Archive for the ‘B2b Supply Chain’ Category

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Part II of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

Tuesday, April 16th, 2019

 

Todays post is by Ron Southard, CEO at SafeSourcing

Yesterdays post reviewed why and how this author felt that reverse auctions were potentially good for both the distributor and the retailer alike. So just what is cost plus?

According to Wikipedia  Cost-plus pricing is a pricing method used by companies. It is used primarily because it is easy to calculate and requires little information. There are several varieties, but the common thread in all of them is that one first calculates the cost of the product, and then includes an additional amount to represent profit. It is a way for companies to calculate how much profit they will make. Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.

Once unit level cost has been established for the distribution of products it’s easy to turn that into a percentage and add it to the price of a product coming up with a distributed unit price or category price. The most important part of this pricing exercise for the distributor is to get the distribution costs correct. This can include price of storage, freight, length of travel, driver cost and any number of other costs. This is an area where a distributor can lose a lot of money if they are not very careful.

So, are revere auctions a tool that can help distribution companies?  The answer is a clear yes both above and below the gross margin line. If you like to know more please contact me at ronsouthard@safesourcing.com.

We look forward to and appreciate your comments.

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Part I of II. Are reverse auctions a good tool to use in the retail distribution cost plus arena?

Monday, April 15th, 2019

 

Todays post is by Ron Southard, CEO at SafeSourcing

A lot of distributors have told this author that reverse auctions don’t apply to them because they use the cost plus model and as such they just add their price or profit margin on top of the contract price with their source to drive their distributed price.

The fallacy in this thinking is that it may make buyers and category managers lazy in their approach to driving margin within the categories that they manage. This results in a higher price to the retailers they distribute to and ultimately to the consumer or their customers customer. A worst case scenario is that the consumer stops shopping at their customer’s store which reduces overall volume and further increases prices by not meeting volume incentives. It’s a slipper slope.

Off course this argument is relatively easy to overcome when we get around to discussing capital goods and expense related products and services area. These areas have an impact on the distributor’s net profit. And I’m sure that many of you will agree that just because one says they are a cost plus provider does not necessarily mean it’s true in the most pure sense of the definition.

Check back tomorrow and we’ll review what the real definition of cost plus is in part II.

We look forward to and appreciate your comments.

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It’s just a pallet; or is it? Part II of II

Monday, November 12th, 2018

 

Today’s post from our  SafeSourcing, Inc Archives

Use of Pallets: While pallets and palletization were once considered to be powerful components of material handling strategy, today, industry takes the practice largely for granted.  When the palletization concept was first introduced, however, it had a dramatic impact on the improvement of material handling efficiency. Rail cars, for example, that had taken two days to unload could subsequently be unloaded in just one or two hours.  Palletized products can be moved more quickly than by the manual handling of individual palletized cartons.

Benefits of this quicker handling include:

•   Faster turnaround of delivery vehicle and increasing operational efficiency of transport equipment
•   Dramatically reduced labor requirement versus manual handling
•   Reduced risk of temperature abuse for perishable products on unrefrigerated docks
•   With less manual handling there is less risk of product damage and reduced risk of worker injury. Palletized products can be moved more efficiently and stored more efficiently in warehouses and customers often prefer the receipt of palletized goods.
•   Pallets provide drainage and circulation for commodities requiring this, including fresh produce.

Grades of pallets: The GMA (Grocery Manufacturer Association) has determined the standard in which pallets are graded and thus is broken into four (4) different categories. Each category is a guideline to use when buying or selling pallets. The problem is that each category is open for interpretation and it’s important to verify exactly what you’re getting. Each category will have a price range and the price range will vary from region to region. The price will also vary based on the amount of available reconditioned pallets. Below are the four (4) different grading categories and their corresponding condition.

•   Premium – A very clean pallet that has probably been used only a few times. There is little if any repairs to the pallet. The pallet will have no plates and no companion stringers.
•   Grade #1 or A Grade – Typically this pallet has been repaired to close to its original condition. Broken stringers may have been replaced or repaired with metal plates. All damaged deck boards are replaced. This is a fairly clean pallet that is structurally sound.
•   Grade #2 or B Grade – Typically this pallet has had stringer damage that has been repaired by attaching an additional stringer alongside the damaged one. This is commonly referred to as a companion stringer, block stringer and double stringer. The “B” grade pallets usually have two (2) or less repaired stringers. The deck configuration on the “B” grade pallet is not always consistent because these pallets have been repaired many times.
•   Grade #3 or C Grade – Typically this pallet has been repaired numerous times. Most of the stringers on a “C” grade pallet will have companion stringers. The deck boards will be inconsistent in size, spacing and thickness. These pallets are usually in very poor condition and are accepted by few companies.

