Archive for the ‘Strategic Sourcing’ Category

If pricing looks too low, it is for a reason.

Monday, November 23rd, 2020

 

Today’s post is is from our  SafeSourcing Archives.

We’ve all heard this story of a supplier submitting pricing for select items in a commoditized category so far below other quotes that the strategy the team had used to find suppliers was thrown out the window. The supplier was awarded the contract but it soon became apparent that this particular supplier wasn’t at all the right supplier for the job.

As the contract came to fulfillment and the first orders were being received, major inconsistencies were being uncovered. The team discovered that everything was being subcontracted out, even the contract itself. The supplier changed key ingredients of several of the items it had quoted. The supplier had quoted items out of specification tolerance, even altered required pack sizes. It was an unacceptable situation.

The costs of the project skyrocketed which was exactly what was trying to be avoided. My advice is to have policies and procedures in place for price examination. If pricing seems too good to be true, it most likely is. Ask questions.

Let SafeSourcing better manage your sourcing projects. We enjoy bringing this blog to you every week and hope you find value in it. For more information on how we can help you with your procurement needs 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.

 

 

It’s Time to Give Thanks!

Wednesday, November 18th, 2020

 

 Today’s post is written by Ivy Ray, Senior Procurement Specialist at SafeSourcing Inc.

The month of November began with an election that had the highest rate (over 67% of eligible population) of voter turnout in a century, in the midst of a pandemic that has claimed the lives of over 200,000 individuals.  On the following week we recognized our veteran men and women who deserve our gratitude for their willingness to serve this country and help protect our rights and our freedoms.

As we look towards the Thanksgiving holiday, we cautiously proceed with altered plans to observe our day of thanks. We may have limited attendance gatherings or curtailed travel, in order to protect our safety and that of our loved ones. Some will have to spend the day alone, or in the presence of strangers. Our veterans have first-hand knowledge of this experience on a regular basis.

In spite of the current situation, we should all still be very grateful to be here. We should be grateful to live in a nation that is resilient and that has continued to thrive in the face of adversity. The sacrifices that have been made by those before us, allows us to be able to get through this very trying time and while still celebrating the small everyday victories.

Manufacturing companies have stepped up and produced life-saving equipment and materials that were necessary to keep us going. Medical professionals have been working around the clock to save lives. Stores have been open and stocked with the essentials we need. Transportation and logistics companies have been delivering packages to our doorsteps. Educators have worked out plans to teach students in an alternate environment. We are grateful for the scientists who have developed vaccines in record time. Everyone has to make a sacrifice and do their part to get through this, and our military works tirelessly behind the scenes to keep us safe at home and abroad.

We will emerge from this pandemic stronger than we were before. The glass is half full so take a drink, and the next time you exercise the freedom of speech, to vote, to move freely about the country, to protect your family, and gather in your house of worship, you should thank a veteran.

For more information on how SafeSourcing can assist you in exploring your procurement

solutions for your business efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.

We look forward to your comments.

Going Nuts!  

Friday, November 13th, 2020

 

Today’s blog is by Gayl Southard, Administrative Consultant for SafeSourcing Inc.

Nuts are a compact, convenient, and nutritious snack. They come in various sizes and shapes and are an easy way to boost nutrition and energy levels without any preparation.

Consuming nuts has shown to improve heart health and reduce mortality from cardiovascular disease. “Consumption of tree nuts and even peanuts (technically a legume, but nutritionally similar) has been significantly associated with a reduced risk of certain cancers and reduced risk of all-cause mortality. These nutritional powerhouses are so potent, eating just a handful of nuts per day has been associated with a 20 percent reduced risk of death.”1.  Eight of the healthiest varieties of nuts are as follows:

  1.  Not only do walnuts resemble the brain, they are linked to better brain health.  By adding walnuts to your diet, it improves heart health, aids in blood clotting, immune health and platelet adhesion.
  2. They contain high levels of antioxidants.  The antioxidant capabilities are 20 times more potent than vitamin C and 50 times more than vitamin E.
  3. They are a high-protein snack favored by athletes and fitness buffs.  Clinical studies show that consumption of almonds 2 hours before before exercise can improve performance.  Almonds may even reduce the risk of cardiovascular disease.
  4. A macadamia-rich diet can reduce LDL cholesterol in men and women.
  5. They are a great source of vitamins, minerals, and dietary fiber.  Due to their high vitamin E content, it also protects against cell damage.  Clinical studies in mice have shown that they support brain health by slowing down motor-neuron degeneration.
  6. Brazil Nuts. They are the best source of selenium.  Low levels of selenium produces brain fog and also can affect the thyroid.  Brazil nuts can improve your mood and reduce anxiety.  They can also improve energy levels.
  7. They can reduce cholesterol levels.  They contain the anticancer, catechol, which has demonstrated activity against drug-resistant cancer cell lines.
  8. They are high in vitamin B and B6 which is vital to a healthy nervous system.  They are heart healthy.

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

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

References………………………………………………………..

Food as Medicine, Epoch Times,

 

 

Collaborative Buyer Organizations, Share Groups and Consortiums are evolving in order to compete with mega retailers.

