Part II of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

March 3rd, 2017

Yesterday in part I of this post we discussed why cost plus distributors felt that reverse auctions were not necessarily appropriate for their companies.

 

Todays post is by Ron Southard, CEO at SafeSourcing

Yesterdays post reviewed why and how this author felt that reverse auctions were potentially good for both the distributor and the retailer alike. So just what is cost plus?

According to Wikipedia  Cost-plus pricing is a pricing method used by companies. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that one first calculates the cost of the product, and then includes an additional amount to represent profit. It is a way for companies to calculate how much profit they will make. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.

Once unit level cost has been established for the distribution of products it’s easy to turn that into a percentage and add it to the price of a product coming up with a distributed unit price or category price. The most important part of this pricing exercise for the distributor is to get the distribution costs correct. This can include price of storage, freight, length of travel, driver cost and any number of other costs. This is an area where a distributor can lose a lot of money if they are not very careful.

So, are revere auctions a tool that can help distribution companies?  The answer is a clear yes both above and below the gross margin line. If you like to know more please contact me at ronsouthard@safesourcing.com.

We look forward to and appreciate your comments.

Part I of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

March 2nd, 2017

If your distributor is using cost plus pricing are they getting you the best possible price for the products you are buying? Probably not! But they could be.

 

Todays post is by Ron Southard, CEO at SafeSourcing

A lot of distributors have told this author that reverse auctions don’t apply to them because they use the cost plus model and as such they just add their price or profit margin on top of the contract price with their source to drive their distributed price.

The fallacy in this thinking is that it may make buyers and category managers lazy in their approach to driving margin within the categories that they manage. This results in a higher price to the retailers they distribute to and ultimately to the consumer or their customers customer. A worst case scenario is that the consumer stops shopping at their customer’s store which reduces overall volume and further increases prices by not meeting volume incentives. It’s a slipper slope.

Off course this argument is relatively easy to overcome when we get around to discussing capital goods and expense related products and services area. These areas have an impact on the distributor’s net profit. And I’m sure that many of you will agree that just because one says they are a cost plus provider does not necessarily mean it’s true in the most pure sense of the definition.

Check back tomorrow and we’ll review what the real definition of cost plus is in part II.

We look forward to and appreciate your comments.

DO You Have a winning or Super Bowl Level Team?

March 1st, 2017

It is truly a great thing when you have a team that can function like a well-oiled machine.

 

Today’s post is by Steven Belvin, Account Manager at SafeSourcing

Teamwork – The process of working collaboratively with a group of people in order to achieve a goal. Teamwork is often a crucial part of a business, as it is often necessary for colleagues to work well together, trying their best in any circumstance. Teamwork means that people will try to cooperate, using their individual skills and providing constructive feedback, despite any personal conflict between individuals.

I believe the New England Patriots displayed the perfect example of how teamwork should be carried out and an example of how far it can take you if done properly. The now 5-time Super Bowl champions had the greatest comeback in Super Bowl history. Great news for New England fans, however, how did they do it? That answer is easy, teamwork. They were a team that was down by more than 21 points by half time. However, their determination, desire, and of course teamwork brought them back to win the game in overtime. It was amazing to watch the Patriots firing away on all cylinders and looking like a well-oiled machine.  Do you have a Super bowl team?

It is truly a great thing when you have a team that can function like a well-oiled machine. Everyone knows their part and others can pick up the slack when someone is behind. Teamwork is truly a great thing. This is why at SafeSourcing we consider ourselves a team. We strive to always be on the same page and to also provide our customer with the best market value. Our expert knowledge of the market and suppliers helps us find you the best person for the job/supplies needed for your company. Once we get word of an event it is like watching a 4X100m track race, each member of the team completing a step until we reach the finish line. Every handoff is as smooth as possible and we all move as fast and precise as possible; again, like a well-oiled machine, all to bring you the best total market value and the potential to provide you with at least with 10X ROI.

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.

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“What Is Teamwork?” BusinessDictionary.com. N.p., n.d. Web. 14 Feb. 2017.

 

 

Gross Domestic Product

February 28th, 2017

Gross Domestic Product (GDP) is the value of all goods .....

 

Today’s post is by Jericia Stevens, Account Manager at SafeSourcing Inc.

