If you missed this the 1st time, “Shrinkflation” Don’t this time!

January 30th, 2024

Just another word for Just Noticeable Difference that hurts the consumer.

 

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

Just another word for Just Noticeable Difference or JND that hurts the consumer.

In a recent post titled “How are you dealing with your overstock issues” Where I discussed using eprocuremnt tools to help reduce retail shrink. Then today I opened the paper and there it was Shrinkflation. Which is the Reduction in the size or weight of retail products, especially items of packaged food, with no corresponding reduction in the retail price. This improves financial results for the company with the expense born by the consumer who end up getting less for more.

In economics, shrinkflation is the practice of reducing the size or quantity of a product while the price of the product remains the same or slightly increases. In some cases, the term may indicate lowering the quality of a product or its ingredients while the price remains the same.

When I was studying Psychology in college out professor brought up the term Just Noticeable Difference or (JND). He asked us if anyone though that candy bars were getting smaller year over year. We all know the answer to that question, particularly if you ever trick or treated or now take your kids trick or treating. Those darn candy bars keep shrinking. So just what is a Just Noticeable Difference

According to Helensinblog on WordPress, Just Noticeable Difference, also known as the difference threshold, is the minimum level of stimulation that a person can detect 50-percent of the time.

For our senses, there is a measure called an absolute threshold. The absolute threshold shows that we can hardly see the difference in stimulus and are able to perceive its ability, and the difference threshold is that we cannot notice the difference, better known as the” Just-noticeable difference” (JND). For example, if you hold a bag of 100 pounds of oranges, plus a pound will not be noticed. But if you hold 5 pounds, then you add a pound, you will notice.

SafeSourcing is an eprocurement company that operates across multiple industries. As such we have specific experience in helping our customers source their products through a variety of tools. One of those is our SafeSourceIt™ Templates Library. Here we house thousands of specifications that have evolved over the years as products have changed. Having the proper specification is key to sourcing the correct products at both the manufacturing and the retail level. Take care of your customers the way they deserve to be. Don’t sell them less for more, they are already hurting enough.

To learn more, please contact a SafeSourcing customer services associate.

References:

shrinkflation meaning – Search (bing.com)

Just-noticeable difference (JND) – Consumer Behaviour (wordpress.com)

How are you attacking your shrink?

January 29th, 2024

You're probably watching those tried and true KPI’s and building cases huh? Good Luck with that!

 

Today’s repost if from Ron Southard, CEO at SafeSourcing Inc.

Shrink never goes down. Read all of the trade rags and the numbers stay pretty constant even with the newest technologies and services offerings. And, turnover is as high as ever so unless you have great awareness campaigns in place problem will just recycle itself.

If you want to have a huge impact and have it immediately, clean out those back rooms and move your overstock items using a forward auction. We all know that with all of the new products, store resets, aged inventory and poor sell through that most backrooms are full of items you did not receive money for. That is also shrink!

The first benefit if this strategy is it will force you to look for it. The second benefit once you find it is that it will reduce your inventory shrink.

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.

Contact a SafeSourcing customer services representative to see how we can help reduce your overstock and shrink with forward auction tools.

We look forward to and appreciate your comments.
.

What is Shrink? It was a big subject at NRF 2024!

January 26th, 2024

Inventory shrink is a loss of goods either due to theft, damages/spoilage or administrative errors!

 

 

Todays repost is by Gayl Southard, Gayl Southard VP of Administration at SafeSourcing.

“What is shrink? Inventory shrink is a loss of goods either due to theft, damages/spoilage or administrative errors on items moving from a manufacturing site to an end customer.  The shrinkage can be referred to as a hit to the margin or loss in profit.”1

  1. How do we Record Inventory Shrink? Between the last cycle count and the current period, your business may have Inventory loss. The physical Inventory is less than what is recorded in your books. “To account for this loss of Inventory via the perpetual accounting method, you would: increase the cost of goods sold and decrease the inventory but the difference for the recording period. Your balance sheet would show a credit to the inventory line then for the value that was lost. Showing that you have incurred higher expenses (cost of goods) and a lower gross profit will lower your taxable income.” You may prefer to record shrinkage separately. This would require IRS Form 4684 if your business is in the US.
  2. What Causes Shrink? Shrink is inevitable. It can be controlled through inventory management best practices. Shrink can occur by employ theft and fake sales. Retail theft may occur through petty theft, shoplifting, breaking and entering, and entering fake coupons. Shrink isn’t always caused by scams. It can be attributed to poorly designed operational procedures and standards. It causes a trickle down effect to the rest of the business including the warehouse and financial operations. Shrink can be managed by implementing internal controls. When hiring, conduct background and reference checks. Educate new employees on your policies and stance on employee theft. Some preventative steps may be surveillance cameras, valuable items secured in secured areas accessed by higher authoritative levels, separation of duties, anonymous reporting, checking on how trash is disposed, and audits.
  3. What Can be Done to Prevent Retail Theft? Using security cameras and mirrors through the space. Suspicious behavior may be spotted more easily. Bad promotion codes and fake coupons and online discount sites have increased the amount of manufacturing coupons on the net. Personnel will have to stay current with coupon scams.

