Archive for the ‘Strategic Sourcing’ Category

The Procurement Integrity Act

Tuesday, August 7th, 2018

 

Today’s blog is from our SafeSourcing Archives

Depending on your political leanings, the government might not be your first choice of where to get guidance on integrity. I would suggest, however, that the government guidelines may not be the end-all source for all of your policy development, but it may be a great starting point. When experts speak about business ethics, they usually talk ethics as a spectrum of more ethical and less ethical, not as an on/off switch. The starting point of that threshold for most ethicists is the law. So even though you may want to go above and beyond the law for determining how you conduct your business, the law is where you would start for ensuring your policies are compliant, and you may want to begin with the government’s procurement integrity policies when developing your own.

The purpose of the Procurement Integrity Act is to prevent the award of contracts based on corporate espionage or bribery. The intention is for this act to encourage contracts that provide the best value to the government and, by proxy, its citizens. Below we will summarize a few key concepts from the Procurement Integrity Act for you to consider:

Communication must be much more regulated after a formal request for proposal has been released: It is expected that before the release of an RFP, a government procurement representative will be conducting industry research that may involve direct communication with the vendor community. However, after the release, communication must be well documented and must not include information that would give advantage to any one vendor over another.

Conflicts of interest: If you are advising the government in a procurement project and yourself, a family member, or company you are involved with have a financial interest in the project, criminal law may prevent you from working on the project. This policy applies to both giving AND receiving gifts between the purchaser and the vendor, applicable to gifts and other “perks” as well.

If you think it would be inappropriate for you to be involved on a project, speak with an agency ethics officer: Not many private companies have an ethics officer, but it should be within your policy to have the ability to notify a supervisor and self-identify any reasons why an employee shouldn’t be involved on a project when warranted.

Obligate participating vendors to minimize exposure to competitor information: It should be within your terms of participation that a company should never knowingly obtain confidential competitor information, and if ever erroneously receiving such information, they agree to minimize that exposure. In other words, the error should be immediately disclosed and information destroyed, not further disseminated. It does not benefit the purchasing party to have any one vendor have an informational advantage over another.
For more details, we recommend further study of the resources available at the website for the Office of Government Ethics at: http://www.oge.gov/

For more information on how SafeSourcing can assist your team in this process, 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.

Share This Post

When Good Companies Make Good Vendors

Tuesday, July 31st, 2018

 

Today’s post is from our SafeSourcing Archives.

In a previous issue Fortune Magazine published the top multinational companies to work for to compliment the top 100 US companies list they release every January.  Some of the highlights included donating money on behalf of their employees, offering extra money and vacation at long term anniversary, providing on-site childcare, and free breakfast buffet and game rooms.  You may be wondering what this has to do with your company.  The answer is everything.  When your suppliers are doing things right and creating a great place for their employees to work, it means they can service you better, provide better prices and products and have employees who are happier to work with your company.

In today’s blog we will be looking at a few other areas that suppliers are evaluated against that should be part of how you measure your potential and existing suppliers.

Non-Profit Organization Ratings – Along with industry reviews, there are also organizations like the Better Business Bureau who give its ratings to companies based on complaints that have been logged against those companies and any other information available.  Others sites like Angie’s List and customer driven feedback sites allow you to see consolidated views of the companies, services and products.  These sites go beyond surveys and get right to the customer feedback you are looking for.

Peer Opinion – One of the most valuable questions you can ask a supplier but one that is rarely asked is “Who are your top three competitors?”  By asking all of the vendors this question during an RFI or RFP process you will quickly understand the landscape of who the leaders in the field are and how they view each other.  This can be valuable information to get from the companies who know their industry the best.

Industry Reviews – There are so many organizations these days whose sole purpose is to research and rank other companies against one set of criteria or another.  This BLOG was sparked by one of these surveys performed by a financial periodical, but there are other major companies like Gartner and Hoover who regularly publish the findings of their research for both companies and products.  These types of surveys and research results are important because they include the same types of criteria found in an RFI and are performed by independent organizations saving your organization some valuable research time.

Certifications – Almost all organizations have been certified for one reason or another depending on the industry they belong to.   Many times their customers have no idea that they carry these certifications.  Capturing these during an RFI or RFP process will help you better evaluate the vendors you do business with.  Another way of getting this information is to go to the Certifying Organizations websites to find out which companies have been certified by their processes.

