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This is not a general complaint although the majority of folks believe they are overworked today. This complaint is in regards to using today’s e-procurement tools to reduce their costs across the board. How about, my team is to busy with other initiatives to take a look at this now.  Or our buyers and category managers work eighty hours a week and already get the best prices.

I work a lot. I always have. More than most if you were to ask my customers, employees and other individuals I am associated with. When someone tells me their people work 80 hour weeks, I flat don’t believe them.

Here’s a simple fact: IT”S ABOUT THE MONEY! From a corporate perspective if you are not profitable, you will die. This holds true for both public and private companies.

Let’s talk about retail for a bit. I don’t care what retail vertical you work in, for the most part your cost of goods are going to be between a low of 50% (you better hope not) and a high of 70%. Most of these companies have net profit of a couple percent at best.

Fact: E-procurement tools and specifically reverse auctions will reduce your costs.
Fact: You do not know where all the available sources of supply are.
Fact: Neither you nor your team has time to look for them or vet them.
Fact: Once vetted neither you nor your team have time to collect and analyze bids from all available be sources of supply.
Fact: Because of the facts listed above, you can not guarantee that you are receiving the best price.

Let’s do some simple math. If you are a $100M retail company. If your net profit is 2%. If your cost of goods are 70%. If you were to assign 10% of that to a full service company that offers e-procurement tools in the form of a service. If they were to achieve 20% in savings for you.
 
Fact: Your Company would more than double their net profit.

If you still do not believe me, please contact me and test me.

I look forward to and appreciate your comments

Ron Southard
CEO SafeSourcing
ronsouthard@safesourcing.com

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The front page headline of the Dayton Daily News on Thursday January 19,2012 read, “Americans spend more on tech bills than utilities.”  With people spending more money on  things like internet, mobile devices, and cable or satellite in their home than they do for basic utilities such as power, water, and natural gas it brings up the question of where the priorities are for the American public.  According to the Dayton Daily News article, “63% of U.S. households spend 35% more on technology bills than they spent on utility bills.”

This author wonders if the American public is spending so much of their time and money on technology, how much time and money does your company spends on focusing that attention for your benefit?  The online presence of a company can help increase the client base which in return can help increase your bottom line. So what are the ways you can increase your online presence?

 Facebook – a social networking service that has more than 800 million active users.  According to Wikipedia, “a 2009 study ranked Facebook as the most used social networking service by worldwide monthly active users.”
 Twitter – an online social networking and micro-blogging service and it currently has over 300 million users.
 LinkedIn- a business related social networking site and it currently reports more than 135 million users in more than 200 countries.

With the use of these popular networking sites, a company can quickly increase their client base.  Technology can be accessed from home, work, and a person’s mobile device.  Therefore, if you can get a person looking at your company on any one of these social networking sites, you and your company can reach a person at any time.  According to the Dayton Daily News article, “That’s the way you measure yourself as a 21st-century society, is by making these (technologies) basic services (essential) for daily life.”  So make yourself and your company essential for daily life.  Technology makes it easier!

For more information on SafeSourcing and how to increase your company’s technology footprint, please contact a Customer Service Representative for more information.

We look forward to and appreciate your comments.

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We have some friends in town this week. So, last night we decided to rent the movie MONEYBALL. According to wikipedia, The movie is based on the book Moneyball: The Art of Winning an Unfair Game (ISBN 0-393-05765-8)  by Michael Lewis, published in 2003, about the Oakland Athletics baseball team and its general manager Billy Beane.

First of all the game of business is unfair, so let’s just accept that as fact. There are winners and there are losers. As I have mentioned in prior posts I tend to look at the world in terms of our profession of procurement. In the aforementioned movie, two things stuck out like a sore thumb. The first was the inability of professionals that have been in a job for a long time to accept change. The second was the benefit realized by those that are willing to embrace change and often this is not the earliest of adopters. In the case of the book, the Oakland A’s won a lot of games by using a new philosophy of player acquisition through specific data points. The Boston Red Sox used the same formula to win a world series that had eluded them for almost a century a couple of years later. Does this still mean that bigger companies using the same philosophy will always win? Or, does it allow the smaller company to compete on a more even playing field

So what does this mean to the procurement professional? Relative to the first point it means being open to change and not thinking that you already know everything. An example might be that reverse auctions of today do not run the same way as the reverse auctions of yesteryear. These tools have been rethought by companies that are newer to the space and not restricted by legacy thinking. To the 2nd point, it is never too late to think through how you are doing things. An example might be thinking through whether or not it makes sense to run an RFI with every RFQ? How do the savings compare in this environment versus the historical way of doing things.

What’s your plan to do things differently?

We look forward to and appreciate your comments.

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Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.

Recently we hosted a Request for Information for one of our customers for Mobile Technology for pharmacies.  This was such a good event because so many of companies aren’t even sure what is available to them with all of the technology advancements being made in the internet and with mobile devices.

Today we will be looking at all of retail and some of the new features your company should be considering with changes to your Mobile Technology strategy in 2012.

