Archive for June, 2011

Health Canada, a tool for buyers in Canada that costs little yet contains a lot.

Thursday, June 30th, 2011

In Canada, it’s as simple as visiting the Health Canada Website. According to Wikipedia Health Canada (French: Santé Canada) is the department of the government of Canada with responsibility for national public health. Here you can find news releases, speeches, media notices and research a variety of data related to health and food safety within Canada.

Just as yesterdays post  “Buyers; Do you need a great place to research product quality and recall issues” that talked about The U.S. Consumer Product Safety Commission  the Canadian Government has many tools that buyers can use that also cost nothing. You just have to spend a little time on their site.

Sometimes the best tools are the ones you don’t have to pay for.

We look forward to and appreciates your comments.

Buyers; Do you need a great place to research product quality and recall issues?

Wednesday, June 29th, 2011

The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of injury or death from thousands of types of consumer products under the agency’s jurisdiction. The CPSC is committed to protecting consumers and families from products that pose a fire, electrical, chemical, or mechanical hazard or can injure children. The CPSC’s work to ensure the safety of consumer products – such as toys, cribs, power tools, cigarette lighters, and household chemicals – contributed significantly to the 30 percent decline in the rate of deaths and injuries associated with consumer products over the past 30 years.

 Recalls and Product Safety News can be found at the CPSC’s website and can be searched using a number of categories, dates and other criteria such as those below.

1. Recall Number
2. Company
3. Product Type
4. Product Description
5. Hazard
6. Country/Administrative Area of Manufacture
7. Recall Date
8. UPC

You don’t always have to buy something in order to get your job done. Sometimes just knowing where to find the information can be the hardest part of your job. Now you have one fewer places to look.

We look forward to and appreciate your comments.

Rain, Wheat and Pasta!

Tuesday, June 28th, 2011

For weeks, North Dakota and Montana, the nation’s two largest producers of durum wheat have been pounded with heavy rain that will likely mean a drop of up to 47% of durum wheat production. 

Durum wheat, or “macaroni wheat”, is the hardest of all wheat types and that together with its high protein and gluten content make it the perfect wheat to be used in the manufacturing of pasta.

Due to the heavy rains farmers have been unable to get crops planted and even now they are out of time to plant crops in time to avoid the pre-winter frosts and will likely have a little more than half of the durum wheat production as normal, affecting prices of related products all over the world.
Durum wheat was up over 52% in May and the May U.S. pasta prices were the most expensive on record while other durum wheat producers like Canada saw prices jump 47% in May.  With fewer acres of wheat being produced the pasta prices will be affected accordingly.

Companies producing pasta products like Kraft with their Macaroni and Cheese and Campbells with products ranging from noodle-based soups to Spaghettios, have already announced increases in many of their products due to the lack of durum wheat production and subsequent higher durum wheat prices.

In product categories such as this one it is more important than ever to make sure that you are doing everything you can to keep the cost of goods controlled with tighter contracts containing index terminology and keeping the pricing you receive as competitive as possible. 

When the supply of product takes a huge decrease in relation to its demand, the opportunity for competitive pricing events becomes a little more difficult, as vendors will have plenty of places to sell their product. 

This may be a time to get more creative in other ways as far as length of contracts, other services or products you may agree to take on, or other considerations that will allow you to get competitive pricing on a high demand product category.  It is hard to predict what climatic conditions such as all of the spring rain will do  to agricultural products, but smart procurement professionals can learn to leverage other techniques in order to keep their costs for products affected by these conditions under control.

For more information on SafeSourcing and how we can assist your company with sourcing these goods and services, please contact a Customer Service Representative for more information.

We hope you have enjoyed last week’s  Five Part Series and look forward to and appreciate your comments.

Getting to know your specifications.

Friday, June 17th, 2011

Here is a challenge: Pick a product that you purchase and write out a specification. Be specific and include components and peripherals. Take it a step further and write down how many and how often you purchase. Finally, what is the price you are currently paying for this product? Is that the same price you agreed to pay when at the beginning of the contract?

This exercise may seem basic, but this knowledge is a vital component of the procurement process. Here is a list of potential red flags that may mean it is time to research your products.

     1. All of your product data is in the form of a vendor invoice.
     2. You are uncertain of your order volumes or frequencies.
     3. You have been placing the exact same orders for years.
     4. Your pricing fluctuates often.

Be honest with yourself; is there room for improvement in product knowledge? I would encourage you to reach out to your strategic sourcing partner for suggestions. Aside from dollar savings results, you will also benefit from having a complete set of product specifications, vendor information and more at the completions of your strategic sourcing process. 

For more information on SafeSourcing and how we can assist with this process, please contact a Customer Service Representative for more information.

We look forward to and appreciate your comments.

Do your buyers ever consider what type of auctions they need to run or the features they should use within each e- negotiation session?

Thursday, June 16th, 2011

Today’s strategic sourcing platforms have incorporated many features within their overall offerings that are there to drive behavior in your favor. Most companies don’t use many of them.

Can your supply chain leaders tell you what a blind auction is? How about an RFQ or a turbo auction?  What about a Dutch auction? Can they tell you what a reserve price is? What about the difference between and RFI and an RFP. How about when to use and RFI,RFP or RFQ?

Today’s reality is that many supply chain professionals can not give you a clean definition of the many types of auctions or the tools used to enhance participation within the auctions. This is really too bad because most of the terminology has been adapted from traditional procurement practices and negotiation strategies. Understanding these terms and where they play in the negotiation framework can help procurement professionals whether they are negotiating with on line tools or in person.

If you are already using on line negotiation or e-procurement tools, your solution provider should have a checklist they go over with you for each e-negotiation sessiont. This checklist should cover all of the options available to you and your provider should be able to discuss the strategy behind the use of these features.