Understanding your potential and existing suppliers and how they compare in areas outside of the normal metrics, can help you develop good partnerships well in advance of any final contract with them.  For information on how SafeSourcing can help you gather these types of details, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

Share This Post

Google search tools

Monday, July 23rd, 2018

 

Today’s post is from our  SafeSourcing Archives

Google’s search algorithms are notoriously complex and secretive. After all, if a savvy online company cracked the code to becoming the first result you see no matter what your search, they could stand to profit immensely. The ambiguity and complexity also makes it difficult to conduct research effectively and avoiding false-positives within your search results. What many users don’t know is that there are many shortcuts embedded into the search bar that allow you to get more specific with your results. We have passed through the many shortcuts available, and ranked the ones we think would be the most helpful to any procurement professional:

Search term format, followed by description:

    1. Word1 Word2: The default search parameter used by most users will search BOTH terms as separate terms. Therefore your search results won’t necessarily use the same word order, which may not return the correct results when using compound words or specific phrases.
    2. “Fourscore and seven years ago”: Using quotation marks will search the exact phrase entered in its exact order. This is best used for searching exact quotes, or product descriptions that must have an exact match.
    3. Star -Trek: Is your search result giving you too many false positives? If searching a word like Star is giving you too many results within a popular science fiction category that doesn’t belong in your scope, placing a “-” symbol before a second term will prevent the results from returning results containing that second term.
    4. Logistics site:www.safesourcing.com: Enter a search term, and then use “site:” to limit the search results to a specific domain. This can be helpful when looking for a specific product within a manufacturer’s website, but aren’t certain where to find it.
    5. Filetype:pdf: This shortcut allows you to search for files of a certain extension type. For instance, if looking for a sample specification, sometimes limiting your search to a pdf or word filetype will return the most relevant results.
    6. Fluid Milk Type VI 2008…2013: Placing three periods between two numerical terms will limit your results to between those numbers. For instance, if you are conducting historic market research for a commodity within a certain timeframe, this search will only return results containing numbers within the year range given. This can be useful if shopping for within a known price range as well.
    7. Related:www.cmegroup.com: When looking for similar suppliers or services, a “related:” search can be helpful for returning other sites of similar scope.

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.

 

 

Share This Post

How to insure the sustainability of e- RFX events for your customers.

Friday, July 13th, 2018

 

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

If you follow these simple guidelines it will also encourage senior management to consider placing more of the companies spend under the umbrella of e-procurement tools and specifically reverse auction tools.

Once you are armed with a robust detail focused supplier database and related e-procurement tools:

1. Conduct a detailed category discovery
a. Learn all there is to learn about the customers way of doing business.
b. Walk, observe and annotate all activity at distribution centers and warehouses.
c. Walk an array of stores and review all formats of the enterprise.
d. Compile a list of all corporate categories
2. Rank categories by
a. Total spend
b. Importance
c. Sourcing frequency
d. Quality objectives
e. Look for aggregation opportunities
i. Lighters, lighter fluid, flints, fire sticks.
3. Conduct supplier discovery
a. Rank suppliers
i.   Size
ii.  Experience
iii. References
iv. Environmental certifications
v.  Safety Certifications
4. With all of the above in hand; develop a three year game plan
a. Identify suppliers for each event over the three years
b. Develop savings targets by category
c. Develop a three year time line  for all categories
5. Role Play internally  the first year for a test category
a. Ask the following questions
i.   How will you award the business
ii.  Review alternate scenarios
iii. Review savings by scenario
iv. Determine which suppliers will be invited back
v. Determine what new suppliers from your database search will be invited during the next year or cycle.

I’m sure you can fill in a few more items prior to your launch, but the key is to have a plan and to write it down. Now you do.

If you’d like Safesourcing to conduct a cot neutral 2 day discovery session for your procurement team, please contact a SafeSourcing Customer Services Account Manager.

We  look forward to and appreciate your comments.

Share This Post

Cold calling is a necessary part of all businesses, not just sales.

Tuesday, July 10th, 2018

 

Today’s post is from our  SafeSourcing Archives

I come from a history of cold calling. When my mom was in junior high (circa 1955), my grandmother started her own catering business. A hard working Hungarian immigrant, she would sit at their kitchen table every Sunday afternoon after church and call the family of every single young woman listed in the engagement announcements to ask if they had decided on a caterer. My dad is a mechanical engineer, turned salesman, who spent the bulk of his career in the tool and dye industry selling everything from diamond grinding wheels to linear ball bearings.

