Archive for the ‘B2b Reverse Auction’ Category

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Do suppliers benefit from participation in e-negotiation events such as reverse auctions?

Friday, April 23rd, 2010

A discussion followed relative to incumbent suppliers view and how long the retailer had been doing business with them vs. the opinion of 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? Retail Supplier Database of over 380,000 retail suppliers located throughout the world. Additionally we also place a great deal of value on each individual supplier regardless of their 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:
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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 same day 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 based on fluctuating markets..

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.

It sure does not sound like a bad deal to this author as long as it is explained correctly and supported by the retailer as their way of automating their procurement process and record keeping.

We look forward to and appreciate your comments.

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Today is a great time to take a look at your logistics planning and to try out e-procurement tools in order to reduce your freight costs.

Thursday, April 15th, 2010

According to Wikipedia Logistics is the management of the flow of goods, inforamtion and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers. So getting it there at the right price is an enormous challenge.

The constantly fluctuation cost of fuel is causing less stable freight rates and creating concern and worry? in the executive suite about transportation expenses. As such many senior executives are looking to e-procurement solution providers to automate and reduce costs in the execution of their shipping plans.

Reverse auction tools,? electronic RFI?s and other e-procurement tools are being used regularly in order? to? optimize bid collection by helping companies organize detailed information about their shipping patterns so they can? compare daily or weekly offers from vendors.

Believe it or not many companies continue to use time-consuming manual processes to schedule shipments and have not even consolidated their rate tables into spreadsheets let alone assembled data with easy to use e-procurement tools. Many companies also continue to use static rules based on full loads to LTFL to a destination to decide which carrier they should use. The problem with this is that rate, routes, and a particular haulers availability change daily if not more often.

Call your e-procurement solutions provider and ask how they can help.

We look forward to and appreciate your comments.

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If I save and you save shouldn?t we all save?

Monday, April 12th, 2010

Historically this author has heard the buzz phrase that this is a? win win situation? far too often because far to little thought is put in to what it should really mean. As such when I do hear it, it makes me want to puke. What we should be doing is focusing on win-win-win relationship in the supplier-buyer-consumer supply chain model.

E-negotiation tools offer benefits to both suppliers and hosting retail companies which should also provide a benefit to consumers if the retailer and supplier are savvy enough to figure it out. Some but not all to consider follow.

1.?Suppliers have an opportunity to bid on business they might otherwise not know about.
2.?Forces retailers to formalize their specifications for further use.
3.?Retailers are exposed to far more sources of supply than they were previously aware of.
4.?Focuses the buyer-seller relationship on a fair trade approach to conducting business
5.?The best total solution based on more than just price generally rises to the top.
6.?Focuses both suppliers and buyers on reducing their net landed costs for products and services.
7.?Unbundles costs to reveal and eliminate hidden costs that provide little or no value
8.?Creates a competitive and balanced marketplace.
9.?Offers a lesson that in cost cutting those suppliers should use with their raw material suppliers.
10.?Collectively provides an opportunity for improved margins and earnings
11.?Provides a tool to offer products to consumers that are of better quality, safer and at a lower price.

If this is not win-win-win, someone is not paying attention. Even though I still don?t like the buzz word.

We look forward to and appreciate your comments.

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If I save and you save shouldn’t we all save?

Monday, April 12th, 2010

Historically this author has heard the buzz phrase that this is a” win win situation” far too often because far to little thought is put in to what it should really mean. As such when I do hear it, it makes me want to puke. What we should be doing is focusing on win-win-win relationship in the supplier-buyer-consumer supply chain model.

E-negotiation tools offer benefits to both suppliers and hosting retail companies which should also provide a benefit to consumers if the retailer and supplier are savvy enough to figure it out. Some but not all to consider follow.

1. Suppliers have an opportunity to bid on business they might otherwise not know about.
2. Forces retailers to formalize their specifications for further use.
3. Retailers are exposed to far more sources of supply than they were previously aware of.
4. Focuses the buyer-seller relationship on a fair trade approach to conducting business
5. The best total solution based on more than just price generally rises to the top.
6. Focuses both suppliers and buyers on reducing their net landed costs for products and services.
7. Unbundles costs to reveal and eliminate hidden costs that provide little or no value
8. Creates a competitive and balanced marketplace.
9. Offers a lesson that in cost cutting those suppliers should use with their raw material suppliers.
10. Collectively provides an opportunity for improved margins and earnings
11. Provides a tool to offer products to consumers that are of better quality, safer and at a lower price.

