There are several important elements to understanding retail competitive bidding when using e-negotiation tools.

Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality. The process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on an equal playing field. Ideally each supplier must bid on the same documented specifications, terms, and conditions for all the items. However breaking out individual line items that a specialty supplier can provide bids for can help to reduce the opportunity for suppliers to manage the overall gross margin of their bids and drive higher savings. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest possible price, for the benefit of the host Retailer. Competitive bidding cannot occur where specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding tangible benefit for the host Retailer.

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

A discussion followed relative to incumbent suppliers vs. new sources of supply. In general most vendors in the space would come up with many of the same points listed below. Please read on.

SafeSourcing Inc. places a great deal of value in our SafeSourceIt? North American Retail Supplier Database of over 250,000 suppliers located in Mexico, Canada the United States and China. Additionally we also place a great deal of value on each individual supplier regardless of size. We believe that well thought out next generation e-procurement tools can provide significant benefits to buyers and suppliers whether they are hosting or participating in e-procurement events.

Some but certainly not all benefits that suppliers can anticipate from SafeSourcing are:

1. An easy to use e-procurement tool limited to a single page view where a supplier can be completely comfortable that their company?s best foot is being put forward to the soliciting company.

2. An increase in new business opportunities through engagements they would otherwise not be exposed to.

3. Clean data about the soliciting company and an accurate listing of their event guidelines, specifications, terms, conditions and other information necessary to build an accurate and successful pricing strategy.

4. Best practice training in event participation and strategy development.

5. A clear focus on what?s important beyond price in next generation e-procurement tools such as supplier safety certifications and practices as well as their environmental programs that will differentiate them from other suppliers.

6. Closed loop reporting of results of the specific e-procurement event a supplier participates in as well as a detailed supplier feedback questionnaire report.

7. Significant time savings associated with new business development that becomes more and more costly as fuel and other prices continue to rise.

8. Industry pricing trends extrapolated from their view of low quote information during the event if allowed by the soliciting company.

9. Use of these tools for their own procurement needs.

We appreciate and look forward to your comments.

The other day while I was mowing the lawn, a man pulled up to ask if he could take some logs that had been stacked by the curb to use as firewood. We started talking and the conversation was pretty typical for two people that had never met. Then, it took an interesting turn when I mentioned that I had been up at the high school football game and had a burger there.

The man then began talking about E. coli and how he does not trust the grocers to provide him with safe meat. He actually went on to tell me that his son is a chef who grinds his own meat. Not just that, the man actually went on to name a retailer where he bought ground beef that he claimed gave his wife food poisoning.

This conversation, albeit brief, was very interesting to me. At SafeSourcing, we are very aware of product safety issues and the ramifications of unsafe products. To this man, his fear of the meat was based on his distrust of the supply chain. He struck a chord with me when he mentioned that he had no idea where his meat comes from.

Can this man?s concerns be managed? Through traceability, the products you offer could be proven to be safe. Retailers must be aware of their entire supply chain and the product safety procedures in place at each point. Here again, it is fair to ask; what certifications do your suppliers hold? Clearly, when these product safety questions arise such as an outbreak of E. coli, only a relatively small portion of the product is affected. With the technology available today, retailers should be able to defend their products against this type of concern.

If you don?t think this is important, ask yourself this question: How many other people did he tell?

We look forward to and appreciate your comments.

When you are watching TV tonight, pay close attention to thecommercials. You?re sure to find all types of messages aimed at showing that products are green or environmentally friendly. Can you say that about the products or services that you sell or use?

There are any numbers of programs out there in which you and/or your suppliers can participate. They are easy to find. Just type green certification into your favorite search engine and you will find results. You can do your homework to find out which one?s are right for you. Most provide the steps required to qualify right on their website. The U.S. EPA for example has a program called Green Power Partnership, http://www.epa.gov/grnpower/, which is worth looking into. Another certification program to check out is Green-e, http://www.green-e.org/. This is an independent organization that has set out to reduce environmental impact. These are just two programs of the many programs you can participate in. Think of it as the tip of a green iceberg.

So, since there are so many certification programs out there, the question remains: Why aren?t your suppliers green? Next time you speak with them why not ask if they hold any environmental certifications or about plans they may have in place to become green certified. This may also be a good time to share with them what your plans are and that this may be an opportunity to learn together.

For even more information on programs, please visit www.safesourcing.com and type the word green into the search box.