For more information on SafeSourcing and how we can help you with your sourcing 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.

Resources:————————————————————-

1 Colleen Roderick’s, inFlow

 

 

 

 

There are many challenges when sourcing freight lanes.

January 23rd, 2024

Are you aware of all the areas that impact the cost when sourcing freight lanes?

 

Todays oldie but good post is from our SafeSourcing Archives.

You have to keep your eyes open in this category as there are many moving parts you might never anticipate, like are there actually enough drivers to fill the trucks.

Most people would guess that it is the cost of fuel, new regulations or the age of a providers fleet that keep adding costs for third party freight companies.

An area most buyers of these services might not think about is the cost of and need for qualified drivers. Most 3rd party freight companies are looking for drivers and there are not enough to go around.

Our economy rides on the wheels of the freight companies that ship our goods across the country, in fact all across North America.

So what happens when there is a shortage of drivers? It’s pretty simple, prices go up. Why? Because freight companies have to compete for qualified drivers and when there are not enough to go around, the price for these services go up. It’s a pretty simple supply and demand equation.

In an interesting and  related article in the June 25th edition of USA TODAY titled Trucker jobs go unfilled, leading to delayed deliveries by  Paul Davidson of USA TODAY indicates that the annual driver turnover rate at large carriers rose to a four-year high of 90%.

When you source your freight lanes make sure that you understand all of the dynamics that impact cost.

If you’d like help sourcing your freight lanes, contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

What should be considered when purchasing vehicles personally or for your fleet?

January 22nd, 2024

If you have been paying attention to news lately.....

 

 

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

If you have been paying attention to news lately there has been a lot of talk about electric vehicles.  Recently the rental company Hertz announced that they are dumping EVs including Tesla’s for gas cars.  According to the news they are selling about 20,000 electric vehicles from its U.S. fleet citing higher expenses related to collision and damage.  Another article appeared recently that stated that due to the current cold temperatures around the United States that the public charging stations have turned into vehicle graveyards over the past couple of days.  Owners are stating that they have been trying to charge the cars for days with no success and have had to borrow vehicles or get rides to their destinations.  One of the workers jokingly stated, “We got a bunch of dead robots out here.”  If you are looking into buying a new vehicle and have considered EVs or hybrids, please read the BLOG below that I wrote a few months back.

If you are in the market for a new vehicle and have been paying attention to gas prices lately you may want to look into an electric or a hybrid.  If you want to stay on the cheaper side you may want to consider the hybrid over the fully electric because they seem to be better value at this time.  A hybrid vehicle can save you on gas because they can get over thirty-five miles per gallon compared to a standard gasoline engine vehicle, which is about a forty percent improvement.  This is done by combining an electric motor with a gasoline engine.   When driving, the vehicle can switch between the electric motor and the gas motor and during some conditions both are used simultaneously.  This results in less gas being used, which gives you a better fuel economy than vehicles that just have a gasoline motor.  The electricity used comes from a high voltage battery pack and does not have to be plugged in to charge because the charging occurs by the gas engine and by capturing energy from deceleration.  Therefor when making long trips you do not have to plan out where you may have to stop to charge the battery unlike a full electric vehicle.  Below are some of the advantages of hybrid vehicles.

  • Lower Fuel Costs
  • Immediate Torque
  • Tax Incentives
  • Lower Emissions
  • Possible Use of HOV Lanes
  • Lack of Idling
  • Value Retention
  • Dependability

If you need help finding new vehicles for your company, feel free to contact SafeSourcing.   We can gather all the necessary information for you and help you decide which product meets 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.

 

The Power of Teamwork and B2B Partnerships

January 17th, 2024

Teams thrive when they share a common vision and align their goals..

 

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

In the dynamic landscape of modern business, success is often a collective effort that extends beyond individual achievements. The symbiotic relationship between teamwork and business-to-business partnerships can shed light on how collaboration can propel organizations to new heights.

Teams thrive when they share a common vision and align their goals with the overarching objectives of the organization. Collective commitment to a shared purpose fosters unity and motivates team members to work towards a common goal.

Open and transparent communication is the backbone of successful teamwork. Regular team meetings, feedback sessions, and collaborative tools facilitate seamless information exchange and idea sharing. A well-rounded team comprises individuals with diverse skills and expertise. Leveraging the strengths of each team member enhances problem-solving and innovation capabilities. Trust is the foundation of any successful team. Establishing trust among team members promotes collaboration and a positive working environment. A culture of accountability ensures that team members take ownership of their responsibilities, contributing to overall success.

Successful B2B partnerships are built on mutual benefit and a clear understanding of each party’s objectives. Aligning interests and goals creates a win-win scenario that fosters long-term collaboration. Clear and transparent communication is equally crucial in B2B partnerships. Establishing effective communication channels helps partners stay informed and aligned throughout the collaboration. B2B partnerships are strengthened when organizations share common values and culture. A cohesive cultural fit promotes seamless collaboration and minimizes potential conflicts.