If this is not win-win-win, someone is not paying attention. Even though I still don’t like the buzz word.

We look forward to and appreciate your comments.

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Retailers need to think it through before trying a do it yourself program when it comes to e-negotiation or e-procurement

Wednesday, April 7th, 2010

This author has met with many large companies that are using e-sourcing suites or tools provided by some of the largest names in the industry. After we have reviewed what we do and how we do it and then compare what they are accomplishing the following question always comes up. Why are you generating significantly higher savings than we are?

The answer is pretty simple in most cases. You have bought a software suite or tools and rather than using them as designed you have just incorporated your old practices into new tools. In addition, further training or access to your supplier?s data in the form of sources of supply etc. was not included in your initial cost.

A full service solution provider should be able to create, execute and support all auction activity including but not limited to the following.

1.?Assistance in selecting Auction categories
2.?Market insight
3.?Determine the timing of category auction
4.?Identification of potential quality suppliers in addition to existing
5.?Building on-line auctions
6.?Supplier contacts and training
7.?Execution of live bids
8.?Trouble shooting during live bids
9.?Compiling and communicating reports within 24 hours
10.?Award and Non-Award notifications to Suppliers
11.?Providing ongoing customer support
12.?Monitoring Supplier performance
13.?Feedback from Retailers/Suppliers
14.?Analyze the quality of each auction

The above deliverables if not executed in a self service program will result in less than maximum results and potentially failure of your program.

We look forward to and appreciate your comments.

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Retailers here is a repost of twenty steps to running high quality e-procurement events such as reverse auctions from over two years ago. It still works.

Tuesday, April 6th, 2010

At any rate and regardless of the specific naming convention used there are certain rules which when followed will create higher quality e-procurement events for the retailer as well as the supplier? Following these steps will result in maximizing savings opportunities or cost avoidance in tough markets

The importance of focusing on a clear process will also increase event participation. As a result of? paying attention to quality and detail your existing trading partners and potential new sources of supply will respect your process and will keep them coming back in the future to compete for your business.

1.?Executive sponsorship is mandatory from the C- Suite.
2.?Get the entire buying organization together for a kickoff session.
3.?Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4.?Discuss and agree on success criteria.
5.?Every event is not a homerun. Singles and doubles score runs.
6.?Create a fun environment.
7.?Consider prizes for the most creative use of an auction.
8.?Use scorecards by department with percent of savings.
9.?Discuss the meaning and importance of corporate aggregation.
10.?Hand out event templates to gather existing product specifications.
11.?Put a time requirement on data collection.
12.?Gather an accurate list of your present suppliers.
13.?Work with your sourcing company to identify a top 100 list of events.
14.?Calendar the events.
15.?Prioritize by dollar value, date and strategic value.
16.?Conduct department level discovery meetings of 30 minutes to an hour.
17.?Investigate existing contract language.
18.?Look for auto renewal (evergreen) language roadblocks.
19.?Determine alternate sources of supply with your sourcing company.
20.?Develop an event rules and instruction template and post with each event.

Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.
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We look forward to and appreciate your comments.

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Part II of II. Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?

Friday, April 2nd, 2010

Continuing from Part I of II Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?

The following scenario offers one example as to how the careful management of your suppliers and a little strategic thinking can drive the type of results you desire as well as a long term sustainable process.

Suppliers will almost always not be of the same size. This does not mean however that they are not of the same quality. Smaller vendors that have accepted your invitation will most likely bid early during your event and then drop out after the early rounds. These suppliers will most likely not agree to participate in the future as they consider their chances of winning the business unrealistic. This too is manageable however back to our first premise. Suppliers that finish first or second or your incumbent that may have been replaced will in most cases agree to participate again, but? a lack of new competition will make the auctions less successful.

Thinking more strategically, an apparently logical question might be… If we only have six suppliers available how many should we invite to participate the first time and is more always better over the long run? Should we invite them all? Every company will answer this question differently. When considering the future, do we want successful early events or would we like a continual process improvement that drives continuous savings?

There are several possible solutions to consider. One scenario might be to only invite four participants to your first event. This will create a competitive environment for your reverse auction. After all it only takes two suppliers both interested in your business to drive quality results. Now back to our story. Let?s make the assumption that in twelve months or in the next purchasing cycle when you wish to repeat this auction that the two largest suppliers from the previous event agree to return. You could now invite supplier?s number five and six that were not included in the original auction. You have now created a competitive auction for the second year or purchasing cycle. An additional thought might be to not invite all of the largest suppliers to your first reverse auction, in order to manage the quality of your suppliers for future auctions. This type of critical thinking supports continual process improvement in e-procurement implementations.

