Archive for the ‘Sourcing Strategy’ Category

Government Procurement: Bids and Contracts

Tuesday, January 8th, 2019

 

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

If anyone has ever seen the movie War Dogs, it is a prime example of exactly how government procurement works, well at least how it worked back in the 90’s. In the movie, the government used procurement to buy weapons and ammunition on a large scale.

For anyone who doesn’t know what government procurement is, it is the procurement of goods, services and construction on behalf of a public authority, such as a government agency. With 10-20% of GDP (Gross Domestic Product), government procurement accounts for a substantial part of the global economy. Per Wikipedia, to prevent fraud, waste, corruption, or local protectionism, the laws of most countries regulate government procurement to some extent. Laws usually require the procuring authority to issue public tenders if the value of the procurement exceeds a certain threshold. Government procurement is also the subject of the Agreement on Government Procurement (GPA), a pluryilateral international treaty under the auspices of the WTO (World Trade Organization).

It has been amazing working at SafeSourcing and learning about all the different markets there are to take out to bid. However, it would be incredible to learn exactly what the government takes out to bid. The opportunity in Government Procurement is substantial. Government Procurement brings in about 7 trillion dollars annually.

The government buys many of the products and services it needs from suppliers who meet certain qualifications. The US federal, state and local governments apply standardized procedures by which to purchase goods and services.

For example, according to RFQ.com the federal government does not purchase items or services in the way an individual household might. Instead, government contracting officials use procedures that conform to the Federal Acquisition Regulation (FAR). The FAR is a standardized set of regulations used by all federal agencies in making purchases. It provides procedures for every step in the procurement process, from the time someone in the government discovers a need for a product or service to the time the purchase is complete. When the government wants to purchase a certain product or service, it can use a variety of contracting methods. Key contract methodologies used to purchase products and services include:

  • Simplified acquisition procedures
  • Sealed bidding
  • Contracting by negotiation
  • Consolidated purchasing vehicles

There are problems, however, with procurement within the government, such as the possibility of corruption. Like in movie War Dogs, you had 2 Americans that ended up corrupting the procurement process and stealing millions of dollars from the government and overseas officials by using the procurement process to hold fake bids and then collect the money on weapons and ammo and then buying them from the black market. The movie is based on a true story that happened in 2007. David Packouz and Efraim Diveroli ended up proving how corrupt Government Procurement could become. Worth the read? Maybe an upcoming blog.

For more information on SafeSourcing, or on our Risk Free trial program,  please contact a SafeSourcing Customer Service Representative. We have an entire team ready to assist you.

 

 

 

Happy New Year 2019. This year’s strategic sourcing plan should already be in place

Wednesday, January 2nd, 2019

 

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.

Welcoming the New Year Resolutions Part I of V

Monday, December 31st, 2018

 

Today’ s post is by David Wenig;  Senior Vice President of Sales and Services at SafeSourcing.

As we welcome in a new year, we often speak of our resolutions. Personally, the resolutions that we make are likely to include exercise more, become more environmentally conscious or lose weight. The same concept of resolutions should take hold in your procurement department. Take the New Year as a challenge to drive new initiatives that will reduce spend in a sustainable manner.

If our first resolution was to exercise more, we could also apply that to procurement. That is to say that we could take more steps toward efficient and effective procurement. You may focus your RFI, RFP and RFQ efforts on initiatives that have been deemed the most significant based on spend or some other factor, but what about all of the other initiatives that go unnoticed? How many of these smaller spends are allowed to continue year after year while your focus is on these larger spends? Make a plan to include more of your contracts and share that plan with your strategic sourcing partner.

If you were to say “I want to lose some weight this year”, couldn’t you also say “I want to reduce my spend this year?” Just like it is for a body, exercise will lead to weight loss. Stay on track with your procurement plan and you will see the spend dollars drop. Increasing your company’s strategic sourcing initiatives to involve all projects will have a significant impact on reducing your overall spend.

In the remaining segments of this series, we will continue to explore ways to take advantage of that New Year energy.

Tomorrow, we will take a look at how to get your department prepared for the new (or renewed) procurement initiative.