Don’t be blind to the opportunity to drive maximum savings by not discussing strategy with your solution provider on every session you run. If you are doing everything yourself  i.e. self service, it might be time for a one day work session from a leading provider in order to make sure that you have all your bases covered.

We look forward to and appreciate your comments.

Procurement deserves more attention from the executive suite now!

Wednesday, June 15th, 2011

Procurement when looked at properly has the largest single impact on a company’s financial performance. In fact more than any other area of the company. The fact is that when additional sources of supply compete for a company’s business, it results in compressed pricing that drops directly to the bottom line and also often delivers better quality products or materials. Coupled with the prevention of possible disruptions in a company’s regular source of supply – like the situation businesses have experienced during the last several years, e-procurement tools offers many advantages that can not continue to be overlooked. Companies that are more profitable grow and companies that grow generate jobs.

The benefits to be realized in using e-procurement tools beyond savings include faster time to purchasing decisions and more effective supplier management. Today’s easy to use tools are a result of technology advancements, enhanced data mining techniques and data management best practices  driving significant improvements in the e-procurement process.

In today’s tight business environment, lowering costs through the use of e-procurement tools are proving to be a valuable aid to ensuring profitable operation.

If you are not using them, you should be. If you are reducing staff in your procurement area you should not be.

We look forward to and appreciate your comments.

Is it possible to compress prices in this market? Commodity prices are rising aren’t they?

Tuesday, June 14th, 2011

This is the precise reason why some companies are profitable and others are not. Just because the commodities that are the basis for products we buy are up, is no reason to not try and compress pricing through the use of e-negotiation tools or other more traditional methods. With that said e-negotiation tools will make the process much easier and insure compression in a much shorter period of time.

There is a lot that goes in to the products companies buy and maybe even more in the prices they pay. Two things are certain. There will always be suppliers that want to bid on your business. There will always be suppliers that are willing to invest to get your business. This dynamic is what will allow you to compress prices in an up market.

However, there is work to do on your part in order to make sure you are sourcing the categories or products that make the most sense at any given point in time. Here are two things you can and should do. Check your current contracts. Those that are over two years old with the same supplier will be more likely to drive savings. Check the commodity markets for specific commodities that will impact your pricing. As an example, the price of oil is up so freight will be more expensive. A great place to check commodity data is index mundi. You can check current and historical commodities and product related pricing.

Understanding everything about what you re buying and what drives its prcing and using the proper tools to leverage the supply base can and will result in price savings even in an up market.

We look forward to and appreciate your comments.

Should we unbundle or not? That is the retail e-procurement question of the day

Monday, June 13th, 2011

It is primarily because of this reason that most procurement companies are not able to drive the type of savings that their customers deserve.

At Safe Sourcing we discuss unbundling all of the time. We discuss it regardless of category or product. As a result, our low quote savings average nearly thirty percent across all categories while other companies struggle to achieve half of these savings.

For the sake of protecting our value add, I will not give you specifics on products, but think of all of the elements that go into a product becoming a product. This process will surely uncover those value added costs associated with acronyms like customer relationship management or CRM which are used as an excuse to hide margin dollars.

If your e-procurement event is one line item, your solution provider is not doing their job. If your event is two line items your solution provider is probably not doing their job. How many products are you aware of that you buy either for reuse or for resale that are made up of one component?

There is a lawsuit going on in Europe as we speak where a major manufacturer is being challenged to unbundle a particular product family. If you are interested, you can Google the subject.

In the meantime, hold a white board session internally and list any product that you buy for reuse or resale and see how many line items you can come up with that make up the product. Now think about how you might use that information in a negotiation online or otherwise. If you can’t figure it out, give us a call at 1-866-623-9006.

We look forward to and appreciate you comments.

So you want to offshore or source from China or other Asia Pacific Countries.

Thursday, June 9th, 2011

We all know there are cultural differences when doing business or sourcing products from a foreign country. These differences go way beyond language capability or dialects of languages.

At a very high level, a buying agent is a person or a company that should understand the cultural issues and challenges associated with a target country down to the region or local level. Additionally they should understand where to locate sources of supply that can provide the specific goods and services required at competitive prices with favorable terms and conditions. Additionally a buying agent should be aware of logistical opportunities such as warehouse availability and local 3PL?s that will allow them use as a collection point for shipment flexibility for their customer.

As with all things if you do not have the internal expertise to source from a foreign country, find organizations that do and ask for references. One mistake can wipe out any potential savings and end up costing you much more.

We look forward to and appreciate your comments.

How difficult is food safety?

Wednesday, June 8th, 2011

You can?t open up your browser or turn a page in a local or national newspaper without reading about some food borne illness issue followed by some official saying we have to get a handle on this. Most of these illnesses are lumped into the food poisoning category. Some are bacterial and others virus related.

The bacteria and viruses most frequently associated with food poisoning cases in the United States are Salmonella, Botulism, Norovirus,Vibrio Infections, Listeria, Hepatitis A, B.cereus, E.coli and Campylobacter. To this author all of these names are pretty scary and many have resulted in death.

There are dozens of trade organizations, programs within those organizations, standards and governments focused on Food Safety. And we still end up with outbreaks like we are seeing in Europe.??

If I were to try and define food safety, a simple definition would be that it is a scientific discipline describing the handling, preparation, and storage of food in ways that prevent food borne illness. This includes a number of routines that should be followed to avoid potentially severe health hazards. Food can transmit disease from person to person as well as serve as a growth medium for bacteria that can cause food poisoning.

Isn?t too bad it?s not that easy. Unfortunately, Food Safety seems to be proverbial camel???? created by a committee trying to design a horse.

We look forward to and appreciate your comments.