Gross Domestic Product (GDP) is the value of all goods and services produced in the U.S. The GDP figure is released quarterly. We use GDP to measure economic output. The growth rate in GDP is closely evaluated by the Federal Reserve to determine whether the economy is growing too slowly or too quickly. (Bankrate.com)

I recently read an article concerning the GDP and if it can still effectively measure the economy. This was being questioned because the economy has shifted from being a production driven economy to a more service driven economy. The economy used to be driven by the production of things, such as refrigerators, cars, shoes, etc.

Today the economy thrives from services and technologies. According to the Bureau of Economic Analysis, the quarterly data by industry reports that finance and insurance; wholesale trade; and information services were the leading contributors to the increase U.S. economic growth in the third quarter of 2016. The Bureau also reported, 20 of 22 industry groups contributed to the overall 3.5 percent increase in real GDP in the third quarter.

SafeSourcing, Inc. is part of the service industry. We provide innovative eProcurement tools that can increase efficiency and improve profitability for our customers; as well as provide superior value for all stakeholders. In addition to providing information, tools and services, SafeSourcing proactively supports consumer safety and environmental standards throughout the global supply chain management process.

To learn more, visit SafeSourcing.com.  Let SafeSourcing manage your services, goods and projects. We can handle your sourcing needs. 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.

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https://bea.gov/newsreleases/glance.htm Ahearn, Cale (2016, September 21).

 

 

What is an Onboard Diagnostic II (OBD-II) Scanner?

February 24th, 2017

An Onboard Diagnostic II (OBD-II) scanner is .....

 

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

An Onboard Diagnostic II (OBD-II) scanner is a device that is used to read information from the computer within vehicles that were built after 1996. There are two types of OBD-II devices.  The first are basic code readers which can read and clear codes.  The second are scan tools which can provide more information about specific codes and provide access to recorded and live data.  The scan tool is the more expensive of the two and offers a variety of features not found in the basic reader. The devices are fairly simple to use and connect to a standard connector usually located under the dash.  Some of the devices are Bluetooth or Wi-Fi enabled and can connect to your smart phone using apps that are available for download.  There a many apps available that offer different features, you just need to make sure it is compatible with your OBD-II device you own.  To use the scanner, simply plug the device into the vehicles connector, connect to the device using your smartphone and then open the OBD-II application.  The most common use for the device is reading current trouble code(s).  These are codes that can be given off by the check engine light, check transmission light, ABS light, airbag light or other modules.  These codes can be accessed and cleared by using the downloaded application.  Depending on the application you may also be given additional information about the trouble codes such as possible causes and possible fixes for the recorded code.  Below are some other diagnostic features that are available with a scan tool and compatible application.

  • Engine Temperature
  • Fuel Rate
  • O2 Sensors
  • MAF Airflow Rate
  • Batter Voltage
  • Vehicle Speed
  • RPM

If you would like some help finding the right scanner, we can gather all the necessary information for you and help you decide which one will meet 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.

 

Do You Know The Different Types of Knowledge?

February 22nd, 2017

“Gaining knowledge is the first step to wisdom. Sharing it is the first step to humanity.”-- Unknown

 

Today’s post is written by Heather Powell, Director of Customer Services & Project Manager at SafeSourcing Inc.

“Understanding the different forms that knowledge can exist in, and thereby being able to distinguish between various types of knowledge, is an essential step for knowledge management (KM). For example, it should be fairly evident that the knowledge captured in a document would need to be managed (i.e. stored, retrieved, shared, changed, etc.) in a totally different way than that gathered over the years by an expert craftsman.”1.

Over the centuries many attempts have been made to classify knowledge, and different fields have focused on different dimensions. Within business and KM, two types of knowledge are usually defined, namely explicit and tacit knowledge. The former refers to codified knowledge, such as that found in documents, while the latter refers to non-codified and often personal/experience-based knowledge. KM and organizational learning theory almost always take root in the interaction and relationship between these two types of knowledge. Some researchers make a further distinction and talk of embedded knowledge. This way, one differentiates between knowledge embodied in people and that embedded in processes, organizational culture, routines, etc. (Horvath 2000).