Owned vs Pool pallets: Many companies choose to buy their own fleet of pallets, but this is not always the best or most efficient thing to do.  What you need to consider…

Owning:

•   Cost: Depending on the amount of goods a company needs to transport, it can be very expensive to buy and upgrade a pallet fleet.
•   Management and tracking: Managing and tracking a rental fleet can be very hard work, if mismanaged, it can create huge problems if goods cannot be transported when needed.
•   Maintenance and cleaning: Once purchased, pallets will need to be continually repaired and cleaned in between usage, requiring the manpower, space and equipment to do this.
•   Storage: When not in use, pallets can take up a lot of space, which is inefficient and costly.
•   Fleet fluctuations: If a company suddenly has an increased order, or an order that requires a special type of pallet, then buying them just for these rare occasions is wasteful, as the rest of the time the overflow will just be gathering dust in storage

Pooling:

•   Flexible: You can rent as many or as few pallets as you need for each specific shipment, meaning you’re never over or under stretch with your pallet fleet.
•   Management and tracking: The pooling company can use their own specialist up-to-date management and tracking systems meaning you doesn’t have to worry about it.
•   Cleaning and maintenance: After each hire, the pallets will be inspected, repaired and cleaned by the pallet pooling company, before they are sent out again.  This means that you don’t need to worry at all about the expense of doing this yourself, and you know all the pallets will be up to standard before each use.
•   Storage: Once you’ve finished with the pallets you just need to hand them back to the pooling company with no need to set aside valuable space to store them.

As you see there are many things to consider before buying or pooling pallets in your business. Should you own pallets or use a service to manage them? What type of pallet do you really need? We at SafeSourcing are ready to help you through all the questions and help you lower your procurement costs.  For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments

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It’s just a pallet; or is it? Part I of II

Friday, November 9th, 2018

 

Today’s post is from our  SafeSourcing Archives.

If you’re in a business today that provides goods, supplies, equipment  and alike somewhere along the line these products most likely traveled on a pallet, either in the loading, shipping, delivery or receiving process.  Pallets are the most common method for this as well as being used for storage purposes.  In this article I wanted to share some key factors to consider when purchasing, using or accepting pallets, no matter the originating source.   In this blog my intention is to educate you a little more than you probably wanted to know about pallets.

First the definition,  pallet:  sometimes inaccurately called a skid (a skid has no bottom deckboards), a pallet is a flat transport structure that supports goods in a stable fashion while being lifted by a forklift, pallet jack, front loader, work saver or other jacking device. A pallet is the structural foundation of a unit load which allows handling and storage efficiencies. Goods or shipping containers are often placed on a pallet secured with strapping, stretch wrap or shrink wrap and shipped. While most pallets are wooden, pallets also are made of plastic, metal, and paper.

Types of pallets: although pallets come in all manner of sizes and configurations, all pallets fall into two very broad categories: “stringer” pallets and “block” pallets. Various software packages exist to assist the pallet maker in designing an appropriate pallet for a specific load, and to evaluate wood options to reduce costs.

•  Stringer pallets use a frame of three or more parallel pieces of timber (called stringers). The top deckboards are then affixed to the stringers to create the pallet structure.  A stringer pallet is also known as a “two-way” pallet, since a pallet-jack can be used from only two sides to move it. Two-way pallets are designed to be lifted by the deckboards. In a warehouse the deckboard side faces the corridor.
•   Block pallets are typically stronger than stringer pallets. Block pallets utilize both parallel and perpendicular stringers to better facilitate efficient handling. A block pallet is also known as a “four-way” pallet, since a pallet-jack may be used from any side to move it. Four-way pallets or pallets for heavy loads are best lifted by their more rigid stringers. A warehouse has the stringer side facing the corridor.

Efficiencies: organizations using standard pallets for loading and unloading can have much lower costs for handling and storage, with faster material movement than businesses that do not. The exceptions are establishments that move small items such as jewelry or large items such as cars.  But even they can be improved. For instance, the distributors of costume jewelry normally use pallets in their warehouses and car manufacturers use pallets to move components and spare parts.