We look forward to and appreciate your comments.

Environmentally Preferable Product or Process also known as (EPP) identifies a product or service that has a lesser or reduced impact on human health and the environment when compared with competing products or services that serve the same purpose. Such products or services may include, but are not limited to those which contain recycled content, minimize waste, conserve energy or water, and reduce the amount of toxics either disposed of or consumed.

One practice we use at SafeSourcing on a daily basis is the process of questioning the impact of a current or planned action as to its environmental impact. A great example of this is the exchange of contracts and invoices with our customers and other business partners. Electronic signature capability and EDI have been an accepted business process for years. Yet many companies continue to exchange their contracts and invoices via the mail system in the form of a hard copy and exchange checks for payment in the same manner.

There are five simple steps that can be used to reduce the environmental impact when sharing this type of information between businesses.

1. Pay all invoices electronically and save the paper and ink required to print the documents, stamp the envelopes and mail the check.
2. Review drafts of all contracts and agreements on line prior to the final signature version.
3. Open the signature line of the final version for pasting an electronic signature.
4. Store all documents and contracts electronically
5. Back the data up regularly and store a copy off site.

A few of the benefits to the above related to the environment are.

1. Reduction in the use of paper products for copies, stamps and envelopes.
2. Reduction in the use of ink products such as toner.
3. Reduction in cost of stamps
4. Reduction in the companies recycling tonnage.
5. Longer printer life
6. Reduction in utility costs.

This entire process just requires a little thought.

We look forward to and appreciate your comments.

I was reading the NEW YORKER magazine recently and came across this cartoon with three trash cans standing side by side each containing one of the titles from above. This cartoon spoke volumes to me about both individual and or company commitment to a subject or process. From an environmental perspective the term Greenwash has evolved to describe a variety deceptive practices.

According to Wikipedia Greenwash is a term used to describe the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing. The term green sheen has similarly been used to describe organizations that attempt to show that they are adopting practices beneficial to the environment.

As I continued to reflect on this, the cartoon raised questions that all companies should ask themselves in support of their Corporate Social Responsibility initiatives or CSR. Relative to procurement, what are procurement professionals really doing to support product safety and environmental protection within their sourcing practices? And, are those practices tied to the companies overall CSR strategies. In a lot of cases when you ask this question the answers you get may be very vague such as; we follow some trade organizations initiatives or we’re SQF compliant. However when asked to discuss or demonstrate how they are adhering to these practices there is indeed very little content to support the words.

As such, I thought this simple cartoon could serve as a great reminder as we enter the weekend to look at your marketing collateral and your media campaigns relative to your CSR plan and then think about how all of your corporate sub culture would answer the same questions. This may help to answer the question; are we real or make believe? With this information you can now you can put a plan in pace to either reinforce or reeducate to support your overall CSR goals.

We look forward to and appreciate your comments.

I was reading the NEW YORKER magazine recently and came across this cartoon with three trash cans standing side by side each containing one of the titles from above. This cartoon spoke volumes to me about both individual and or company commitment to a subject or process. From an environmental perspective the term Greenwash has evolved to describe a variety deceptive practices.

According to Wikipedia Greenwash is a term used to describe the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing. The term green sheen has similarly been used to describe organizations that attempt to show that they are adopting practices beneficial to the environment.

As I continued to reflect on this, the cartoon raised questions that all companies should ask themselves in support of their Corporate Social Responsibility initiatives or CSR. Relative to procurement, what are procurement professionals really doing to support product safety and environmental protection within their sourcing practices? And, are those practices tied to the companies overall CSR strategies. In a lot of cases when you ask this question the answers you get may be very vague such as; we follow some trade organizations initiatives or we?re SQF compliant. However when asked to discuss or demonstrate how they are adhering to these practices there is indeed very little content to support the words.

As such, I thought this simple cartoon could serve as a great reminder as we enter the weekend to look at your marketing collateral and your media campaigns relative to your CSR plan and then think about how all of your corporate sub culture would answer the same questions. This may help to answer the question; are we real or make believe? With this information you can now you can put a plan in pace to either reinforce or reeducate to support your overall CSR goals.

We look forward to and appreciate your comments.