Just the Basics  – For those companies that are just looking to start adding this technology to their customers there are a few standard features that should be included.   The store locator feature is a standard offering that provides users a tool to instantly find the closest store to them, frequently providing maps and directions.  Another common feature is allowing the users to sign up for mass email coupons and discounts.  These are not focused to the user but rather the same email going to all customers that participate.  Having a link to the weekly advertisements in a smaller format is another standard mobile offering many retailers first give their customers.

Targeted Marketing – Unlike the mass emails and weekly ads, targeted marketing can take a few different forms, each of which provides the user marketing and coupons that are targeted just to them.  Some mobile functionality allows a retailer to “see” a customer’s registered phone when it enters the store and has the capability to provide them with immediate texts and alerts.  If a grocery store manager wants to run a short discount on meat to get it moved they can send out a text to the users in the store in order to focus the sale.  For other systems, based on the customer’s profile and/or buying patterns, texts and electronic coupons can be sent out to focus marketing messages on customers without flooding them with messaging that frequently leads to discontinued use of the system.

Pharmacy Features – As stated above the recent RFI SafeSourcing ran recently was for Pharmacy Mobile technology which has its own set of unique features.  Prescription related features have been a hot new offering in this space as retailers are looking to give their customers the capabilities.  These include having texts sent to them that their prescription is filled and ready, or that it is about to be out.  Also included in this is the capability for patients to fill and re-fill prescriptions through a mobile app to local pharmacy.  Other frequently requested features are tips for healthy living and links to quick information about their medicines right from their phones.

For more information on finding suppliers and products to help with your companies 2012 mobile strategy, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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When I read the paper, the internet, trade magazines, blogs, books or other sources of information, I subconsciously apply a careers worth of learning or everything I know in order to try and understand the issue. I guess it means trying to understand things through my philosophy. This also allows me to look at what our company does by the way others look at things and apply non procurement based logic to what we do.

When I was reading that airlines did not want to unbundle their ticket prices for consumers it simply indicated to me; that they’re hiding something. Prices have not always been bundled. As an example, original technology models were based predominantly on hardware prices. This was when companies sold huge mainframes. As technology evolved to microprocessors ever more quickly along a Moore’s law curve, hardware prices dropped through the floor. This evolution caused technology companies to find ways to stop their revenue erosion. As such companies began to focus on increasing the services portion of their contracts. One way to do this was through solution bundles. Solution bundles were a hard sell and made it more difficult for customers to understand what the total cost of a product or solution was. Today many of the historical major hardware company’s services revenue are higher than their hardware revenue.

From a procurement perspective, the way one attacks this is through a detailed specification that outlines all the components, commodities etc. that make up the product or service being bid on.

Let’s get back to the airline ticket. Why don’t the airlines want to unbundle their ticket pricing. It’s simple. It creates too many questions. Questions like why is airlines A’s airport costs higher than airline B’s? Why am I paying more for Bags at airline A versus airline B?  Shouldn’t federal security charges be same for airline A versus airline B? What are flight segment taxes?

So why don’t the airlines want to publicly unbundle their ticket prices. The simple answer is because it will cost them money. Just the same as the 2nd bag costs you and the food on the flight costs you and the pillow costs you and the movie costs you. Here’s to full cost disclosure.

We look forward to and appreciate your comments.

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Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing

For many companies the journey to begin a project to source products or services begins with determining what they know about what they are about to purchase.  Many times when the product is one they have purchased previously, the task is simple and the details are readily available.  

In other cases, when new products are being purchased, or when many parts of the business are purchasing the same product but from different vendors or with different agreements, this beginning process can be much more difficult.  

Enter surveys…..Surveys are a useful tool to quickly and easily gain the additional information you need in order to begin a difficult sourcing effort.  Whether internal or external, today’s blog will focus on how you can use them to find the missing pieces of information you may need.

What are we doing? – When large companies have offices in more than one location, many times there are items which are purchased by the remote locations directly.  The obvious problem with this scenario is that the organization is not able to leverage the combined purchasing power it has.  In order to do this, however, how the company is currently doing things must be known.  Running a simple internal survey will allow the company to ask their locations or offices what they are purchasing, how much they are purchasing and for what price.  With this survey you should also determine who the company is working with and, if they are under contract, what the length and terms of that contract are. 

What should we be doing?  – The other useful aspect of internal surveys is to gather information from the offices on what the company “should” be doing.  Asking simple questions about what the location would like to do, or what isn’t working for their current agreement could provide valuable information about the type of vendor you want to look at as well as what types of products and/or services you should be moving with.

Poll your vendors – One area of information that can provide great detail but that some companies never tap into is their own vendors and partners.  Particularly in situations where many vendors are providing the same service you can often get a greater level of detail of what they are providing than you can through an internal search.  The hardest part for many companies is to get past the pride of, as a company, admitting that you don’t have the detail readily available.  Most vendors will not have a problem getting this information and as an added benefit you will get a chance to find out which vendors are willing to work with you during this process so that you can decide who will get the opportunity to win your business.

For more information on running surveys to gather information for your procurement team, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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

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

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

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

We appreciate and look forward to your comments.

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