “Balancing Deliberate vs. Emergent Strategy: SafeSourcing …” 2015. 15 Dec. 2015 <http://blog.safesourcing.com/2015/06/01/balancing-deliberate-vs-emergent-strategy/>

Don’t let decision maker fatigue ruin your sourcing project!

Thursday, April 4th, 2019

 

Today’s post is from our extensive blog archives at  SafeSourcing:

As a procurement professional operating under other managers or engaging vendor executives, Having the decision making power change hands in the middle of a procurement project can be disruptive, but you can still keep things on track if you can keep a few key points in mind:

  1. Keep a running history of how the project got to its current stage, so that you can get the new manager up to speed quickly. If you can show your reasoning through the process to make sense, they will be more likely to get on board.
  2. Gauge his/her buy-in and be ready to head off objections before they’re even brought up. Show authoritatively that you know the project intimately to instill confidence in its handling, but give the manager the sense that they are in charge, and that they will get the big win out of the project.
  3. Avoid discussing legacy decisions. If the new manager’s predecessor made poor decisions the new manager could use that as an excuse to scrap a legitimate project, or worse, they could be looking for a scapegoat to blame past failures on.
  4. Find out the new manager’s goals (and potential hidden agendas). Let the new manager drop clues about his knowledge of the projects history. You may find out about some of what lead to the previous managers departure that can help you avoid future pitfalls.

For more information on how SafeSourcing can assist your team with your procurement projects 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

Wednesday, March 20th, 2019

 

Today’s post is written by Heather Powell, Director of Major Accounts and Special Projects at SafeSourcing Inc.

In this series, the author will work to educate you on how you CAN take your proprietary product out to market. While there are many confusing words associated with proprietary products; such as trade secrets, non-disclosure agreements, trademarking, and many more, the author will break down the meanings and how many of them are in place to protect you and your product.

You may be thinking: why should I go to all this trouble? My product has been the same for years or decades without problems. How will this save me money? How will I know my product won’t change? This seems like a waste of time. Why would I rock the boat or ruin my current relationship with my incumbent?

While the process of procurement of proprietary products or items can be a long process, it does have multiple benefits. It identifies if you, or your current manufacturer, are making your product in the most cost effective way, using the best ingredients or materials to make the product, using the most cost effective and/or green packaging materials, and it opens the possibility for growth of your product.

Over the next few months, this author will provide examples of proprietary products being taken through the steps of procurement, covering the concerns that arose in the process, and how clients were successful in protecting their product and name in the process and obtaining savings and education along the way.

SafeSourcing can assist you in exploring your procurement solutions for your business or on our “Risk Free” trial program for RFPs and RFQs, 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.

 

Water Cooler vs Disposable Water Bottles

Friday, February 22nd, 2019

 

Today’s post is by Troy Lowe; Vice President of Development at SafeSourcing. Troy asks “Are you looking for a new water cooler?”

I’m tired of wasting money on disposable water bottles so I decided to look for other alternatives.  After doing some light research, I decided to look into companies that supply water coolers.  I was looking at the usual dispensers that use the reusable 3 and 5 gallon water bottles.  While doing that research, I came across some water coolers that I have not seen before.  These units produce fresh water on tap with no plumbing or refilling.  All you do is plug the units in and water is produced from the surrounding air.  The water is produced by drawing air into the system. The air then goes through a series of filters that removes the moisture from the air creating clean drinking water.  The filtration process also filters the air which creates clean air that is then released back into the environment.  So not only clean water is produced, but the unit acts as a dehumidifier as well.  Since the water is produced from the humidity in the air, it creates fresh, bacteria-free pure drinking water.  Listed below are other features and benefits that you could receive by using this type of water cooler.

  • Unlimited supply of water
  • Produces up to 10 gallons of water per day
  • Creates oxygen enriched water for quicker hydration
  • Dehumidifies the air reducing mold
  • Increases A\C efficiency
  • No more water delivery
  • No more lifting heavy water bottles

If you are looking to purchase a new water cooler and would like help researching available options, feel free to contact SafeSourcing.   We can gather all the necessary information for you and help you decide which one 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.

 

 

Information about Cybersecurity Part I

Monday, February 18th, 2019

 

Today’s post is by Ashley Riviello, Account Manager at SafeSourcing, Inc.

According to Forbes.com, there were 2,216 data breaches and more than 53,000 cybersecurity incidents reported in 65 countries in the 12 months ending in March 2018. People have been forced to increase their security and find new ways to keep our personal information safe. Just within the last 2 years we started using the chip process in our debit and credit cards. I think we all remember the data breach that happened March of 2018 where Facebook allowed to 87 million records to be breached. Millions of people had their personal information and other sensitive matter exposed for the public to see.

Hysolate is a company whose mission is to create a future-ready endpoint platform that provides the highest levels of both security and productivity. Led by experts in security and infrastructure, Hysolate is shifting the work environment into a new era. According to the CEO Tal Zamir of Hysolate,, “In 2019, the two main targets for cyber-attackers will be the cloud and user devices. Operating systems on user devices provide more functionality than ever before, making them more vulnerable and an easy target for attackers. At the same time, users will expect more flexibility and the ability to work with any OS, any application, and on any device. As organizations look to provide security, privacy, and productivity, they will have to shift to a new, ‘zero trust’ device architecture”. I honestly cannot think of a person that does not use cloud on their computer or their phone.