Pallet pooling:  due to cost and a need to focus on core business, pallet pooling becomes more and more common. A pallet management company can help supply, clean, repair, and reuse pallets. Pallets should be seen as reusable packaging items. Every pallet that is built could potentially be used and used again until such a time when it will need to be replaced.

Stay tuned for Part II of: It’s just a pallet; or is it?

There are many things to considered before purchasing pallets, such as; should I buy new or used pallets, what grade of pallet is right for my business, do I want a service to manage the pallet inventory for me?  We at SafeSourcing are ready to help you through all the questions and help you lower your procurement costs.  For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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How to negotiate without hurting your supplier relationships

Tuesday, September 4th, 2018

 

Today’s post is from our SafeSourcing Archives

When negotiating a sale with a vendor, the wrong process can quickly change the tone of communication from a friendly sales meeting to that of a confrontation. With large accounts at stake and communication tools that can lose the intended meaning of the speaker, misunderstanding can easily breed offence. The process doesn’t have to devolve into a foray that sours business relationships however. The health of your business will require healthy, win-win, long-term relationships with your suppliers, so let’s consider a few rules for promoting a healthy negotiation outcome:

Clear away assumptions

The only assumption you should start with is that you will discover unknown variables during the procurement process. This is why it will be crucial to allow for questions, feedback, involvement from SME’s and stakeholders, as well as flexibility for the process to be iterative. Your team may publish a set of specifications, then find that there were options in the market they weren’t even aware of from the vendor community. Assuming you know all there is to know about a category could force you into a purchase that is sacrificing value without considering other opportunities identified in the process, as well as alienate suppliers who may be trying to help you help yourself.

Think win-win

You and your suppliers know each other’s business: How can you help each other do business better? Things like “If we changed shipping schedules we could save our vendor a ton of money. And if the vendor sent us PO’s through our EDI system we’d save a lot of time”. The give and take of negotiation doesn’t have to be win/lose. Find the variables that make sense for both parties and adds value to the full project, not just the invoice.

Have a clearly defined process

Leveraging competing quotes to drive savings can be exhausting when done linearly. The back and forth over remote location can be extremely time consuming, and the “negotiation room” tactic leaves suppliers feeling short-changed. This is why e-sourcing web-tools are designed to consolidate complexity through clearly defined mechanisms. Bids are collected with a simple and immediate indication of low quote status. Negotiation is technical, not personal, parameters such as top threshold of quote are identified from the outset, and the timeline and specifications are all in one place.

For more information on how SafeSourcing can assist your team this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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Are you doing business with your suppliers “A” Players?

Wednesday, February 14th, 2018

 

Today’s post is our SafeSourcing. archives!

You can classify all employees in an organization into three categories: A, B, and C players. Should an organization strive for 90% of employees being ‘A’ players? No, a healthy distribution of A and B players is what an organization should strive for.

C Players– All employees generally start as C players due to their training and inability to bring a benefit to the company right off the bat. Genuine A and B players will not be C players long. They will eventually bring value to the company and move to an A or B player. The employees that remain C players will eventually be weeded out of the company.

B Players– B players can perform the tasks given to them well, but show no initiative to perform beyond average. B players show more loyalty to a company. In many cases B players are former A players, but do not want the responsibility anymore for whatever reason (age, personal, family, etc.). B players will complete the task given to them and with their loyalty will save companies money in hiring and training.

A Players– Everyone wants a company full of A players. A players are responsible and work to bring great benefit to the company. Sure they are experienced, motivated, and bring great benefits to your company, but how long will they stay satisfied? With the knowledge, motivation, and experience A players have it can be challenging for organizations to sustain their employment. A players find greater opportunities and their loyalty is far less than B players.

What type of player is your company searching for? You cannot run a company with only one type of player. A successful organization will have a healthy balance of A and B players. Understanding who your A and B players are is an important key step.

We all work with the three different players from our suppliers and  we know it can be challenging to receive the results or information you have requested from a B or C player. If a company you are working with has not established  who their A, B, and C players are, then you could end up working with any of them for contract negotiations. At SafeSourcing we have an extensive SafeSourceIt™ Supplier database and  existing relationships with  the suppliers that will deliver the results you request. SafeSourcing finds the suppliers A players in order to bring value to your company from the outside.

For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to and appreciate your comments.

