Archive for October, 2011

Retailers: Want to increase your sales and reduce liabilities? Implement a mystery shopping program. As with any process, it pays to get it right.

Thursday, October 27th, 2011

Mystery shopping is a service that retailers often use to determine if their locations are consistent with their compliance efforts, product displays, customer service, sales and more. Mystery shoppers will “shop” the stores and follow a set procedure or checklist and will then report on their findings. Among the findings will be areas for improvement at the locations that are very beneficial to retailers.

One example of the benefit of these services is in compliance. If a retailer is selling alcohol or tobacco products they are required to be compliant with age verification laws. Mystery shopping can identify locations that are not consistently checking ID. Another example is in sales. Retailer may find lost opportunities for revenues based on missed up sell attempts or lacking product displays.

Here are four steps to get the most out of your program.

1. Shop the shoppers. There are hundreds of companies that offer mystery  shopping services. You and your sourcing partner will need to evaluate the field. This is a critical first step and is best addressed with a thorough Request for Proposal (RFP).
2. Set your evaluation criteria. In order to evaluate the providers, you need to have a well thought out plan. What are the most valuable attributes of your ideal mystery shopping provider? Share these with your sourcing partner as a basis for your RFP. Likewise, what are the most important service offerings or capabilities?
3. Evaluate. Now that you have completed your RFP, you will need to evaluate the responses. Your sourcing partner will assist with this process as well. By setting your criteria in step two, you have already set the stage for a simple review process. Your reporting will be centered on what matters the most to you.
4. Finalize your selection. Of course, once you have chosen the vendors that will remain under consideration, you will have the option to host a reverse auction based on the pricing collected during the RFP. This will ensure that you are getting the best provider at the best possible price.

If you are new to mystery shopping programs or if you would like to give an existing program a new start, your strategic sourcing partner has the expertise to guide you through these four steps.

We look forward to and appreciate your comments.

Contract Management 101.

Tuesday, October 25th, 2011

Beyond storage, understanding  and alerts of the Meta data that will mitigate your risk relative to contract leakage, understanding the terminology in your contracts and how they are organized is a daunting task.

There are many law dictionaries available in hard cover and over the internet that can help, but remember just having one does not make understanding these documents any easier. Here is a list of many of the most popular.

1. Anderson’s Dictionary of Law (1893)
2. Bouvier’s Law Dictionary 1856 Edition
3. Criminal Justice Today Glossary
4. Criminology Today Glossary
5. Criminal Law Glossary
6. Canadian Bankruptcy Glossary
7. Divorce Law Dictionary
8. Duhaime’s Law Dictionary
9. Everybody’s Legal Glossary
10. Glossary of Commercial Fraud
11. International Law Glossary
12. INS Glossary of Immigration and Naturalization Law
13. Law Glossary
14. Merriam-Webster’s Law Dictionary
15. Legal Lexicon’s Lyceum
16. Merriam-Webster’s Law Dictionary
17. Oxford Law Dictionary Top of Form

Certainly one could argue that some of these might be eliminated for business use, and this author would agree. However others might argue that separating from an unfavorable contract or supplier relationship  can be as difficult as a divorce so maybe we should leave that one on the list.

If you’d like to eliminate your contract leakage, give SafeSourcing a call.

We look forward to and appreciate your comments.

Twenty steps to running higher quality e-procurement events.

Thursday, October 20th, 2011

There are rules which if followed that will create higher quality e-procurement events for the companies and their suppliers?

Here are twenty you can begin with and then refine with others that your own team comes up with.

1. Executive sponsorship is mandatory
     a. This is required at the CEO and CFO level
2. Get the entire buying organization together for a kickoff session.
3. Provide a detailed over view of what you are going to do and the financial impact you expect it to have on the company.
4. Determine who your Subject Matter Experts are.
5. Conduct detailed data discovery sessions with all who have spend authority
6. Set specific success criteria.
7. Under stand that every event is not going to be a homerun.
8. Remember that singles and doubles score runs.
9. Create a fun environment.
10. Use scorecards to reinforce results attainment
11. Hand out E-RFX templates to gather existing product specifications.
12. Develop a standard timeline for event completion.
13. Gather an accurate list of your present suppliers.
14. Calendar your categories.
15. Prioritize by dollar value, date and strategic value.
16. Investigate existing contract language.
17. Look for auto renewal (evergreen) language and other roadblocks.
18. Determine alternate sources of supply with your sourcing company.
19. Develop a standard T& C document.
20. Assign an overall project owner
This list simply provides a format for getting started that offers suggestions that will help to create the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner like SafeSourcing that understands your business.
We appreciate and look forward to you comments.