B2B partnerships often lead to joint innovation and the development of groundbreaking solutions. Organizations should prioritize team development initiatives to build a cohesive and high-performing workforce. Success requires ongoing collaboration and adaptability to changing circumstances.

In business, the combination of effective teamwork and strategic B2B partnerships is a formidable force. By fostering a culture of collaboration, organizations can unlock new levels of success, innovation, and sustainable growth. Embrace the power of teamwork and forge meaningful B2B partnerships to propel your business towards a future filled with achievements and shared victories.

For more information on what the SafeSourcing team can offer you, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

http://safesourcing.com/ContactUs/tabid/60/language/en-US/Default.aspx

Category Captain

January 9th, 2024

Does your company have a Category Captain (Subject Matter Expert) for all of your spend areas?

 

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

Does your company have a Category Captain (Subject Matter Expert) for all of your spend areas?

Within a category, a category captain is the manufacturer‘s representative responsible for analyzing the product movement, assortment, inventory management, promotion, buying, and profitability for a specific geographic area or an entire chain. They will be expected to have the closest and most regular contact with the retailer. In order to do the job effectively, the supplier may be granted access to a greater wealth of data-sharing.

At SafeSourcing we offer SaaS based eprocurement solutions, as part of our SafeSourceIt™ family of products. Each product is backed by white-glove services with battle tested statements of work.

If you lack specific product knowledge or only source  certain categories less than annually, and would like to understand current market drivers,, please contact a SafeSourcing customer services associate.

 

Why increased profitability continues to evade the middle market retailers.

January 5th, 2024

The reason is because middle market retailers are not using internet based live bids or RFQ's and other e-procurement tools.

 

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

I wrote this post 14 years ago and it’s still true today.

There are two primary sources of objections that continue to halt the use of these profit enhancing tools in the retail middle markets particularly c-stores and regional supermarket chains.

The first source is your own buyers or category managers. For some, it is the false belief that these tools will eliminate their jobs. For others, it is the thought that in rising markets, buyers tend to be conservative in the hopes that their suppliers will continue to honor old contracts and delay price increases. Neither assumption is true. E-procurement tools make a buyer’s job easier as they can do more in less time such as working with dozens of suppliers versus only the same few. Honoring old contracts almost never happens. Ever-greening of contracts is a huge problem in retail where the lack of sophisticated contract management systems that can provide automatic alerts results in hundreds of contracts auto renewing at predetermined price increases. This results in huge cost increases to retailers that were not planned for. This is all the more reason to be thinking about your spend months before contracts expire even if it only results in cost avoidance.

The second area where you can expect pushback is from your incumbent suppliers or wholesale distributors. If you have never participated in the setup of a reverse auction and most middle market retailers have not, that initial call to your suppliers to ask them to participate in a reverse auction event is always an interesting journey. Be prepared for all of the reasons in the world why you should not waste your time on this type of process. The more forceful the pushback the more likely you are to see savings that you should have seen earlier. As such, although suppliers may b well aware of or even using these technologies to reduce their costs, middle tier retailers have not able to share in these savings to the extent they should.

If middle market senior executives lead the charge and cost and the availability of new sources of supply is no longer an issue, there is no reason middle market retailers should not benefit greatly from running online bids or RFQ’s.

If you’d like a risk-free trial, please contact SafeSourcing.

A Category Management Primer!

January 4th, 2024

What is the structure of your buying organization?

 

 

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

What is the structure of your buying organization?

Evolution to a category management structure began in the 1980’s. Many companies today have still not completely evolved to this structure. So, what are some of the elements of a category management structure and what do they do. Here are some definitions from the SafeSourcing Wiki which is free for anyone to use.

  1. CategoryManagement is a retailing concept in which the total range of products sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product Examples of grocery categories may be tinned fish, washing detergent, toothpastes, etc. Each category is then run like a “mini business” (Business Unit) in its own right, with its own set of turnover and/or profitability targets and strategies.
  2. categorymanager (CM) analyzes product brands and mixinventory levels, movement, shelf space allocation, promotions, buying, and profitability of a merchandise category. They manage the marketing for a range of related products in a way designed to increase sales of all of the products, as opposed to a brand manager who markets an entire brand of goods.
  3. Within a category, a category captain is the manufacturer‘s representative responsible for analyzing the productmovement, assortment, inventory management, promotion, buying, and profitability for a specific geographic area or an entire chain. They will be expected to have the closest and most regular contact with the retail In order to do the job effectively, the supplier may be granted access to a greater wealth of data-sharing.

If you would like to learn more about our daily posts or other SafeSourcing free tools like our SafeSourcing Wiki, please contact a SafeSourcing customers services associate.

 

 

Happy New Year 2024. This year’s strategic sourcing plan should already be in place

January 3rd, 2024

Now you should be focused on tactics and execution at this point.

 

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

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

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

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

We appreciate and look forward to your comments.