Wednesday, October 28th, 2020

 

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

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.

If you’d like to learn more about our risk free trial or how SafeSourcing may be of service to you, please contact a SafeSourcing Customer Services Representative.

Watching the RFQ – Part 2

Wednesday, October 21st, 2020

 

Todays post is by Dave Wenig is the Senior Vice President of Sales and Services at SafeSourcing Inc.

In this post, which is the second of several, we’re continuing to take a close look at the online Request for Quote (RFQ) from a different perspective. Rather than focus on measuring the value delivered as savings, let’s examine when that value is created and consider the vendor behaviors that went into that moment. If you need a primer on what an RFQ is, click here.

In part one of this series Watching and RFQ Part 1, we reviewed the first five or so minutes of the RFQ. While the beginning of the RFQ can at times be interesting, it isn’t always a good indicator of what will come.

The same can’t usually be said about the middle of the RFQ. I would consider the middle of a typical RFQ to be from around 5 minutes in to around 15 minutes in. While it doesn’t always look like there is a great deal of activity in this portion, I would argue that looks can be misleading.

 

 

 

 

 

 

 

 

In the example above, there are several things that are happening in this 10 minute window. First, the SafeSourcing Customer Services team and some of the participating vendors are usually in communications off and on during this time. The second is that the vendors will start to become active and begin to test the waters. Again, there are different approaches and different tolerances for the emotional impact of participating in an auction. Here, we see that some of the vendors decided to try small reductions in their costs in an effort to “fish” for the Low Quote Indicator that would tell them they are doing well. We see that another takes a drastically different approach and enters significantly lower costs that most of the competition.

In this phase of the RFQ, what we see if the vendors jockeying for position as they head into the final lap. They know that this particular RFQ was scheduled for 20 minutes plus extensions so they will want to be ready to compete in the final phase. We’ll get into the last portion of the RFQ in the next installment.

For more information, please contact SafeSourcing.

 

 

 

How to tell when you need to simplify your processes

Friday, October 2nd, 2020

 

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/>

I know that your costs are going UP!

Wednesday, September 23rd, 2020

 

Today’s post is from Ron Southard, CEO at SafeSourcing Inc.

Its amazing to me that with all the increases in spending due to the COVID-19 Pandemic, which would certainly be classified as tail spend that companies continue to not use tools available to them that will help to keep these costs down. Please contact me personally if you’d like to discuss.

At SafeSourcing, we help buyers save considerably on costs by providing tools that enhance the ability to do business in a better, safer, smarter, more streamlined and cost-effective way. Our flexible service offerings and suite of e-procurement tools deliver savings that can be referenced that are greater than 10 times the cost of our services and often much higher. Our annualized savings across all customers and all categories over the last 24 months are greater than 24%

We can help Improve your profitability and increase your efficiency. Both areas that  should and can help during these stressful times.

Here’s what one of our customers had to say. “We would not be where we are with our Indirect Spend if it were not for SafeSourcing.” SR. VP FINANCE OF $20B DISTRIBUTION COMPANY.

If you’d like to discuss our risk free trial, please contact a SafeSourcing Customer Services professional.

Let’s play supplier poker if you dare!

Monday, September 14th, 2020

 

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

Let’s play supplier poker! Then we’ll find out how good your current supplier data is.

If this were a real poker game, I’d raise our big supplier data versus your existing supplier data.

Locating, managing and updating supplier information that companies choose to do business with has never been more difficult. How many companies that you used to do business with 4-5 years ago are no longer in business? How many new companies have taken their place? I already know the answer you are going to give me. It’s I don’t know.

We keep hearing about big data. With new regulatory requirements emerging daily, economies failing, the supply chain shrinking in some places and expanding in others,  changing  safety factors and  environmental factors ( think LEEDS), detailed supplier information and traceability are but a few of the issues that require regular maintenance in order to mitigate a company’s risk.

Solution Providers like SafeSourcing that provide supplier databases (SafeSourceIt™) that are part of automating the procurement process, need to step up and make sure that their data support these changes on a regular basis to the greatest extent possible by providing tools that interacts with both regulatory agencies and suppliers to insure consumer safety and environmental impact as more new sources of supply and new products enter the supply chain on a daily basis.

Actions that solution providers can take should include but are not limited to:

1. Monitor daily alert data as to product recalls and safety warnings.
2. Trace warnings back to the original source of supply automatically and maintain history.
3. Require that suppliers meet certain safety certifications in order to participate in their database.
4. Require that suppliers meet required environmental certifications or programs in order to participate in their database
5. Provide a regular purge of suppliers that do not comply with necessary standards.
6. Validate the entire database regularly for companies no longer in business
7. Adhere to a strict RFI process for new suppliers requesting participation in their database.
8. Provide a rating system for suppliers that are offered to companies as new sources of supply.
9. Monitor regulatory agencies such as ISO for new standards and include them as further requirements in supplier databases.
10.Conduct on going category research for evolving sources of supply.
11.Compare your best customers GL to your database for additions deletions.

