Archive for January, 2012

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It’s more than just being “green”

Friday, January 13th, 2012

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark asks

For many companies the first steps to becoming greener companies begins with the desire to be doing more than just making a dollar in this world.  Their initiatives are the type of trailblazing that publications and “Bloggers” love to read and write about.  That all being said, there was nobody that ever said becoming green didn’t have to be a good business decision as well.

In today’s blog we will briefly look at some ways companies can leverage some financial incentives for their organization while they are saving the planet.

Reduced expenses – One of the most import of the 4 R’s (see series from last July’s SafeSourcing Blog) is Reduce   By its very nature the concept of getting greener by reducing waste will allow companies to reap financial rewards in the reduction of expenses.  These can come in the form a reduction in printer costs by using more online publications, or they can come in the way of reduced utility expenses by changing the way lights, heating and electricity are managed within the organization.

Rebates & Incentives  – During a time when there is such a push to protect our environment, incentives are piling up for companies to take their first steps toward becoming a greener company.  Government organizations from the Federal level all the way to the local level are offering thousands of different incentives for taking steps.  Some of these are tax breaks which translate straight to the bottom line and some are outright cash incentives.  Other companies such as insurance companies are providing additional discounts off of their rates to companies who choose greener ways to heat their buildings or that purchase environmentally safer vehicles for their internal fleet.

Increased revenue – The fact of the matter is that along with price and value, people “like” to buy products from companies who are trying to do the right thing in their business practices (i.e. Getting greener).   In the mind of the consumers, companies that invest in the future of our planet are the types of companies who are more likely to produce items they want to buy.  In 2010 Clorox invested millions towards the process of moving away from chlorine gas transportation.  In the end the move was a breakeven one in terms of expense but it has generated an overwhelming perception that Clorox is a company that is “committed to doing the right thing.”  Clorox sales as a result are “up.”

Regardless of why your company takes its first step to becoming greener, one thing is for sure, it doesn’t have to be without benefits.  For more information on becoming a greener company or in sourcing from companies who do, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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It?s more than just being ?green?

Friday, January 13th, 2012

Today?s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark asks

For many companies the first steps to becoming greener companies begins with the desire to be doing more than just making a dollar in this world.? Their initiatives are the type of trailblazing that publications and ?Bloggers? love to read and write about.? That all being said, there was nobody that ever said becoming green didn?t have to be a good business decision as well.

In today?s blog we will briefly look at some ways companies can leverage some financial incentives for their organization while they are saving the planet.

Reduced expenses ? One of the most import of the 4 R?s (see series from last July?s SafeSourcing Blog) is Reduce?? By its very nature the concept of getting greener by reducing waste will allow companies to reap financial rewards in the reduction of expenses.? These can come in the form a reduction in printer costs by using more online publications, or they can come in the way of reduced utility expenses by changing the way lights, heating and electricity are managed within the organization.

Rebates & Incentives? ? During a time when there is such a push to protect our environment, incentives are piling up for companies to take their first steps toward becoming a greener company.? Government organizations from the Federal level all the way to the local level are offering thousands of different incentives for taking steps.? Some of these are tax breaks which translate straight to the bottom line and some are outright cash incentives.? Other companies such as insurance companies are providing additional discounts off of their rates to companies who choose greener ways to heat their buildings or that purchase environmentally safer vehicles for their internal fleet.

Increased revenue ? The fact of the matter is that along with price and value, people ?like? to buy products from companies who are trying to do the right thing in their business practices (i.e. Getting greener).?? In the mind of the consumers, companies that invest in the future of our planet are the types of companies who are more likely to produce items they want to buy.? In 2010 Clorox invested millions towards the process of moving away from chlorine gas transportation.? In the end the move was a breakeven one in terms of expense but it has generated an overwhelming perception that Clorox is a company that is ?committed to doing the right thing.?? Clorox sales as a result are ?up.?

Regardless of why your company takes its first step to becoming greener, one thing is for sure, it doesn?t have to be without benefits.? For more information on becoming a greener company or in sourcing from companies who do, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

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Why don’t the airlines want to publicly unbundle their ticket prices.