We look forward to and appreciate your comments.

Procurement of Potato Salad Part I

Friday, December 28th, 2018

 

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

Procurement of potato salad? How many types of potato salad can you name? What are your favorites? What ingredients make the potato salad your favorite?  Do you walk up to a deli counter and get overwhelmed by the sheer number of potato salad behind the glass? Do you spend your valuable time to make your own potato salad?

The types and number of potato salad is limitless. Every region and continent has their type of potato salad. If you can imagine an ingredient to be included into the potato salad, then a recipe or manufacture has probably created it. There are varieties of potatoes that can be used for potato salad, as well as, the various types of “sauce”. There is even a debate if potato salad can be served hot, such as the German potato salad.

This author’s mother would often make her own potato salad, but in her later years she would buy cheap potato salad and “doctor it up” by adding additional ingredients like more mustard or celery seed, eggs, onion, or whatever else she could imagine. This often created some very tasty salads and only one time in this author’s memory can remember a not so great potato salad with an overzealous garlic powder version of potato salad.

You are probably wondering what any of this has to do with procurement.  I often use potato salad to explain to family, friends, and even strangers what procurement is and why it is important. Potato salad has so many facets of purchasing requirements, whether the salad is pre-made by a manufacture or homemade. Where do the potatoes come from? How are they processed? Mayonnaise or Miracle Whip? Yellow Mustard or grain mustard? Eggs? Spices? Celery? Even bacon?

Why there are three to five different types of potato salad behind the glass at the deli counter and why do the price per pound vary so much if the potato salads visually look similar? How would you choose which one to purchase? In explaining what procurement is, it is also important to explain why sampling is critical to making a purchase.  The best deli departments are the ones who will let you sample each of the potato salads and be able to tell you what makes each one unique to be behind the glass and not in some plastic bucket in the refrigerator section to be purchased by the gallon.

This author hopes that you find this series fun and educational. In part two of the Procurement of Potato Salad, this author will start at the “root” of procurement of the potatoes for potato salad.

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.

 

 

Benefits of Using a Staffing Agency

Friday, December 21st, 2018

 

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

Hiring new employees can be a very daunting task.  Sometimes it can be a real struggle finding the right talent.  Even if you find the right talent, the new hire may not fully satisfy your company’s needs.  This can result in wasted time and money.  As a result of this, a lot of companies choose to work with staffing agencies to help them find the right talent.  When done in-house, the vetting process for a new hire can be very time consuming and expensive.  Staffing agencies can help with this because they do all of the vetting and may absorb other costs such as skill assessments, background checks, drug screenings, driving records and training.  Using a staffing agency ensures that you get qualified candidates that can come aboard and start being productive right away.  Below are some other reasons to consider working with a staffing agency.

  • Faster Hiring Process
  • Better Candidates
  • Save Money
  • Superior Market Knowledge
  • Lower New Employee Overhead
  • Performance Guarantees
  • More Effective Job Descriptions
  • More Access to Experienced Candidates

If you are planning to hire new employees and would like help finding a staffing agency, 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.

We look forward to your comments.

 

 

It’s About Time​

Wednesday, December 19th, 2018

 

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

As we wrap up another year of providing eProcurement services to our customers, it’s a good time to consider what categories you’ll be sourcing in the new year. In an effective eProcurement program, every spend category should be considered at the appropriate time. But how do you know when it’s time to source a category?

One of the first considerations is contract timing. Unfortunately, many organizations today don’t have good controls in place to monitor contract terms. In some cases, the contracts are even missing because they were not saved in a central repository.

That’s where a contract management tool comes in. SafeSourcing’s contract management tool, called SafeContract™,  is a great way to manage contracts and avoid the issues caused by losing track of your contract terms, or even entire contracts.

SafeContract™ is an online contract repository that stores, tracks, and monitors your contracts. SafeContract™ puts you in control of your contract and notifies the user when it’s time to consider a category for eProcurement based on contract termination. For example, if the contract requires 30-day written notice before termination, a user might set a 60 or 90 day reminder so that they remember to take action. With SafeContract™ as your contract management tool, you’ll know when it’s time to consider sourcing a category. Not only will you know when to source your categories, you’ll also avoid missing deadlines for automatic renewals and other unfavorable outcomes.

