Archive for October, 2023

Where is the best place for retailers to spend their effort to improve profitability?

Friday, October 27th, 2023

 

Today’s post is an oldie but goody by Ronald D. Southard, CEO at SafeSourcing

The answer to this posts byline is of course all three!

Obviously, all retail companies would like to focus on all three areas and there are even sub sections of these top line areas that we could spell out as needing attention. The challenge is where to deploy already taxed resources?

It does not require an accountant to figure this out. If we assume that COGS or cost of goods and services is about 75% of top line revenue that would result in a simple gross margin of 25%. Based on a number of industries reports we are also safe using a shrink number of 3% of top line revenue.

This author is aware that there are a a few companies with shrink below 1% and cost of goods below 75% which means there are also companies with gross margin better than 25%. The obvious question is are these companies that solution providers want to target for profit improvement sales? Probably not.

So, let’s look at an example of shrink improvement with data analysis tools and process improvement tools versus cost compression with SaaS e-procurement tools. Let’s assume we have a company that does top line sales of $1B. Using a shrink number of 3% shrink would be $30M annually. If you were able to reduce shrink by a third in one year, profit improvement would be $10M. If this were a supermarket company with a 1% bottom line or $10M, improvement could be as much as 100%.

Now let’s take a look at reduction in cost. If we assume the same company has COGS of 75% or $750M and that we were only going to address 20% of that number or $150 and only reduce those costs by 20% which is slightly above industry averages the net profit improvement would be $30M or 300% improvement in year over year net profit. If we were only able to achieve 10% savings which is well below industry averages, net profit would improve by 150%.

I’ll leave the gross margin example for you to figure out. In the above case it is clear that attacking COGS has an impact on the bottom line of up to 3 to 1 versus addressing shrink with your already taxed resources.

If you are interested in an immediate impact to your bottom line, please contact a SafeSourcing Customer Services associate today.

We look forward to and appreciate your comments.

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Post-Consumer Materials and the Circular Economy

Thursday, October 26th, 2023

 

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

How is your company planning to work with evolving circular economy issues?

According to Wikipedia A circular economy (also referred to as circularity and CE)[2] is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible.[3] CE aims to tackle global challenges as climate change, biodiversity loss, waste, and pollution by emphasizing the design-based implementation of the three base principles of the model.

Global business is now thinking way past post-consumer materials which as we all know drove many of the early recycling initiatives implemented by businesses. A definition of that term which is a beginning point but less broad than circular economy is below.

The term post-consumer materials are finished products, packages, or materials produced or created by a business or consumer.  Post-customer materials have served their intended uses and have been recovered or diverted from the waste stream with the intention of recycling or reuse. An example of post-consumer materials is paper recycling.  The purpose of paper recycling is to turn paper into new paper products.

SafeSourcing is an eprocurement company that operates across multiple industries. Our SafeSourceIt™ Global Supplier Database of over 457,000 suppliers provides easy access to alternative sources of supply based on post-consumer materials and or circular economy requirements. To learn more, please contact a SafeSourcing customer services associate.

Sources: Circular economy – Wikipedia

 

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How does your company control all of your purchasing at all levels?

Wednesday, October 25th, 2023

 

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

SafeCatalog™ is a tool that allows companies to consolidate the products and services they order into one online view for employees. This tool is easily customizable and allows users to create different catalogs for multiple departments within their organization. It also provides control over ordering by listing only approved vendors at negotiated rates.

When integrated with the SafePO™ module, users can have their catalog orders automatically processed and entered into an online purchase order system that allows suppliers to be notified of the order once it has been approved.

Catalogs can be populated with items from one or multiple suppliers and are presented in a way that includes descriptions and provides prices in one location.

SafeCatalog™ provides users the leverage to monitor and control spending through spending thresholds that ensure that users are receiving the correct price for all items.

SafeSourcing is a Procure to Pay SaaS based provider of a number of e-Procurement solutions and associated white glove services that are part of our SaaS offered SafeSourceIt™ eSourcing suite. These include but are not limited to SafeContract™, SafePO™, SafeDocument™ and our SafeSourceIt™ Global Supplier Database that includes over 557,000 vendor/suppliers.

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

 

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Ghost of Prices Past

Tuesday, October 17th, 2023

 

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

Fall has arrived and with it comes the anticipation of the holiday season. October starts with the cooling temperatures, theme and costumes galore, and the eerie décor of all thinks spooky. Some of us celebrate with the day of the dead, remembrance, and those spirits that are never truly gone.

Something often remembered fondly are the prices we once paid for the things we needed, often just a few years ago, as if the spirit of what the price used to be still lingers when they are far from present. Indeed the spookiest things to be seen are rising grocery bills and prices tags of the things we need.

But there is hope. You can still utilize procurement partners to help find the suppliers, goods, or services you need and potentially stop the ever escalating prices. In fact, many customers wind up saving more than they expect when utilizing a procurement partner, like SafeSourcing. We can help you find what you need and help to save money too. There’s nothing spooky about begin able to get what you have already been buying, but for less than you thought you could.

In addition to finding what you already purchase, a procurement partner can help identify areas that could be good candidates to save even more. If you are starting a new project, the entire process can take resources and time away from your team and partnering with SafeSourcing can help streamline your process, provide central reporting tools, and also keep your team’s time free for their other activities. A collaborative opportunity would be a great treat, just in time for the season!