Explicit: information or knowledge that is set out in tangible form.2

Implicit: information or knowledge that is not set out in tangible form but could be made explicit.2

Tacit: information or knowledge that one would have extreme difficulty operationally setting out in tangible form.2

Embedded: knowledge that is locked in processes, products, culture, routines, artifacts, or structures (Horvath 2000, Gamble & Blackwell 2001).1

All knowledge is a mixture of tacit and explicit elements rather than being one or the other. The “build it and they will come” expectation typifies this approach: Organizations take an exhaustive inventory of tangible knowledge (i.e., documents, digital records) and make them accessible to all employees. Senior management is then mystified as to why employees are not using this wonderful new resource. In fact, knowledge management is broader and includes leveraging the value of the organizational knowledge and know-how that accumulates over time. This approach is a much more holistic and user-centered approach that begins not with an audit of existing documents but with a needs analysis to better understand how improved knowledge sharing may benefit specific individuals, groups, and the organization as a whole. Successful knowledge-sharing examples are gathered and documented in the form of lessons learned and best practices and these then form the kernel of organizational stories.3

Stay tuned for next month’s blog where we explore more about Knowledge Management Framework.

We hope you enjoyed today’s blog. 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.

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Resource: 

  1. http://www.knowledge-management-tools.net/different-types-of-knowledge.html
  2. http://www.knowledge-management-cafe.com/faq/what-explicit-implicit-and-tacit-knowledge
  3. https://mitpress.mit.edu/sites/default/files/titles/content/9780262015080_sch_0001.pdf

 

Ready, Set, Gone

February 20th, 2017

How do you peak someone’s attention?

 

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

With a world of information at our fingertips, it can be difficult to no not only gain people’s attention, but also to sustain that interest. It is believed that a person forms an opinion of a product, company, or another person within eight seconds. On top of that, most people visiting websites only average 10-20 seconds before leaving. Viewers visiting websites and online articles will likely only read about 20% of the words on the page. This is a growing challenge for businesses and especially marketing groups, but they have found a few ways to not only get more viewers, but to keep their attention even longer.

First, keep messages short and to the point. While lots of information and expanding on a variety of topics is great for research and academic papers, most consumers retain short simple messages. If the message happens to resonate with a consumer, short and clear facts help to keep their attention.

If the message you want to relay is a long and complex one, there are ways of getting viewers invested in what you are trying to say. For example, telling a story or using real life examples can be highly effective. Presenting a common problem or situation with your message embedded into the story can leave a lasting impression.

Second, make things easy. Majority or viewers prefer watching a video to reading a block of text. Often, just putting text over a video can be just as effective. However, if a video is not an option, using graphics and images is a way to keep attention and even inject humor into topics.

With our ever-moving, fast-paced digital age, getting your message across effectively can not only get the attention you seek, but also change the processes of how business and marketing approach consumers. Different tactics can yield different results, and sometimes stopping to smell the roses is an underrated activity.

For more information on how SafeSourcing can get your message out, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

Sources:———————————————————

http://www.socialmediatoday.com/social-business/shortening-human-attention-span-and-what-it-means-marketers-infographic

 

 

Full Software as a Service

February 17th, 2017

How to choose an eProcurement provider that works for you!

 

Today’s post is by Dave Wenig, Director of Sales, North America at SafeSourcing.

If you’re a follower of eProcurement and a reader of our blog and other great blogs out there, you likely understand that there are many different ways to leverage eProcurement in an organization.

Chiefly, we recognize two distinct types; those that are software or platform oriented and those that are service oriented. Both types may refer to their offering as Software as a Service (SaaS). Setting bias aside, I can acknowledge that there are pros and cons for each and that both have their merits. Picking back up my bias, I’d like to elaborate on some of the reasons why we recommend choosing an eProcurement provider with a service oriented approach. You might think of it as Full-Service Software as a Service (FSaaS).

First, and not to sound like a broken record, is time to value. When you’re standing up a new eProcurement platform, you have to be conscious of how long it will take before the results – your savings – are realized. When you work with a service oriented provider, you can lean on your provider during the first weeks and months as your organization gets up to speed. The provider can offer intellectual property (IP), expertise, staff augmentation through customer services, and the platform itself. The combination of these offerings is what will, ultimately, provide fast time to value. If you’re doing it right, results should be realized in the current quarter.

Second is cost. While it might seem as though the software or platform only options will be the lower cost alternative to the full-service options, you have to look at the total cost of ownership (TCO). Again, while the upfront software or platform only costs may seem low, you have to be careful of the factors that will drive your actual costs up. These might be user training, support, additional features, or additional user licenses. Also, to stand up an eProcurement platform without the assistance of a full-service provider, an organization should be prepared to allocate several FTEs to use the tools, work with suppliers, and provide supplier support. The fully loaded cost of these employees should be factored into your TCO estimate and should not be underestimated.