Thursday, January 12th, 2012

When I read the paper, the internet, trade magazines, blogs, books or other sources of information, I subconsciously apply a careers worth of learning or everything I know in order to try and understand the issue. I guess it means trying to understand things through my philosophy. This also allows me to look at what our company does by the way others look at things and apply non procurement based logic to what we do.

When I was reading that airlines did not want to unbundle their ticket prices for consumers it simply indicated to me; that they’re hiding something. Prices have not always been bundled. As an example, original technology models were based predominantly on hardware prices. This was when companies sold huge mainframes. As technology evolved to microprocessors ever more quickly along a Moore’s law curve, hardware prices dropped through the floor. This evolution caused technology companies to find ways to stop their revenue erosion. As such companies began to focus on increasing the services portion of their contracts. One way to do this was through solution bundles. Solution bundles were a hard sell and made it more difficult for customers to understand what the total cost of a product or solution was. Today many of the historical major hardware company’s services revenue are higher than their hardware revenue.

From a procurement perspective, the way one attacks this is through a detailed specification that outlines all the components, commodities etc. that make up the product or service being bid on.

Let’s get back to the airline ticket. Why don’t the airlines want to unbundle their ticket pricing. It’s simple. It creates too many questions. Questions like why is airlines A’s airport costs higher than airline B’s? Why am I paying more for Bags at airline A versus airline B?  Shouldn’t federal security charges be same for airline A versus airline B? What are flight segment taxes?

So why don’t the airlines want to publicly unbundle their ticket prices. The simple answer is because it will cost them money. Just the same as the 2nd bag costs you and the food on the flight costs you and the pillow costs you and the movie costs you. Here’s to full cost disclosure.

We look forward to and appreciate your comments.

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Why don?t the airlines want to publicly unbundle their ticket prices.

Thursday, January 12th, 2012

When I read the paper, the internet, trade magazines, blogs, books or other sources of information, I subconsciously apply a careers worth of learning or everything I know in order to try and understand the issue. I guess it means trying to understand things through my philosophy. This also allows me to look at what our company does by the way others look at things and apply non procurement based logic to what we do.

When I was reading that airlines did not want to unbundle their ticket prices for consumers it simply indicated to me; that they?re hiding something. Prices have not always been bundled. As an example, original technology models were based predominantly on hardware prices. This was when companies sold huge mainframes. As technology evolved to microprocessors ever more quickly along a Moore?s law curve, hardware prices dropped through the floor. This evolution caused technology companies to find ways to stop their revenue erosion. As such companies began to focus on increasing the services portion of their contracts. One way to do this was through solution bundles. Solution bundles were a hard sell and made it more difficult for customers to understand what the total cost of a product or solution was. Today many of the historical major hardware company?s services revenue are higher than their hardware revenue.

From a procurement perspective, the way one attacks this is through a detailed specification that outlines all the components, commodities etc. that make up the product or service being bid on.

Let?s get back to the airline ticket. Why don?t the airlines want to unbundle their ticket pricing. It?s simple. It creates too many questions. Questions like why is airlines A?s airport costs higher than airline B?s? Why am I paying more for Bags at airline A versus airline B?? Shouldn?t federal security charges be same for airline A versus airline B? What are flight segment taxes?

So why don?t the airlines want to publicly unbundle their ticket prices. The simple answer is because it will cost them money. Just the same as the 2nd bag costs you and the food on the flight costs you and the pillow costs you and the movie costs you. Here?s to full cost disclosure.

We look forward to and appreciate your comments.

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USDA to close 259 Domestic Offices!

Wednesday, January 11th, 2012

On page 3 section A of the January 10th edition of USA TODAY there was a news post titled USDA cutbacks to reach 46 states and further mentioned that this inluded?259 offices, labs and other facilities. These comments were? attributed to Agriculture Secretary Tom Vilsack.

What impact will these cuts have on Food Safety only time will tell? But certainly the jobs added to address food safety are certainly not safe.

The USDA focus on food safety and at a minimum drives efforts focused on Food Handling, Food Recalls, Food Irradiation, Foodborne Illnesses, through a number of Food Safety Resources. At the beginning of our current presidents last term, he committed to focusing on the safe food issue. Now that he needs to get re-elected maybe not so much.