We as a society have become so accustom to completely relying on our devices for every aspect of our lives. Ordering food, using GPS, posting on Facebook, googling and many more other activities we do on a daily basis. With that, whether we like it or not, all of our information is everywhere. We put in our credit cards to buy stuff online, and we post every little thing we do on social media. So we rely on companies like Hysolate and other security companies that specialize in keeping our information safe.

Transunion stated that cyber security doesn’t involve just businesses and the government. Your computer, tablet and cellphone probably contain information that hackers and other criminals would love to have, like other people’s email addresses, names and birthdates. Suppose, for example, a hacker had access to your contact information. He could then send an email or text message to everyone you know, using your name, encouraging them to click on a link containing malware, like “Hey Jane, I thought you’d love this! Click here.” I know in the last month I have received multiple emails and text messages of this kind. So educate yourself, make yourself aware of these issues and keep your self-protected.

“When you are aware of the risks, it may be much easier to protect yourself from hackers, viruses and malware.” Transunion.com.  In my next blog I want to go over the 3 principles of cyber-security and what we can do to help protect ourselves. Stay tuned…

For more information on how SafeSourcing can help in your procurement efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service Representative. We have an entire team ready to assist you today.

References………………………………………

  1. https://www.forbes.com/sites/ 2019
  2. https://www.transunion.com/blog/identity-protection/why-is-cyber-security-important 2019

 

The Final Countdown

Friday, February 15th, 2019

 

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

While many organizations have already completed multiple procurement processes and have begun saving already this year, it’s not too late to start saving too. If you haven’t already, now is the time to begin your procurement processes. Beginning now can help you see those savings in Q1 instead of waiting and not realizing those same savings until Q2 or later.

As a hypothetical example, let’s say two retail stores have been competing for years, both with equal amounts of success. Now, one store began its procurement processes at the beginning of the year sourcing goods that they already purchase, like their bathroom supplies of paper towels, soap, toilet paper, etc. They realized 20% savings on an annual $200,000 spend, meaning they are already savings $40,000. They can now use those savings in any other areas where it might be needed and begin working on their next event to save more. Those savings add up, too. The store that sourced their products through the procurement process was able to begin using their new price right away and the store that has not yet begun is essentially losing out on over $3000 worth of savings each month they delay their efforts.

While it is better to start your procurement processes early, it’s not too late to start seeing savings this quarter, but you must begin soon. A procurement partner, like SafeSourcing, can help you understand the process involved, what is needed, what can be expected, and help your organization every step of the way. They can help you get savings on things you already purchase and help your organization get the best cost savings available.

For more information on how SafeSourcing can help in your procurement efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service Representative. We have an entire team ready to assist you today.

 

 

 

 

 

 

 

 

Print Fulfillment

Wednesday, February 13th, 2019

 

Today’s post is our SafeSourcing Archives.

If you aren’t familiar with print fulfillment standard practices, it can be surprising to see how complicated the program can get. In retail, for example, printing can be segmented by uses such as signage, labeling, circulars, mailers, flyers, banners, and promotions. Each of these segments is usually kitted by the print fulfillment provider, who also stores and distributes the final product. However, the whole process is further complicated by the fact that each store in a retail chain will have different needs that may require specific promotions, store address prints, quantities relative to store size, quantities relative to market, or differing departments between stores such as deli, floral, or pharmacy. Therefore, the whole process is typically outlined in complex spreadsheets that breakdown stores, campaigns, print files, costs, logistics, and lead times. Managing this process is a delicate dance between all parties involved, and can seem impossible to negotiate better pricing. However, we routinely see double digit savings in this category from companies who take their programs to market.

The first thing many companies will find when exploring the market for other print fulfillment providers is inconsistency. For example, you may find that you have previously priced a banner from a print company, and find that the fulfillment company you buy that banner through, marks up the cost of the same banner by 40% before freight. Another inconsistency you may find is that you are being charged two different price points for the exact same kind of print/material/color, just because they are in different kits, and you’re already being charged a kitting fee. If you have an agreement that allows you unlimited changes to the print file on any product that doesn’t require a re-tooling, the aforementioned price difference doesn’t make any sense. Now that you’ve found these inconsistencies in price for products with a common denominator, you can structure your RFQ appropriately.

If your program data is captured well within a table, you can use any number of programs to identify and consolidate your print types. For example, do you have the same 8.5 x 11/60lbs/4-color product being used in 8 different kits with multiple price points? Itemize that as ONE product, with the print file and kitting to be communicated post-bid in a master print schedule. Go through the same exercise with all of your activity, and you will find that the complexity of your program can have its volume summarized in a much reduced number of activities.

SafeSourcing has walked their clients through this exercise countless times, and then compressed the pricing through our e-suite of procurement tools. We do the heavy lifting, engage the vendors, and negotiate the pricing on your behalf. Utilizing our expertise, you’ll never have to be subject to costly pricing inconsistencies for your Print Fulfillment needs ever again.

Please leave a comment or for more information on how SafeSourcing can assist your team with your procurement 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.