I guess you could say that I was born into it. Although I resisted for the first several years of my career, once I finally gave in to the sales call, I never looked back. One of my favorite parts of the sales cycle is the cold call. It’s the first introduction of the product or service that you have to offer to a person or business that may have a need for it. I see cold calls as a challenge, each one a fresh opportunity. Apparently not everyone feels the same way. Here are a few suggestions that might help your cold calls be a little less frightening and a little more fun… like mine!

  • Be Confident. Go into each call with confidence and optimism. You are a business professional providing a viable product or service to someone whose company might very well have a need for it.
  • Listen. You’re prepared. You have a good understanding of your value proposition and basic understanding of the businesses that you’re calling on. Now have a conversation, paying close attention to what’s being communicated verbally and otherwise.
  • Be Yourself. Believe it or not, discomfort is easily perceived over the phone. You do not have to be unnaturally pushy or super aggressive to make sales calls. Using your own assets and unique personality to create a genuine rapport can be much more effective.
  • Speak at a Normal Speed. Or even slightly slower than normal, and enunciate. You want to do everything you can to help your potential customers hear what you’re saying. There is nothing worse than struggling to understand someone who is speaking too quickly or mumbling.
  • Be Succinct. Get to the point quickly, keeping in mind of course that if your potential customer feels like engaging in a little small talk to feel more comfortable, you’ll be happy to oblige.
  • Know Who To Ask For. When making sales calls, do your best to understand who the decision maker is for your particular product or service. For some clients, it might be VP of Marketing, for others it could be the head of Human Resources. Learn who makes the final decision before picking up the phone, so you’re not wasting their time or your own.

Would you like to learn how SafeSourcing could help your company run more efficiently? Interested in a risk free trial? Please don’t hesitate to contact SafeSourcing. Our team is ready and available to assist you!

We look forward to and appreciate your comments.

 

Share This Post

Freight Tendering 101

Monday, July 9th, 2018

 

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

This author has been in and around the freight business for years. Actually for 40 years. Just like the unrelated movie, I have seen it all. Planes, trains and automobiles (trucks really) to be sure but also ocean bound freight. The ships and planes get bigger, but at the end of the day the same issue exists. How do companies get their products to where they need to be efficiently and at a cost that is acceptable in order to satisfy customer demand?

This is not necessarily about your internal optimization models; it is more about the data that feeds your internal optimization models. That is of course if you even have one. The basis for collecting that information is not all of the math calculations and pivot tables; it really is the following types of data.

• Lane data in distance for your delivery model such as Plant to DC.
• Volume discount data from carriers
• Lane rate per mile
• Fuel Surcharge rate
• Human resources rates for loading and unloading (Lumpers in the US)
• 3PL storage rates
• Load balancing charges for LTL versus FL

There may be other data that is required for your individual model, but the above will cover most of what you need to come up with a well rounded format that freight companies can easily bid on.

Relative to who should be bidding; this authors recommendation conducting a three step process that includes a detailed RFI, followed by a detailed RFP and then ultimately the RFQ data compression piece or a reverse auction.

• RFI  – Incumbent and other participants selected from a quality sourcing  database
• RFP – Participants include a reduced number from the RFI process
• RFQ – Includes all RFP participants unless otherwise indicated by the host.

The terms and conditions of the reverse auction or RFQ can cover the balance of information needed by providers that relates to quality, certifications, payment terms, safety, insurance etc.

If you want to get control of your freight costs, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

Share This Post

Retail collective buyer organizations and consortiums are evolving in order to compete with mega retailers.

Friday, June 15th, 2018

 

These business structures have been around for a long time. Many have evolved to use cutting edge e-negotiation and eProcurement tools. Their retailer members are also benefiting from their use of these tools in order to reduce their net landed costs in many different ways

These types of organization can go by many different names such as wholesaler, collective buyer, consortium, cooperative, share groups and more. They all have one thing in common. They consolidate purchasing volumes for a wide array of groups that may have very similar business structures, but for the savvy consortium can also be wildly different.

In the retail vertical, companies may actually belong to several different buying groups because their primary group does not offer expertise in a certain area.

Consortiums are also evolving and beginning to focus mixed markets where it makes sense. In general consortiums tend to be vertically focused such as a drug industry consortium with the members generally representing the drug industry only. However some consortiums are beginning to market them selves outside of their vertical to retailers or other companies who want to take advantage of learned expertise that the consortium possesses in the categories that are common across more than their own vertical and offer increased volumes. An example might be drug stores sourcing very similar products that health care organizations like hospitals source. Although this may seem like a stretch fro most, it is now very common within retail for non vertical specific players to work together.