We look forward to and appreciate your comments.

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Part II of II. How are you managing your procurement talent pool?

Tuesday, January 10th, 2012

TOP GRADING can help any company with one of its most important strategic business pillars which is Talent Management.

I have always looked at business as though it has three primary pillars on which it rests. They are the strategic plan, the operational plan and the talent management plan. Together they form the bedrock for a successful pursuit of companuies goals. Remove one and the company can fall out of balance and have all structure within the company negatively affected.

A great tool for managing your talent or human capital within all areas of the company including procurement is TOP GRADING.? According to TheGinacGroup this term is being used more frequently in the HR world and refers to identifying the top 10% of performers in the interview practice. The methodology ?relies on unusually detailed, chronological interviews; conclusions are gleaned from patterns which have emerged across layers of competencies as interviewers probe every success, failure, relationship, and major decision in a person?s career.

One of the best educational sources for this process is the book Topgrading by Bradford D. Smart PhD. Published by Prentice Hall Inc. in 1999. This text does a great job of describing what A Player?s, B Players and C Players are, how to manage them through your organization and where the ceiling is for each type of player. Please understand that all companies need all three types of players. All groups of players require management through their group because all resources will not achieve their ultimate potential within a particular player category.

The process of screening for players requires specific detailed level questions relative to a candidate?s education, career, integrity and more. A candidates IQ may also enter into the recruiting process as it may be an indicator of the ability to rapidly absorb complex data sets and apply them to complex tasks while making the same clear to all interested and involved constituents.

If you?d like to know how you can apply top grading practices to your procurement talent pool please contact SafeSourcing.

We look forward to and appreciate your comments.

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Part I of II. How are you managing your procurement talent pool?

Monday, January 9th, 2012

If you don’t, and all you have is C players, all you will ever have is C players! Well at least as long as you are in your current position which won’t be for long if that is the case.

I was reading our local newspaper this morning as I do every morning and just happened to look at the job postings in a nice tool called Career Builder  which is an insert. I though I might browse around and find a supply chain job listing or a procurement related listing or something related to the most important function within most companies (and, most if not all companies don’t realize it). That job would be procurement. Actually there are quite a few jobs in this category, but suffice none jumped of the page during my quick browse.

Once I realized that this would not be easy and know that I have several customers looking to fill procurement positions for which I have provided some guidelines, I thought about how companies go about managing that talent once they find them. Or better yet how company’s can make sure they were the right kind of talent in the first place. A resume or CV or work related reference does not provide that information. Neither does an industry related degree. These are all excellent indicators but from a purely scientific approach they do not insure that you are hiring talent that can advance within your specific talent pool.

I am very fond of one particular type of talent management called TOP GRADING. If you check back tomorrow we’ll discuss some of the secrets of that process that will help you find and manage talent in and out of your business in order to achieve a mix that will support you achieving your procurement business plan

We look forward to and appreciate your comments.

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Ok procurement pros the New Year is in full swing now.

Friday, January 6th, 2012

The good news is that there is still time to save those resolutions that right now are probably destined to fail. So, what are the four most important things you can do in order to keep your procurement focused New Years resolutions or goals?

Well it is really pretty simple. The fact is and these numbers move around a bit but are generally within a few basis points regardless of the source. Here you go, 92% of all resolutions will not be kept at all and 45% will have already failed by the end of January.

However there is something you can do in the next five minutes in order to not become a part of these statistics.

I know you’ve heard some of this before, but it is etched in stone for this author. The first step is to write those resolutions down. Writing something down is a psycho, nuero, muscular activity that has an imprint effect on your brain. Typing something does not accomplish the same thing. So, if you have not written them down, do so now. The second step is to make your resolutions public, declare them publicly, and post them. This simple step creates ownership. The third step is to set a date for completion. A resolution or a goal without a completion date is just a dream. Finally take action and start making decisions that move you in the direction of your completions dates.

Here is a simple summary

1. Write them down
2. Make them public
3. Establish a completion date
4. Take action and make a decision.

Here’s wishing you the best one week into your NEW YEARS RESOLUTIONS!