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How does it taste so good?

Monday, May 22nd, 2017

 

Today’s post is by Steven Belvin, Sr. Account Manager at SafeSourcing.

We all enjoy a soda from time to time, but does anyone ever think about how it was manufactured and botted to later be sold? Fun fact about the origins of soda is that it is believed to have been created in the 1700s. www.madehow.com explains that here: “In the late 1700s Europeans and Americans began drinking the sparkling mineral water for its reputed therapeutic benefits. The first imitation mineral water in the U.S. was patented in 1809. It was called “soda water” and consisted of water and sodium bicarbonate mixed with acid to add effervescence.” Obvious these delicious drinks have been around for some time now. But that still does not answer the “how does it get on the shelf?” question. Well it is actually broken down into 5 simple steps as seen below:

  1. Clarifying the water – Filter the water until it reaches the desired pH level by adding ferric sulphate or aluminum sulphate into the water causing the floc to expand so it can then be filtered out.
  2. Filtering, sterilizing, and dechlorinating the water.
  3. Mixing the ingredients – the dissolved sugars and flavor concentrates are pumped and conveyed into batch tanks, where then the water and syrup are carefully combined until the desired flavor has be achieved.
  4. Carbonating the beverage – once the liquid is at a controlled temperature the carbonation is added. The amount of carbon dioxide used is dependent upon the type of soft drink.
  5. Filling and Packaging – Finally the drink is distributed into its correct bottle or can and is then sealed and sits in the warehouse until it is ready to be distributed to multiple locations across the world.

As you can see there is so much more that goes into making those delicious drinks than Coke™ or Pepsi™ may want you to see. Another aspect of this would be how does it get sold to the store? This is where a company like SafeSourcing may come into play. We work with multiple companies to help them find the right soda company for them. So why not give us a call yourself and see what we can save you on your soda, plastic goods, labeling and much much more.

For more information on how SafeSourcing can assist your team with this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

 

Ref:……………………..

Avizienis, Audra. “Soft Drink.” How Products Are Made. N.p., n.d. Web. 16 May 2017.

 

 

 

 

 

 

 

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You just got a great price on an inventory of goods; now how do you protect it?

Friday, May 5th, 2017

 

Today’s post is from our SafeSourcing Inc. archives

One of the many ways that SafeSourcing helps its customers is to find ways to allow them to reduce their Cost-Of-Goods by sourcing smarter through the use of tools and services that give them total insight into what they are purchasing and from whom.  As is often the case, customers are able to find a vendor they feel comfortable with (many times the incumbent) at prices that help their bottom line.  The issues lie once the contract is signed, the new pricing is in place and the product begins to get scheduled for delivery.

Today we are going to take a look at some of the potential supply chain holes and what you can do to ensure that the great deals you have completed are not offset by process, theft and damage problems that can be monitored and controlled.

Vendor issues – One of the common misconceptions about Loss Prevention professionals is that they primarily deal with activity that is fraud or theft when in reality it is often honest mistakes, but mistakes nonetheless, that contribute much of the loss when product comes from a vendor.  One of the best ways to combat this is to engage a Loss Prevention software company to analyze the data of what is being delivered (which includes quality control) against the invoice in an automated system that allows for real-time analysis.  Ensuring that the product quantity, style, and quality is what you paid for is the first step to plugging your supply chain holes.

Transport issues – Transportation is becoming one of the most alarming areas of loss of your product, especially in bigger cities where organized crime is routinely stealing entire trailers full of merchandise.  RFID and GPS pallet monitoring are two of the ways that companies are using to monitor their shipments from the time they leave the vendor until they arrive at their warehouses.  Speak with your transportation company about new ways to monitor shipments and controls your loss in theft and damages and if you are approaching a contract, now may be the time to begin seeing what other companies are offering by running an Request For Information.

Internal Issues– If you can get your shipments to your offices or warehouses without much damage or loss then you have only won half the battle, especially if the product you received will need to go from a warehouse or distribution center to another location.  CCTV systems are regularly employed in warehouses to monitor the flow of goods coming and going but require an employee or service to assist in the effective monitoring.  Many times the practices you enforce for the workers in your facilities can be an effective tool as well such limiting the access an employee has to their purses or bags until they are in a secured area. Monitoring what happens to the product you purchase once you receive can be just as important as making sure it gets to you safely.

