The Land of the FREE and the home of the BRAVE! We should never ever take it for granted.
Todays post is by Ronald D. Southard CEO at SafeSourcing.
I originally wrote this post 10 years ago. While a lot has changed, a lot has not. Many collective buyer organizations are understaffed and lack the category expertise to serve their constituency adequately.
Many of these structures believe that they speak on behalf of their retail members for anything and everything that they source. Unfortunately many of their members do not agree. These are independent business people. If they have an opportunity to reduce their cost of goods, expenses and capital spend it is their right to do so. Are they all getting the best pricing today. don’t believe it for a minute.
These business structures have been around for a long time. Many have evolved to use cutting edge e- procurement tools, but many have not. Do their retailers also benefit from their use of these tools in order to reduce their net landed costs? I’ve been in the supply chain since 1970 and the answer is NO!
This author remembers being a young salesperson over 30 years ago (ouch!). I convinced a customer to buy some new point of sale equipment. I was really excited when I took the contract to the customer for signature. Once there, the retailer told me I had to get a purchase order from Cressy Dockham who was their wholesaler and they would tell me how much discount the retailer was to receive. Cressy Dockham is no longer in business today. They were located in Americus Georgia. I worked in Boston. Thus began a long relationship with collective buyers across all segments of the industry. Explanation of fees was always a part of the discussion.
These types of organization can go by a lot of different names such 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 can also be wildly different. Some retailers may actually belong to several different buying groups because their primary group does not offer expertise in a certain area.
Obviously, these organizations are not in business to lose money. There are some non profit membership organizations that do return earnings to their members on a pre-planned basis such as quarterly or annually.
As a result of volume consolidation or aggregation, these organizations often qualify for much larger discounts from manufacturers and suppliers than do their independent retailer partners. In many cases the full discount is not passed on to retailers in order to cover the cost of administering the programs. Additionally, other service fees may also be added to invoices.
Today?s advanced e-procurement tools make it much easier to accomplish collective buying. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers 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 tools available and how many suppliers they have to choose from by category.
I look forward to your comments.
In to many cases, for many companies the answer to the question above is who knows on both sides of the relationship. And unfortunately this will not change for many companies.
Historically the primary driver associated with the use of reverse auctions and other related e-RFX tools has been to reduce the cost of goods and services and reduce expense in large part, if a retail company saved money it was deemed to be a successful process for the retailer as well as the awarded vendor. What about the other suppliers? What makes it a positive for them?
Supply base management or the attempt at it is the newest focus area of many strategic sourcing suites. Many vendors do not offer this functionality today; in fact some have trouble describing what it is when asked. Although elements of this functionality exist within a variety of surround type service offerings, no one vendor offers complete functionality in this area today even though they may think they do. A significant reason for this is suppliers concern with the thought of being managed at all because it means giving up perceived control. Additionally, retailers, suppliers nor vendors have agreed as to what the correct Key Performance Indicators (KPI’s) should be or how to collect the data that would allow you to manage them. As these types of tools are developed, the most successful supply base management tools will be those that can manage the largest supplier database to the continual benefit of both retailers and suppliers that participate and compete for their business
This author believes that the most probable result of this process will be a set of automated robust supplier scorecards that monitor and report on supplier performance versus a range of KPI’S that are applied against well-known quality guidelines resulting in a continuous improvement procurement methodology.
If you’d like to know how SafeSourcing can help improve and measure improvement in your e-RFX process please contact us!
As always, we look forward to and appreciate your comments.
This author has had the great pleasure of teaching the following course ?Selling to the CFO? to hundreds of sales people with a variety of industry focus areas ranging from Loss Prevention to Procurement.
I was reading Michael Lamoureux?s post at Sourcing Innovation the other day. At Sourcing innovation Michael is referred to as the ?Doctor? for good reason. If you have the procurement blues or other procurement focused illnesses you might just find the cure or at least a roadmap to it at this site. The post I was reading was titled “Does Your CFO Think All You Deserve is a Kick in the Face”?
To procurement professionals this may sound scary, but does not need to be. Quite frankly, the focus of all sales people should be the CFO. It?s great to have C level relationships, including the CEO, CPO, CIO etc. At the end of the day the CFO controls the purse strings if your solution is not included in the present budget and as such you will need his or her support. The good news is that the focus of all CFO?s is to make companies more profitable. This may be housed in terms like managing regulatory compliance or the reduction of process costs and improving asset utilization. At the end of the day it all means trying to insure stakeholder equity which means improving net profitability and increasing share value.