We look forward to and appreciate your comments.

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Are all of your construction projects GREEN?

Thursday, January 5th, 2012

We have held many construction events for numbers of companies, and I have to tell you that the primary driving factor for most of these projects has not been a green focus. Unfortunately it may not even have been a focus at all if we did not bring it up to them.

We understand that finding construction companies that are not struggling or at least are suffering compressed revenue during these tough economic times may be a challenge. We understand that getting projects completed on time is important. With that said, if a company has any environmental focus on nay project, then all of their projects should be environmentally focused. That’s right, ALL not SOME.

You don’t need to look far in order to get examples of the long term savings associated with green focused construction. In this mornings issue of USA TODAY there was a great article titled Habitat keeps an eye on energy by Anne Paine and Bob Smietana. In the article one new Habitat for Humanity resident claimed that their highest electric bill was eighty dollars during a hot summer and that at their previous residence the lowest was two hundred dollars. It does not take a math major to figure out that this represents a 60% savings. I’m sue if folks were offered a small pay raise or a 60% reduction in their utility bills they would pick the latter.

Companies can benefit from these types of savings as well.

If you want to learn more about sourcing construction projects or energy reduction cost opportunities please contact a SafeSourcing representative.

We look forward to and appreciate your comments.

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What should our category savings be?

Wednesday, January 4th, 2012

The answer is that it depends on the industry, company or vertical within an industry as well as who you are asking and what you will actually be measuring. There are dozens of procurement focused websites that speak to or quote category savings.

The reason the answer depends on who you ask is that to begin with every company defines their categories differently. Yes there is similarity across industries in areas like fleet maintenance or currier services. However when we look at the retail landscape and an example like bottled water, thinks get a little murky. Is bottled water really a category or is it a sub category of beverages which is a sub category of grocery. If it is a true category, your buyer or category manager should be able to provide you with pricing, margin and any related cost that shrinks the later.  So, the first question that needs to be answered is…are you looking for true category savings or are you looking for specific product savings. The products savings are good, but don’t get the product to your shelf.  The next question one might ask is, are you asking for actual realized savings or are you asking for savings that are hi-lited at the end of an e-procurement event? If you are asking for true realized savings, there are a multitude issues that need to be discussed.  If the successful supplier is your incumbent, then the savings may actually be closer to those viewed during the e-procurement event; however, reality indicates that a large number of incumbents do not end up as the low quote.  If the supplier is not the incumbent, there are actually quite a few elements that result in true savings that have to be considered.  By in large, they can be included in a bucket referred to switching costs. To begin with the supplier that you may have just awarded business to may not be an authorized vendor in your data base. As such, the IT department and or the finance department are needed to add them to your database. A new contract may also be required with a company that you have not done business with before. This requires the involvement of your legal department and may, in fact,  add delays to the process that require you to order additional product from your existing supplier at potentially higher prices than awarded during the e-procurement event.  If products are being delivered to a distribution center, slotting requirements are needed and pick lists require updating in order for the product to be available when ordered by individual store locations.

All of the above assumes that your buyers know where to find additional suppliers in order to make the event competitive in the first place. Should they go to other wholesalers, manufacturers, distributors, other vertical suppliers that don’t traditionally supply your vertical?

Now, let’s go back to the actual e-procurement event for a minute. At the end of the e-procurement event when business was awarded were the savings the same as displayed during the event? Did the e-procurement event just provide you with high level savings made up of all low quotes; or, if business was awarded to multiple suppliers ,were savings calculated in that manner?  Were funds, if included in the winning bid, included in the savings and treated the same way that your company treats them from an accounting perspective? Were distribution charges and other uplifted costs removed or bid on separately?  Are pre-event historical savings a result of how companies awarded business; or are you being quoted a historical average of all low quotes run through a system even though business was not actually awarded that way and savings may not have been realized?

In order to actually answer the questioned posed in this post, the real answer is that I need to ask you some questions and depending on your answers I can give you a range of savings based on the size of your total spend and dependant on other market influences such as fuel costs and other related commodity costs.

So, what can you expect for category savings in an e-procurement event? The answer is it depends.

We look forward to your comments.

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