Please Contact SafeSourcing if you’re interested in learning more about our contract management tool or any of our full suite of Procure to Pay tools.

 

 

 

 

 

When is the Best Time to Procure?

Tuesday, December 18th, 2018

 

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

When is the best time to procure? This is a question we get often and the answer varies. For many different goods and services, particular times of the year are best to take to market. For example, services like air conditioning repair often yield greater savings if they are taken to market during the winter or spring. This is generally because it can guarantee a provider a certain amount of work and they can budget their time ahead of time. If you seek pricing for air conditioning repair in the heat of the summer, providers may already be booked and may charge much higher rates than normal.

Another factor to consider when determining the best time to procure is market conditions. These can vary month to month, but paying attention to any recent news or trends in the market can delay the timing of your procurement event. For example, if you are seeking maple syrup and there have recently been any devastating natural disasters in Canada or the northeast US, you may want to delay your procurement efforts until the product is more readily available and more competitive pricing can be obtained.

These are just two different factors that can affect the timing of your procurement efforts. There are many other things that could expedite or delay them further, like contract expirations, anticipated tariffs, etc. While we often get questions regarding the best time to procure, we can always give one piece of advice– talk to your procurement partner to plan the best timing for your procurement needs well beforehand. They can help you with all the factors that go into running a successful procurement project.

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.

 

 

 

Spend Analysis Part I of II

Thursday, November 29th, 2018

 

Today’s post is by Alex Borbely, Director of Sales at SafeSourcing

In yesterday’s post we explored what Spend Analysis is and some of the experiences I have had spending time with customers during the review process.

Today we’ll look at the steps involved in Spend Analysis.

Typical Steps of Spend Analysis: Identify all the sources available for your spend data, from all of your departments, plants and business units. This includes accounts payable, general ledger, pCard, eProcurement systems, etc. Gather and consolidate all of your spend data into one central database. This can be difficult if your data is in different formats, different languages and different currencies, however, there are programs available specifically designed to accomplish this however not necessary and a simple Excel workbook may be used.

Cleanse your data. This includes finding and correcting errors in descriptions and transactions, as well as standardizing the spend data for easy viewing. Group, or link, your suppliers for better supplier management. For instance, purchases made from IBM, IBM Corp., or Cognos should all be grouped together, since they’re the same supplier. Categorize your spend. Whether you use specific industry standard classifications or your own company-specific categories, you need to be able to determine where your money is being spent. Office supplies, marketing travel, legal, direct and indirect spend should all be categorized appropriately.

Analyze your spend data. Ensure that you have negotiated the best contract deals per supplier now that all of your spend is identified. Ensure that all of your buyers are purchasing from preferred suppliers. Reduce the number of suppliers per category. Repeat. Performing a spend

analysis once is a great start to identifying savings, however, you need to continually update your data to ensure that contract terms are being adhered to, that buyers are purchasing from preferred suppliers and that savings opportunities are being identified.

Once the Spend Analysis is completed, and reviewed with the client, there are several lessons learned as a result:

  1. Upon completion you now have a baseline for sourcing initiatives
  2. Spend Analysis now becomes an enabler for process improvement
  3. The known data is now a measurement device for cost reduction programs such as SafeSourcing’s Reverse Auction Events
  4. Significant cost-savings opportunities through supplier and commodity consolidation
  5. Enhanced compliance through effective spend and supplier monitoring, which by the way is part of the SafeSourcing full service program
  6. Comprehensive spend visibility across direct and indirect commodities and services

In closing I cannot help but to remember something that was drilled into my head as a young individual by my parents: “It’s not about how much money you make, it’s about how you save it.” This says it perfectly as to why spend analysis is such a vital part of procurement planning.