The reason this is so important for sales people to understand is if your solution can accomplish this in the present accounting period or during the present accounting year in any measureable fashion you will have an interested audience in the CFO.
Once in the CFO?s office, you need to be prepared to present your office in a concise way that is meaningful to the CFO. This means no buzz words or other industry speak. This means understanding the CFO?s company in great detail and presenting your solution to documented problems that your procurement solution will solve in terms the CFO uses every day. That means terms like COGS, EBITDA, Net Profit, IRR, Gross Margin and how you?re offering will impact these areas in a positive fashion immediately.
We look forward to and appreciate your comments.
Does intelligence = Adaptability?
Today’s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing.
Our CEO Ron Southard has decided to repost this message because if you are not changing you are falling behind. So, how fast can you change? It better be immediately if not faster. And it may be that every associate needs to think of themselves as the agent of change both personally, professionally and for their company. So get cracking because in the time it takes you to read this post you will have lost ground with your competition.
What is intelligence? Encarta defines it as “the ability to learn facts and skills and apply them, especially when this ability is highly developed.” Another definition, famously attributed to Albert Einstein, is “The measure of intelligence is the ability to change.” If we consider the attributes we typically assign to intelligence, we can easily see how they all involve change:
If the ability to change is directly correlated to intelligence, then can a lack of intelligence be defined as stagnation? An inability to adapt and change? In short, yes, Dr. Edward Miller, CEO of the hospital
at Johns Hopkins University, stated in a 2005 interview, “If you look at people after coronary-artery bypass grafting two years later, 90% of them have not changed their lifestyle.” It’s been well-established in the medical community that even when the threat is death, the majority of people will not change previously established bad habits. Similar findings have been well established in business management studies. The old-school way of thinking is to assume that everyone just needs more threats, pressure, and dire consequences to get moving. But a one size fits all approach has never worked well in managing human beings. The truth has always been that negative pressure leads to faking change in order to make the boss, the doctor, the spouse, etc, happy with what they’re seeing, even though the truth is performance is still severely lacking.
While some amount of negative pressure will always exist, and will always be essential, what creates long term change is consistent benefit incentives. For example, when people don’t have any hope for the future of their health, their jobs, relationships, etc, adding pressure that says “things are just going to get worse if you don’t change” just adds to the hopelessness of the individual, which they interpret as more reason not to change. However, when someone is given a compliment at work, starts seeing results from exercise, or getting praise from a spouse, they will often see it as a glimpse into something better that is proven to be attainable.
Once we have created the right environment for change, the hard work of implementation can begin. This implementation has to start with paying attention. When a new policy shows up on our desk, we have to take it seriously, read it, memorize as much as necessary, and then change our behavior accordingly. When we see something go wrong, and we don’t change, most people would call that unintelligent. However, when something goes wrong and change happens quickly, effectively, and long-term, we are certainly displaying intelligent behavior. “In a world of constant change, the spoils go to the nimble.”1
Please leave a comment or 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.
Today’s post is from our SafeSourcing Archives
In today’s post, we will be reviewing some of the issues that could occur when a Letter of Intent (LOI) or a new Contract, doesn’t get executed efficiently after a successful eSourcing RFX.
LOI or a Contract is delayed
When an LOI or a Contract is delayed, the savings identified in the RFX will not start accumulating until the first invoice from the new supplier or the incumbent supplier arrives post contract. If a Contract is delayed, the RFX Host Company will have to pay the current contracts negotiated terms for products or supplies until the LOI and/or Contract is executed. Depending on the volume of the items, it could equate to a lot of lost savings.
When RFXs aren’t awarded efficiently
One of SafeSourcing’s many service offerings is identifying historical categories to take to market. Our goal is to create an RFX calendar that outlines future projects extending at least one year out. We then populate the calendar with past eRFXs that should be reruns due to previously negotiated contract expirations. We then identify upcoming potential spot purchases that are a result of our deep dive with our spend analysis tool into all category spending. When RFXs aren’t awarded efficiently these rerun dates will change and as a result may cause future issues with the strategic selection of targeted dates for new RFXs. If you slip 5 months which we see way to often, and prices are headed up over 41% of your savings may be lost.