Today’s advanced e-negotiation or e-procurement tools make it much easier to accomplish collective buying and aggregating outside of a consortiums initial area of expertise. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers and other companies while also coordinating and participating in collaborative events from hundreds if not thousands of miles away. Suppliers now have an opportunity to earn business they could never compete for in the past.

Retailers should ask their collective buyers how they plan to make the use of these types of tools and what they have to offer in terms of introductions to other companies for increased volume.

We look forward to and appreciate your comments.

Share This Post

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

Friday, May 4th, 2018

 

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.
.

Share This Post

What is a price or commodity index and how is it used?

Thursday, April 5th, 2018

 

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

SafeSourcing uses a number of  indices in our sourcing events every day and the same question always comes up from buyers when we do. While this is an older post from our archives I believe you will still find it useful today.

This author has heard a lot lately about prices indexes or indices. Every time we source something we are asked what index should we use. Although there are times when an index is helpful in sourcing in order to manage contracted pricing once a baseline has been determined versus the rise or fall of an index, that is not always the case for every product.

I was reading our local paper today “The Arizona Republic”. In their MARKET TIP on page 3 of the business section they had a nice synopsis of the Consumer Price Index or CPI relative to measuring inflation. It was brief and holds true in terms of how indices are used to measure the rise or drop in prices over time. In your annual contracts you may wish to review them quarterly and have escalator language that locks in price increases or decreases versus a specific index to protect you from volatile commodity markets like the oil market.

According to the Bureau of Labor Statistics website, the Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI is used as an economic indicator, a deflator of other economic series and as a means of adjusting dollar values. The CPI affects nearly all Americans because of the many ways it is used.

To learn more about how the CPI index is used please visit the Bureau of Labor Statistics website.

If you’d like to learn more about the variety of indices and how they impact the many products that you buy for reuse as well as resale or if you are not in the business of prognostication, please contact a SafeSourcing  customer services account manager.

We look forward to and appreciate your comments.

Share This Post

There are 7 steps of the strategic procurement process!

Tuesday, February 13th, 2018

 

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

Only being with Safe Sourcing for a few days and knowing absolutely nothing about the company prior to my hire, I have learned a great deal of information in a very short amount of time. In order to fully understand what it is we do I have been doing a little research out side of work. According to sources, no pun intended, there are 7 steps of strategic procurement process.

Step 1: Conducting an internal need of analysis

To start you need to identify exactly what the needs are of your client. You need data including but not limited to, current performance, resources used, costs and potential growth.

Step 2: Collect Information

It is extremely important for you to collect as much information as possible, so you are able to help your client as best as possible. Look for specific requirements that are needed and see exactly what their goal is and how you can help them achieve that goal.

Step 3: Collect Supplier Information

Not only do you need information from your client, you also need to get information form your suppliers. You need to select suppliers carefully. You should only pick certain suppliers that are going to benefit your clients needs. It would also be helpful to learn a little bit about their company.

Step 4: Develop a Sourcing/Outsourcing Strategy

After all, 3 steps are complete you are in need of your Request for Proposal (RFP) or a Request for Quote (RFQ) to all the selected suppliers. You will also need to get your agreement and documents finalized and sent to your suppliers. Getting your business strategy in order will keep you organized.

Step 5: Implement the Sourcing Strategy

Having an Expression of Interest (EOI), a prepared RFP or a RFQ and solicit bids from identified potential suppliers as part of the bidding process is very important at this stage. The RFP should include:

  • Detailed material
  • Product or service specifications
  • Delivery and service requirements
  • Evaluation criteria
  • Pricing structure
  • Financial terms

Step 6: Negotiate with Suppliers and Select Winning Bid

Your procurement team will then evaluate the received proposals, quotes or bids, and use the criteria and a process to shortlist the bidders to provide detailed proposals and give reports to your client. After the evaluation process is complete, your procurement team will then enter contract negotiations with the first selected bidder.

Step 7: Implement a Transition Plan

Winning suppliers should be invited to participate in implementing improvements. A communication plan is a must when developing a system for measuring and evaluating performance.

These are a few things I have learned in the few days working for this great company and I feel that if you follow these few steps you and your team can develop and implement a strategic procurement plan.

Please contact a SafeSourcing customer Services team member about our risk free trial

We look forward to your comments

 

 

 

Share This Post