Many of the most successful clients that I have worked with have found their success using a full-service provider. Some have tried a software or platform only approach as well and have ultimately determined that the right approach is full-service.

Dave Wenig is the Director of Sales, North America at SafeSourcing. Dave or any member of the experienced team atSafeSourcing would be happy to discuss how SafeSourcing can help you with your eProcurement planning. For more information, please contact SafeSourcing.

We look forward to your comments.

Another Pet Food Recall!

February 14th, 2017

Many years ago there was a pet food recall that affected many brands

 

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

Many years ago there was a pet food recall that affected many brands.  My own dog got extremely ill and required medical attention.  Since then we cook protein for him and supplement his diet with an organic dry food.  Many people view their pets as family members…I am one of those people!

Evanger’s Dog and Cat Food, of Wheeling, Illinois, has recalled specific lots of its Hunk of Beef pet food.  The recall is due to potentially contaminated product with a lethal sedative.

Evanger’s Hunk of Beef Au Jus detected Pentobarbital in one lot.   The FDA reported one dog has died and four others became ill after eating the product,

The recall affects 12-oz. cans of Hunk of Beef:

  • 1816E03HB
  • 1816E04HB
  • 1816E06HB
  • 1816E07HB
  • 1816E13HB

The expiration date of June 2020 is indicated on the product. The second half of the barcode reads 20109, which can be found on the back of the product label.

The products affected were sold in stores and online in Ohio, Indiana, Michigan, Illinois, Washington, California, Minnesota, Wisconsin, Pennsylvania, New York, Massachusetts, Maryland, South Carolina, Georgia and Florida, and were manufactured the week of June 6 – June 13, 2016.

Pentobarbital, in high doses, can be used for euthanasia. Side effects of non-lethal doses include drowsiness, dizziness, excitement, loss of balance, or nausea.

“All Evanger’s suppliers of meat products are USDA approved,” the FDA said. “This beef supplier provides us with beef chunks from cows that are slaughtered in a USDA facility. We continue to investigate how this substance entered our raw material supply.”

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.

 

 

 

 

 

Retail spend management basics.

February 10th, 2017

What data do you have? What format is it in? Do you need a Spend Cube?

 

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

No you do not!

A major step to trying to understand where to spend your effort when building an e-RFX attack plan is to understand the detail of your company’s P&L and how it can provide clues as to where you might have the most impact.

I meet with buyers or other e-procurement knowledge workers on a regular basis that want to know what categories are the best to select in the short term to prove the benefit of  e-negotiation tools. This quite honestly is not a bad approach for pilot selection as it creates an almost sure thing that results in a lot of excitement and the energy to move the process forward within a company.

Quite often before meeting with a new client, I will analyze their annual report and their summary and detailed P&L if available in order to get a good idea as to where the opportunities are hiding that can have an immediate impact. However in order to have long term viability as a way to conduct the business of buying, a more detailed analysis is required. Quite frankly before you can even begin to discuss vendor or supplier selection, management or evaluation this process is critical.

Key data required to prepare you for this analysis can consist of but is certainly not limited to the following. All of this data is readily available from a variety of industry sources. Quite often the data is a year old but you can bet it is better than anything else your customer may be using today.

1. Research and accumulate your specific Industry data
2. Analyze last years P&L
3. Compare your cost of goods with your Industries averages
4. Compare your gross margins with your Industry averages
5. Compare your net earnings with your industry averages
6. Conduct the same comparisons with selected retailers with whom you compete. Pretty easy if they are public.
7. Compare your departmental sales and margin results to those of your specific industry.
8. Look for department level anomalies.
9. Look for specific product anomalies within major and sub departments.
10.Select top categories that are below plan and outside industry average for cost of goods and margin.
11.Select top products that are underperforming to industry averages and plan

One example of the above might be to look at the grocery department sub category of pet care. Now drill down to the sub category of cat and dog products and a list of all accessories. Now look at what products are underperforming to the industry and plan. Continue your analysis with other underperforming categories.

In summary, did you need a spend cube to try and figure this out? No you did not. You needed someone that understands your industry and your P&L with some analytical common sense.

If you’d like to learn how these techniques can assist you, please contact a SafeSourcing customer services account manager.

As always, we look forward to and appreciate your comments.