The supply chain can be a place full of pitfalls for your purchased goods if you are not monitoring it properly but you have many good options and tools to help you do that. When you build your T&C’s, list the policies and tool requirements that you want your vendors to adhere to in order to mitigate after the negotiation leakage.  For assistance in finding companies and products to help do this, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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Your Suppliers Performance – Trick or Treat?

Thursday, October 13th, 2016

 

Today’s post is from our SafeSourcing Archives

Last week we took a look at the life of your purchased products once you have the contract signed and begin to place orders and how you can protect that inventory along the supply chain.  Today we take a look at the job your suppliers are doing while the contract is being executed.  What is the quality of their goods; timeliness of the shipments; pricing being billed versus the contract?   Are you getting “tricked” or “treated” by your suppliers?

Many retailers have looked at the process of developing supplier scorecards that measure how well their vendors are doing in the relationship with them.  If designed and executed well, these scorecards can be invaluable in later stages of negotiating new contracts or in evaluating new vendors against a standard you are used to receiving.  Let’s look at a few of the metrics to consider when creating a good supplier scorecard.

Invoice audits – Many companies work so hard to get a great deal, great prices; finish with a contract that works well for the company only to move forward without well-defined processes for auditing the new invoices to ensure the new pricing is being affected by the vendor.  One of the most important pieces of creating a good evaluation program for your vendors will be to determine how often and which invoices you are going to audit and then stick to that audit schedule.   The bigger your company the more important this will be.

Quality Control – Scoring the suppliers on quality comes in a few different forms.  The first thing to measure is the quality of the product itself: Are you getting the product you contracted and does it meet the specifications that were agreed upon?  Another area is in the packaging of the product when it arrives.  Many times it is how the product was packaged to ship that is the problem and frequently responsible for big losses.  How the items measure up to their warranty will also be another critical area to measure for quality.

Delivery–Even the best product at the best prices has value only if you can get the product in the timeframe that your company needs it.  Vendors should be measured on their ability to deliver within the window agreed upon in the contract but they should also be measured on how capable they are in delivering unscheduled product in emergency situations.  As in any business, circumstances occur that take you outside of the normal schedules and you need partners who can deliver when you need them most.

Service–This leads us to final scoring point for this blog; services.  Delivering unscheduled product within a window of time you need it is one thing but how your suppliers handle the relationship with you business in times of conflict or when issues arise is equally important.   Scoring this area can be slightly more subjective, however developing a strategy by which you can record these bumps in the road and how your suppliers react to them will be valuable in future negotiations.

For more information on scoring your suppliers or for assistance in reviewing or creating automated scorecards, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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The End of Antibacterial

Thursday, September 15th, 2016

 

Today’s blog is by Margaret Stewart, Executive Assistant at SafeSourcing.

In the past decade or so, the market has seemed to be flooded with antibacterial soaps, sanitizers, detergents, and other cleaning products, but recently the FDA has essentially banned those antibacterial products. Many of us are asking, why would they do such a thing?

In today’s world of keeping things extra clean and preventing the spread of bacteria and other causes of illness, many of us see antibacterial soaps as a step in the right direction to keep our surrounding areas clean and our families healthy. This ban on antibacterial comes as a shock to many people. The problem is, however, that the antibacterial soaps have not been found to be any better than classic soap, and the chemicals used in the “antibacterial” do not even kill bacterial, but rather expose the bacteria to low levels that help the bacteria breed into strong, highly antibacterial-resistant bacteria. To top it off, scientists have found that antibacterial soap chemicals actually do more harm to people, including, according to an article by NPR, a disruption in hormone cycles and muscle weakness.[i]

So is this the true end of “antibacterial”? Not quite. The ban of 19 different antibacterial chemicals in soaps haven’t been banned from hospitals and food service, but rather banned from household use. Many soap companies have already stopped use of the chemicals in question in their over the counter soaps and have begun using other chemicals thought to be antibacterial. In response, the FDA has set a limit of one year to show scientifically proven effectiveness before another ban takes place.

With the soap market changing dramatically, many businesses may find themselves needing new soap products. This opens up a whole new window of opportunity for new business and renegotiating for new products. SafeSourcing can help with both ends of this process through its procurement specialties.

For more information on how SafeSourcing can help you source soap products, or are interested in our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

[i] http://www.npr.org/sections/health-shots/2016/09/02/492394717/fda-bans-19-chemicals-used-in-antibacterial-soaps

 

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