We look forward to and appreciate your comments.

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Retail spend management basics for e-procurement professionals and knowledge workers.

Wednesday, March 31st, 2010

I meet with buyers or other e-procurement knowledge workers on a regular basis that want to know what categories are the best to select in the short term to prove the benefit of e-procurement or e-negotiation tools. This quite honestly is not a bad approach for pilot selection as it creates an almost sure thing that results in a lot of excitement and the energy to move the process forward within a company.

Quite often before meeting with a new client, I will analyze their annual report and their summary P&L to get a good idea of where the opportunities are hiding that can have quick hit impact. However in order to have long term viability as a way to conduct the business of buying, a more detailed analysis is required. Quite frankly before you can even begin to discuss vendor or supplier selection, management or evaluation this process is critical to long term success.

Key data required to prepare you for this analysis can consist of but is certainly not limited to the following. All of this data is readily available from a variety of industry sources. Quite often the data is a year old but you can bet it is better than anything else your customer may be using today.

1.?Research and accumulate your specific Industry data
2.?Analyze last years P&L
3.?Compare your cost of goods with your Industries averages
4.?Compare your gross margins with you Industry averages
5.?Compare your net earnings with your industry averages
6.?Conduct the same comparisons with selected retailers with whom you compete
7.?Compare your departmental sales and contribution margin results to those of your specific industry.
8.?Look for department level anomalies
9.?Look for specific product anomalies within major and sub departments.
10.?Select top categories that are below plan and outside industry average for cost of goods and margin.
11.?Select top products that are underperforming to industry averages and plan

An example of the above might be to look at the major department of grocery and the major category of pet care then drill down to the sub category of cat and dog products and a list of all accessories. Now look at what products are underperforming to the industry and plan.? Continue your analysis with other underperforming categories.

Ask you e-procurement provider how they can assist you in accomplishing this with their tools.

We look forward to and appreciate your comments.

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Here are twenty-one reasons why all retailers should use E-Procurement tools.

Tuesday, March 30th, 2010

Since this is not Late Night with David Letterman, our list is not ranked in order of importance although many might argue that not much is more important than improved earnings.

1.?Guaranteed to improve net earnings
2.?Guaranteed to improve safety
3.?Guaranteed to improve Corporate Social Responsibility.
4.?Guaranteed new sources of supply
5.?Retail has less spend assigned than any other industry
6.?Streamlines the? procurement process
7.?Holds suppliers accountable to your standards.
8.?Improves quality
9.?Cost avoidance in a volatile market
10.?Creates a competitive environment
11.?Drives reliable market pricing
12.?Maintains a reliable history for future comparison
13.?Educates suppliers as to how retailers wish to procure products
14.?Supplier training eliminates questions
15.?Improved and consistent product specifications
16.?Improved negotiation.
17.?Improve carbon footprint
18.?Simple award of business process
19.?Frees up time for other tasks
20.?Works for procurement of all product categories
21.?Provides a detailed audit trail.

This author is not sure why a derivative of this list could not become the mission statement for any procurement department.

We appreciate and look for ward to your comments.

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OK so YOU have finally decided to stick your toe in the e-procurement water! NOW WHAT?

Thursday, March 25th, 2010

First and foremost to getting this process right is to select a solution provider or partner that knows what they are doing and is willing to hold your hand during the early part of the process. The plan for each company will be somewhat different as we have discussed in a number of previous posts. There is however a general order to things that will offer the best opportunity for success.

1.?You need a strategy
2.?You must complete a detailed discovery
3.?You must understand how to set up events even if done by your provider.
4.?You must have a quality process and extensive database for sourcing suppliers
5.?You must clearly communicate how events will be run or executed to all involved parties
6.?You must review the process for sustainability and adjust as necessary

As mentioned above it is incumbent upon your e-procurement solutions provider to be able to assist you in completing these tasks in a reasonable period of time. You should be checking the background of the team and their leadership that will be assisting you to insure their understanding of the retail industry such as operations, technology, procurement, warehouse management, logistics, transportation, loss prevention, store management and other functional areas of your business that will be sourcing products and services.? Retail is about detail and detail will improve quality, reduce costs and insure success of your new e-procurement process.

We look forward to and appreciate your comments.

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