What’s the most cost effective action that companies of all types and sizes can take to help reduce the number of food born or airborne illnesses?

Tuesday, October 18th, 2011

I was reading USA TODAY (I do this every day). I love their Snapshots at the bottom of each section. Today’s front page USA TODAY Snapshot was titled Has news coverage on airborne/foodborne illnesses prompted you to wash your hands more by Rachel Huggins and Veronica Bravo.  The snapshot sites Bradley Corps Healthy Hand Washing Survey and indicates that 54% of those surveyed said NO and 46% said YES.

Personally I find these results disturbing. Just think about how often you shake someone’s hand and then think about what they were doing in the 15 minutes before you met. Maybe Howie Mandel has it right by just doing the fist bump.

If the answer to this survey were 100%, it would be interesting to see what the impact on these types’ illnesses would be. As a result, this author will continue to write about food safety and strategies that companies can take to reduce them

Go wash your hands.

We look forward to and appreciate your comments.

Back To The Future!

Thursday, October 13th, 2011

Companies and individuals enter into contracts based on the future price of a market or commodity. Manufacturers that use a variety of commodities in their manufacturing process constantly balance the swing of many commodities in order to drive blended costs that most benefit their future needs. Futures can be monitored on future markets like Bloomberg amongst others.

A very simple example of how this data might be useful to a buyer is that of a retail real estate – construction buyer that is looking at construction of new stores for the upcoming year. If we continue with the Bloomberg example, they report futures prices on energy, agriculture, industrial metals etc. If a buyer were to look at the future price for lumber within the agriculture category based on 1000 board feet, as of this report the cost for this commodity is down 3.46%. This reduction in price might be used as a negotiation point for upcoming stick builds versus prefab on concrete structures that are in your plan for the particular future month being sold. It does not take very long to look at these reporting tools in order to understand trending in commodities that affect your sourcing. Another example would be looking Diesel futures as they impact your distribution costs and those of supplier’s providing products to you.

A simple step you can take is to pick three market views such as Bloomberg, CME etc. Pick a half dozen commodities that impact the products you are sourcing. Now take 10 minutes per day to review them so that they become second nature to you.

If you’d like help in this process or are interested in track a commodities price versus your particular purchase points, please contact SafeSourcing.

We look forward to and appreciate your comments.

Comparative advantage suggests we should be looking to Brazil for our future sourcing needs?

Tuesday, October 11th, 2011

Comparative advantage is a theory that advances that in a free marketplace, each entity or country such as the EU or NAFTA or trading countries will ultimately specialize in activities where it has comparative advantage. Examples of such might be technology, natural resources,   local workers skill sets, agricultural advantages, transportation benefits etc. In an  article published this past March at Bloomberg Businessweek titled BG (BG Group Plc, (the UK’s third- largest natural-gas producer), to Export From Brazil as Nation Becomes Key Oil Source, it would sure seem as though Brazil has the natural resources piece down.

Many people are not aware that Brazil is the world’s seventh largest economy. When you think about the relatively untapped natural resources in this country, their impact as an economic power will only continue to grow.

Now let’s just hope that we don’t create and unnecessary trade agreements that eliminate the comparative advantages that we both have and could build upon.

We look forward to and appreciate your comments.

With the economy moving the public to lower cost products is it time to review your private label strategy?

Monday, October 10th, 2011

Last week the Wall Street Journal published an article by Ann Zimmerman  titled Frontier of Frugality about how the economy is forcing consumers to consider lower priced stores and goods to save money.  With the landscape of retail changing to adapt to this trend many companies are changing their product mix to include more value and private label products.

In today’s blog we will be looking into some new areas of private label sourcing you might not have thought about previously.

Services – One of the areas that companies do not always think of for private label sourcing are services.  Many of these services deal directly with the design and marketing of the private label products themselves helping to develop campaigns for the retailer.  There are other services, however, such as Kosher services and product development services that can also be sourced.