For more information on how we can help your business reduce spending and maintain savings 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 and appreciate your comments
Today’s post is written by Ivy Ray, Account Manager at SafeSourcing Inc.
Temporary worker demand is rising. When Baby Boomers retire, organizations will lose a lot of talent. Retiring Boomers are going to be hard to replace because Generation X (born between 1965-1980) is small, and because Generation Y has a different concept of how they want to work. Gen Y (born between 1981-2001) is more technologically and geographically mobile. They value flexibility, which project-based work allows.
Start-ups and small businesses would normally utilize freelance workers but increasingly, larger companies are using online freelancers, not to replace their core workforces, but to complement them usually for special project work. There are a rising number of freelance positions, which typically lack benefits and other protections that come with being a full-time employee. Platforms like Upwork, Freelancer, and Guru are just a few of the multiple online freelance marketplaces which benefit both the freelancers and the corporations hiring them.
Freelancers now make up over 35% of the U.S. workforce and companies are always looking to outsource and work with them to meet their business goals. Freelance workforce growth is accelerating and has outpaced overall U.S. workforce growth by 3x since 2014, according to Stephane Kasriel, CEO of Upwork.
The use of freelancing platforms could disrupt the way workforces are organized. For corporations, there are coordination costs and other challenges that come with managing both an internal workforce and interfacing with an external one. (Forbes)
The rise of temporary workers is a workforce trend that is here to stay. According to the U.S. Bureau of Labor Statistics, temporary workers make up 19 percent of all new jobs in the U.S.
For more information on how SafeSourcing can assist you in exploring your procurement solutions for your business 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.
Today’s blog is by Margaret Stewart, Manager of HR and Executive Assistant at SafeSourcing.
With the year coming to a close, many companies are focusing on the upcoming year and what changes they may have in store. Whether the change is increasing head count in the office, opening more locations, or even trying out a new product in your store, changes need to be planned out.
Typically, a business needs to plan for its year financially, budgeting money for labor and overhead and trying to plan for goods and services expenses, plus any changes they foresee in the upcoming year. Opening new locations, buying new products, and hiring more employees require financial planning.
With all the other planning at year end, what many companies overlook, though, is planning for procurement. If a company will need temporary labor in the next year, they should reach out to their procurement partner sooner rather than later to identify needs. A procurement partner can help get the right services for you at a competitive price. If, like many other businesses, a company needs to hire landscapers to maintain company property in the spring and snow removal companies in the winter, now is the time to begin the procurement process.
With proper planning and with help from your procurement team, your company can not only have the financial year planned, but also have vendors and suppliers in place ready to begin whatever work might need done. On top of that, many of those suppliers and vendors could be even less than you initially thought, all through the help of your procurement partner and tools like the ones offered by SafeSourcing. This could, in turn, lead to even more financial means to grow your company even more in the upcoming years.
For more information on how SafeSourcing can help with your procurement needs, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.
We appreciate and look forward to your comments!
Twas the day after Christmas
When all through the land
People were still smiling and happy
Because their holiday had gone just as planned
With malls to be visited and unwanted gifts to return
And exercise to be done and all those extra calories to burn
Most offices are still quiet as their staff s celebrate
While others rush to close out their years business before it’s too late
There’s a new year coming full of lots of new stuff
We all hope with this congress life doesn’t get to tough
For businesses public and private and individuals too
Who would all rather focus on what’s exciting and new
Like jobs and raises and a positive end of year review
So on Trump and Ryan with congress hopefully in tow
Let’s get back to Washington
And end this year with some glow.
Happy Holidays from Safesourcing
Today’s post is from our SafeSourcing Archives.
Do you know the importance of the “UOM”?”
Within the procurement industry, every specification boils down to one thing, the Unit of Measure. Without a consistent UOM within the specification when completing an RFP or RFQ, you will receive quotes all over the board that do not match each other or an industry standard.
The issue with having an inconsistent UOM is that you can potentially make the entire event not valid. There are hundreds of UOMs depending on the industry that you are collecting pricing for. When deciding a UOM to collect pricing, it is typically within the original specifications that the items are based on.
The main concern is that the suppliers need to understand the UOM fully. If they do not, none of the pricing will be consistent. We, at SafeSourcing, make sure that our suppliers know exactly what the UOM is for each event and line item within the event.
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.