Ask your solution provider what their process is to grow manage and maintain their supplier database for your benefit.

If you’d like more information on the SafeSourceIt™ Supplier Database of over 427,000 cleansed global sources of supply, please contact a SafeSourcing customer services account manager.

We look forward to and appreciate your comments.

The SafeSourcing Collaborative Aggregation Philosophy: 

Friday, September 11th, 2020

 

Today’s post is from Ron Southard CEO at SafeSourcing Inc.

 

The SafeSourcing Inc Collaborative Aggregation Philosophy supports the thought that disparate buying groups can on occasion work together successfully as a loosely coupled purchasing organization in order to combine volumes for better pricing consideration by suppliers. Often the specifications for these events need to be very similar in nature such as office supplies or other similar categories. Separate shipping charges and other terms and conditions may apply to each participant. Participants must support single supplier award in order to ensure the success of collaborative aggregation events to ensure that suppliers honor their prices.

We have recently seen a lot of activity in this area with dramatic savings for spends of all different sizes. Some categories have even achieved savings of over 50%. We mapped these savings and are seeing some retailers with as few as 20 stores paying less than some very large customers who ran these categories during the last two years.

The markets are ripe! Maybe its time to contact SafeSourcing and inquire about our Risk Free Trial  Program.

We look forward to hearing from you!

eRFX Strategies for Success Part VI the  Request For Quote  

Thursday, September 3rd, 2020

 

 

 

Today is the final edition of this VI part post from Ron Southard, CEO at SafeSourcing Inc. You can download each link or just download my Whitepaper by the same title. If you follow these guidelines, you are on your way to controlling the cost of any category you take to market.

In  parts one, two, three items 1-4 and four items 5-8  and five RFQ Part I of II we have discussed  that the world of procurement is continually changing, and this includes the world of eProcurement when it comes to the request for information, a proposal, or a quote and why this process when used properly even with newer tools is still the most effective results delivering procurement process available.

The Request for Quote (RFQ) Part II of II Details, Missing Pieces and Communication

Details, Details, Details. In the RFQ, send an invitation to potential suppliers containing a detailed list or description of all relevant parameters of the intended purchase, such as:

  • Personnel skills, training level or competencies
  • Part descriptions/specifications or numbers
  • Quantities/Volumes
  • Description or drawings
  • Quality levels
  • Delivery requirements
  • Term of contract
  • Terms and conditions
  • Other value-added requirements or terms
  • Draft contract

An RFQ event can have many suppliers participating in your project. They will all be actively participating during the RFQ in a preset timeframe, which is usually 20 minutes, but can be adjusted when the line item count grows over 25 items.  Within the 20 minutes, suppliers can lower their bid pricing an unlimited amount of times. Like sealed bidding, suppliers cannot see one another’s pricing. Suppliers see whether or not their quote is the low quote through the use of a low quote indicator when they achieve that milestone by fishing for it. Suppliers may also see their ranking at a predetermined point in the RFQ process if the strategic decision to use that feature has been made.

Missing Pieces. An easy way to establish specifications and develop base pricing is from the RFP responses submitted earlier.  Many times, a list of suppliers is established that has already been educated on entering pricing through an online sourcing or bidding tool. The RFQ gives the supplier the opportunity within the live RFQ to view whether or not if they have any low quotes and to “sharpen their pencils” in order to lower their pricing if they wish to do so. From this RFQ, an award of business based on the results can be made.

Training and Communication. Suppliers should be trained as to how to use the eProcurement system, how to place their bids, how to look for the low quote indicator, and also be communicated with relative to questions, pricing, and products and services you are looking for. The overall goal is to drive the best overall value, so suppliers should have an opportunity to enter notes during the RFQ. This additional information often offers additional hidden savings opportunity, i.e. if 1,000 cases are purchased rather than 900 cases, additional discounts, or other value-added services such as freight waived for the first 6 months of a 1-year contract if awarded the business. These additional notes can provide and overall benefit, rather than just a low-price win.

Returning to our original RFI example of a company owning a building they intend to repurpose as a Distribution Center, the process began as an RFI in order to understand what was needed so it could be followed by an RFP in order to collect further detailed information and base pricing. These two steps were then followed by an RFQ to compress the pricing from suppliers who participated in the RFP and were invited to this final stage.  In this last stage running the line items as a complete list of materials rather than an item by item list, total cost of freight, total installation pricing- which could include teardown pricing which could also be listed as its own line item can have great value and provide the opportunity for the suppliers to keep their focus where it is needed rather than on 100’s of individual line items submitted during the RFP. The four items mentioned here represent the largest spend items of the proposal and have the opportunity to lower pricing by 20% or greater from the original RFP pricing.

Determining what stage of the eRFX process to begin with and how to assemble those pieces can be a difficult puzzle to put together especially if a procurement team is already engaged in a myriad of other daily activities. A good Strategic Sourcing solution provider can help put these pieces together in a way that requires less of your company’s time and resources.

If you’d like to learn more and can’t wait for the series conclusion, please contact a SafeSourcing Customer Services associate, they’d be thrilled to hear from you.

Thanks.