Often times when speaking with retailers about the benefits of e-negotiation tools, the categories they want to discuss are expense related categories or not for resale products. The fact is that this area provides a great opportunity to compress pricing. However expense related categories will not have the same impact on a retailers bottom line as a reduction in Cost of Goods Sold or COGS or for resale products. These categories will put more profit in the retailer?s bank account. These categories will also allow retailers to reduce pricing for their customers, and it is these for resale categories that will allow retailers to offer competitive promotions in order to take business away form their competition while also driving a greater wallet share from their top consumer deciles. Finally, these are the categories that consumers care about and watch every day.

A recent 2009 National Grocers Association SuperMArketGuru Consumer Panel survey taken between November 2008 and January 2009 asked consumers the following question. How important is price when deciding where to shop for groceries? Ninety seven percent (97%) of consumers answered the question that it is somewhat to very important. So, low prices are a huge priority. This author?s assumption is that food retailers are already aware of this.

What can food retailers do? The first thing is to continue compressing costs on the expense line. You get to keep all of that money. The second thing is to consider ten categories for price compression in the direct spend area and share the compression with your customers. Run an add or place signs telling consumers what you a re doing and why. It might look something like this. ?Because of the current economic condition, we are running price compression events with our suppliers every week in order to drive our costs down so we can pass lower pricing to you on the products you are buying from us?. Next week please look for significant savings on the following products.

1. Peanut Butter
2. Eggs
3. Potatoes
4. IQF Chicken
5. Rice
6. Tomatoes
7. Juices
8. Jelly and Jams
9. Mustard
10. Deli Ham

The above categories are a few in which sales are apt to rise when consumers are trying to stretch their limited dollars. Additional focus could be made on private label in these areas as well.

As always we appreciate and look forward to your comments.

In yesterdays post, we discussed the pros and cons of a do-it-yourself approach to e-Procurement. Today?s post will take a look an alternative methodology which is to involve 3rd party solution providers to assist in the process.

Before getting into the specific positives and negatives of this approach, it is important to note that this does not have to be an all or nothing approach. As with any process, there are entire solutions or just pieces of solutions that can be provided by a 3rd party that have an impact on your Return On Investment (ROI). The way in which companies adopt outside solutions ranges from using a single service or tool, to a complete implementing an entire package where the 3rd party handles all aspects of the process. Most good solutions providers will accommodate a companies needs with either approach.

Let?s begin by taking a look at the downside of involving a 3rd party in this process. Many companies are hesitant to involve an outside company in their processes for two reasons. The first reason is that they are nervous about the lack of control with a process such as procurement occurring outside of their four walls. They have legitimate concerns as to a provider?s long term viability or not being able to change a process or software functionality without incurring additional costs.

The second reason people shy away from outside solutions is the upfront costs associated with many 3rd party solutions. While, in the end, the total amount of money spent on a 3rd party solution compared to using internal resources can be relatively close it is the initial monies or outlay of capital that keeps some companies from choosing a 3rd party to help them with tasks such as e-Procurement.

While both objections have validity, in today?s market many 3rd party e-Procurement solutions providers offer on demand solutions with no start up costs…

On the positive side of things, when purchasing or contracting an 3rd party solution, there is generally no down-time; no sick days, no vacation, and several companies will offer you 24/7 support for their product family as part of the cost of using their tools on demand. To go with virtual non-stop support, there is also the added benefit of employing a company whose sole focus is making their products and services better and more robust. Unlike an employee whose time may be split from a task such as procurement with other tasks, 3rd parties have teams of people focused on the task at hand and on how they can do it better in the future.

Involving outside resources can also help in that they frequently offer additional services that, dependent upon the size of your organization, could never be undertaken with in-house resources due to a lack of time, expertise or knowledgeable headcount. With a 3rd party solution companies can get all of the benefits that are normally only found in Fortune 500 type companies, and at a fraction of the cost.

Finally, taking the approach of involving an outside vendor with this process allows you to pick and choose the pieces that work best for your company and environment, while a do-it-yourself approach means that you and your team get to handle it all of the time regardless of what else comes up. Whether you select a reverse auction tool, contract management tool, professional services necessary to handle RFIs and RFQs, there are many combinations of solutions that can meet the varying needs of most businesses.

To close, there are two approaches that could be executed when it comes to tasks such as e-Procurement. With the advances in low cost agile technology, and the current economic condition, it would behoove every company to at least investigate the advantages of involving a 3rd party solution provider for adhoc functions or entire solutions. The benefits available today far outweigh the costs associated with attempting to do it yourself.

We look forward to and appreciate your comments.