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.

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Is your property ready for the upcoming winter season?

Monday, October 16th, 2023

 

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

I decided to go ahead and repost this BLOG that I wrote a while back because it is that time of year again and we had done our end of the year maintenance to make sure everything goes smoothly this upcoming winter.  Remember, you are less likely to have expensive repairs if you maintain and inspect the items listed below.

Well, it’s hard to believe it’s that time of year again.  The leaves are turning colors, and the temperatures are starting to drop.  It’s time to start thinking about what kind of fall maintenance needs to be done before winter weather arrives.  With these cooler temperatures, it makes for the best time to take care of any outside maintenance that needs to be done before the really freezing weather arrives.  For example, mowing the lawn for the last time this season.  Your lawn should be approximately 2 to 2 ½ inches by wintertime.  This is considered to be the right height so that it will not be stressed during the chilly winter months.  This height will also ensure that your lawn will not be affected by snow mold.  Snow mold is a type of fungus or turf disease that can damage or kill grass after the snow melts.  It is also a known allergen that can trigger allergies and asthma.   Along with mowing the lawn, it is important to make sure that you clean out your gutters once all of the leaves around your property have fallen.  Leaving these leaves and other debris within the gutters can cause them to become clogged which can lead to leaky roofs or water damage to the exterior or interior of your property.  Since the weather is nice, now is a good time to make a list of all the things that need to be done and get prepared for winter.  Below are some things that you may want to add to your list.

  • Aerate the soil.
  • Fertilize the lawn.
  • Check for foundation cracks.
  • Inspect exterior walls for peeling paint.
  • Inspect the roof for loose shingles.
  • Inspect driveways for cracks.
  • Install storm windows.
  • Disconnect hoses from outdoor water valves to prevent freezing pipes.
  • Clean basement window wells
  • Winterize sprinkler systems.

If you need help finding a licensed maintenance company to maintain your property, feel free to contact SafeSourcing.   We can gather all the necessary information for you and help you decide which company 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.

 

 

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How does the Law of Diminishing Return apply to eProcurement RFQ reporting?

Tuesday, October 10th, 2023

 

 

Today’s re-post is from our archives at SafeSourcing

My experience with eProcurement RFQ reporting is that procurement team’s eyes are often bigger than their stomachs.  I say that because there are lots of numbers gathered during an eProcurement RFQ.  That data can be sliced and diced many different ways in order to show many different scenarios.  What procurement teams need from an eProcurment RFQ is just a few options.

One option is to look at all of the Low Quotes.  What this identifies is how many vendors would need to be awarded  in order to realize maximum savings.  As an example when  a company has 81 current suppliers and they can now award 14 companies in order to maximize savings it makes good sense to explore this opportunity because 14 suppliers represents an 83% reduction in sources of supply and the administrative improvements associated with that reduction..

A second option  to consider is that of the Low Company.  This  provides a single source of supply option.  In some cases it’s just plane scary to put all of a companies eggs in one basket.  In most cases this option is a reduction in savings compared to the all low quote scenario.

A third option to consider is a hybrid award scenario.  This  takes into consideration low quotes, overall low companies and another potential option like by division or number of vendors.  Typically, the top performers are defined globally and then  an analysis is  conducted by location.  This data shows which of the top companies show the most savings by location.

A final option  might be to identify what savings look like when vendors are selected by division and a split award is considered.  For instance if a company has 10 locations 3 locations are awarded to one vendor  and the remaining  to another.  When you do this type of scenario analysis  savings numbers are typically reduced.

When you apply the Law of Diminishing return to eProcurement RFQ reporting please keep in mind anything outside of what procurement teams need to make the award decision is an over abundance of data.

If you are interested in learning how  SafeSourcing’s team can help your company get the right amount of data in order to make a decision please contact our customer service team.

We look forward to and appreciate your comments

 

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Did you win Monday night’s Powerball?

Wednesday, October 4th, 2023

 

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

While I can’t provide the customer’s name, they are NOT a $5B retailer per yesterday’s posts example. However, they are smart and focused and may well be some day. They took SafeSourcing up on our No Risk Offer. Their ROI will more than pay for their contract moving forward. Most procurement teams do not believe these types of results are possible in the current economy. Most of your teams will tell you this is a waste of time. I’ll bet you could use another $338K right now.

Here are the results:

  1. Expense Category: Pilot Event Number One:
    1. Savings $298,270.80
  2. For Resale Category: Event Number Two:
    1. Savings $40,072.32
  3. Total Savings: $338,343.12
    1. ROI 26X

You can still test me, if you’d like, this link will come directly to me. Your team will tell you this is not possible. I guarantee that your odds are better than 1 in 292 million to win Powerball.

SafeSourcing is a Procure to Pay SaaS based provider of a number of e-Procurement solutions and associated white glove services that are part of our SaaS offered SafeSourceIt™ eSourcing suite. These include but are not limited to SafeContract™, SafePO™, SafeDocument™ and our SafeSourceIt™ Global Supplier Database that includes over 557,000 vendor/suppliers.

For more information, please contact a SafeSourcing Customer Services Associate.

 

 

 

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