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

 

 

 

 

 

 

Spend Analysis Part I of II

Wednesday, November 28th, 2018

 

 

Today’s post is by Alex Borbely, Director of Sales at SafeSourcing

While visiting with retailers and manufacturers during the pilot event stage, and watching live events unfolding in front of the client, it is exciting times at SafeSourcing when we show what competition in procurement spend can do.  What other solution can a prospect see instant dollar’s fall right to their bottom line in a matter of a 20-minute reverse auction event?  SafeSourcing, thus far in 2018, has saved on average 24.5% for our clients.  All this falling right to their bottom line.  As I said to a new client watching their first reverse auction event this past week, their 22.3% in savings in one reverse auction event goes right to their bottom line.  I asked my client, how many new customer cups of coffee would you have to sell in order to see a similar impact on your bottom line?  Reality is that selling more in today’s competitive world is difficult without losing margin.  Reducing expense on spend with SafeSourcing’s full service events will add to bottom line profitability at a rate of 10X ROI on average.  This meaning what you pay for an event in most instances will be multiplied in savings by 10 times or more!

After our typical 2-pilot events are executed and the client witnesses the power of SafeSourcing’s  ePROCUREMNT and the reverse auction Event they then ask what’s next? Our typical response is let’s discuss what you spend your money on for both direct and indirect spends.  We usually get that deer in the headlights look and hear “well that is handled by many individuals within our organization and we would have to get with them to see if they know how much is spent in each category”.  The result is 9 out of 10 responses are that “they don’t know”.  This is when SafeSourcing suggests that we engage with the client and together we orchestrate a spend analysis to highlight spend and where SafeSourcing can assist with historical sourcing events results that is the proof of the pudding.  Let’s begin by understanding spend analysis:

Definition: Provide top level picture of spend. Spend Analysis is the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of decreasing procurement costs, improving efficiency, and monitoring controls and compliance. It can also be leveraged in other areas of business such as inventory management, contract management, complex sourcing, supplier management, budgeting, planning, and product development.

At SafeSourcing we use our internal tool and  process called SafeSpendAnalysis™

Tomorrow we’ll review the typical steps in a spend analysis during Part II!

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

 

What Would You Do? ​

Wednesday, November 7th, 2018

 

 

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

We all have choices to make when it comes to managing our responsibilities. In procurement, we face choices with every purchase. When we enter into a new agreement, we have choices. When we renew an agreement, we have choices.

In this post, I’ll focus in on just one major choice that procurement professionals face when it comes time to renew an agreement with a vendor. Clearly, a renewal offers the purchaser an opportunity to review the current agreement and decide whether or not they intent to continue working with the vendor. This is also an opportunity for the vendor to make changes to the agreement, very commonly in the form of price increases.

However, the question of whether to renew with the incumbent vendor or not is a bit premature. The better question is around how we want to evaluate the agreement to make that decision. SafeSourcing clients know that they have access to a powerful set of eProcurement tools that will help them attain the best pricing possible with the best terms. If your vendor knows that you have these eProcurement tools, it’s natural that they might attempt to persuade you not to use them.

Do you want to negotiate the agreement fully, including using your eProcurement tools, or do you want to accept the offer that the vendor made for renewal? This question becomes a bit more complicated if the vendor offers a discount if you were to renew without eProcurement. What would you do?

Let’s assume that your vendor offered you a renewal and agreed to reduce your pricing by 10% and hold that pricing for a year and left all the other terms the same. That’s a pretty good offer, right? Maybe. If they offered that in a non-competitive environment, then I’d bet that they have additional margin beyond the 10%. The reason I believe this is because we see this scenario play out time and again with our clients. The client tells the vendor that they are going to host an RFQ and the vendor says there is no need and offers better pricing to avoid the process. Our average savings are well over 24%. Before making a decision to accept the vendor’s offer, it makes sense to talk through what savings levels SafeSourcing expects in a particular category.

It would be very easy to renew and stay with your incumbent vendor. However, knowing that you might be overpaying by 10% or more should give you pause. We always recommend that we discuss the category details and consider whether an RFQ is the right choice to help you make this decision. We usually recommend running the RFQ after that discussion. Either way, our services are always risk free, so there is very little to lose. So, what would you do? Would you use the available eProcurement tools and negotiate the agreement fully?

We’re here to help you make the choice that’s best for you and your company. Let’s talk before you agree to a renewal.

For more information, please contact SafeSourcing.