Product Ingredients – In some cases the retailer manufactures or is considering manufacturing their own private label products and the raw materials needed for those products need to be sourced.  Flavorings, chemicals, fragrances, pharmaceutical ingredients and organic ingredients are just some of the items that can be sourced.

Supplies and Equipment – When it comes to private label products there are also unrelated equipment and supplies that are needed in order for the inventory to get to the consumer.  Advertising vehicles, pallets, shelving, signage, coolers and freezers, and doors and curtain systems are just a few of the many types of connected purchases which are necessary in order for private label products to be sold.

Not For Resale – This area of private label spend is growing larger every day as more retailers are beginning to offer food and/or beverages in their stores.  Towels, cups, bags, trays, paper products, and stretch wrap are all additional areas of private label products which can be sourced on a regular basis.

Whatever your private label Sourcing need is, the economy is quickly demanding that companies begin to pay more attention to the mix of products they source for their customers.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

The Holiday Season is right around the corner

Tuesday, October 4th, 2011

Christmas will be here before we know it.  While most of us as consumers wonder where the year has gone, retailers are feverishly planning in preparation for their busiest season.  In the retail industry, the short period from October to December can represent more than half of the year’s sales—which means that planning and implementation are crucial for success.

Retailers don’t panic; procurement services can assist you in your holiday preparations.  For novelty products that are traditionally sold such as gift cards, perfumes, and gift basket items, why not purchase products for the rest of the year?  This can help you have the inventory on hand and allow you to lock in a price—that can surely increase as the holidays ensue.  Planning to maintain appropriate inventory levels especially for Black Friday and beyond can help decrease your costs by not being subjected to inflated prices due to seasonality.

Don’t let the season sneak up on you, plan ahead to ensure you have the most successful Holiday.

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.

What are the risks of e-procurement in a third world county? Part II of II.

Monday, October 3rd, 2011

This author wonders if the use of e-procurement practices could potentially help build an economy in a third world county, what are the risks to using e-procurement that could be challenging the process?  Since e-procurement is quickly becoming a standard business practice in developed countries to realize cost savings, improve efficiency, and control the bottom line what is stopping these companies from sourcing through third world countries?  This author believes that if there were not risks associated with this relationship that more countries would be taking advantage of a larger supplier network. 

Some of the risks that are preventing e-procurement in third world countries are:
   1. Some third world countries do not have enforced regulations that prevent the use of child labor.
   2. Many third world countries do not have any regulations in place for pollution control.
   3. By sourcing with a company in a third world country, a host company may increase the cost of their paid warranty claims.
   4. There may be a language barrier between the sourcing partners.
   5. Bribery and corruption can be in issue in come cultures and may be more prevalent in a third world country where the standard of living is lower and the split between economic levels is more drastic.

It is a risk for a company in a developed country to source items from a company based in a third world country that is found to use child labor or bonded labor.  This would have a considerable negative impact for the host company when their supply chain is analyzed and could potential ruin relationships with current or future business partners.

Within the United States and many other developed countries there are government regulated environmental restrictions.  The compliance with many of the regulations is what can attribute to a company’s carbon footprint.  Many third world countries do not require any kind of regulations on a business to take care of the environment.  By sourcing with a company in a third world country it could negatively affect the company’s carbon footprint as well as generate negative publicity from many of the environmental watch agencies.

Another growing concern for sourcing with a company in a third world county is the issue concerning warranty of the product you are selling or distributing to your customers.  Even though you may receive a large cost savings from the products you’re sourcing, the quality of the product may not be comparable and could cause issues with the overall quality of the product you are producing for your customers.  This could negatively affect the amount of warranty claims you will have to pay.

A language barrier could present an issue for the e-procurement process.  Many times companies in a third world country could be doing business in a second, or even third, language.  To avoid issues with this a host company needs to clearly outline objectives and terms and have a clear knowledge that the sourcing company understands them.

Corruption throughout a supply chain could affect the wages being paid to workers.  In order to overcome this challenge in a sourcing relationship, the purchasing company can require as part of the conditions of the sourcing relationship that the supplier sign a code of ethics that ensures that the workers are compensated for their efforts.

If a company from a developed country is interested in sourcing products or services from a company in a third world country there may be risks, but with the proper knowledge and steps in place to overcome them the benefits can outweigh the risks.  By including a company from a third world country in your supply chain you could be contributing to the global economy with a more positive impact.

We look forward to and appreciate your comments.