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

A lot of businesses were hurt by the pandemic and many of those companies are still trying hard to get back up to speed.  Lack of workers caused companies to cut back on production which slowed down supplies to the market and led to rising prices on about everything that we consume.  Home appliances are one the thing that was affected.  Lack of the materials needed to make these appliances is listed as the main reason for the increases that have occurred, and these increases are forecasted to continue throughout this year.  Some analysts are predicting that they will increase by more than ten percent.

Now with the pandemic restrictions being lifted we are facing another crisis that will impact the price of items due to fuel costs.  Besides the rising cost of manufacturing this new fuel issue will also affect the cost of appliances and other goods.  The rising fuel costs further squeeze retailers, and they are forced to pass on the higher expenses to us the consumers.  Anything that must be shipped could cost more as the price of fuel continues to increase.  Also, many of the products contain plastic and synthetic materials which are petroleum based so the higher oil prices the more expensive these parts become to make.

Even though the price of materials has gone up and we have been paying more for appliances why have companies like LG been making record sales during these demanding times.  Are they passing too much of the costs to the consumers?  Last year, LG passed up the Whirlpool Corp. as the world’s top manufacturer of home, kitchen, and laundry appliances after posting record sales in 2021.  Its home appliance and air solutions division had another record setting year with over twenty-seven trillion in revenue which is an increase of over 21 percent from the year previous.  It seems that a lot of companies like this one have been retaining strong profit margins during the pandemic because they have cut costs and continued to pass the unreasonable prices to their customers.  I guess with the pandemic and now the high fuel costs we need to start asking how long this can continue to go on.

Interested in learning how SafeSourcing can help your company save money and run more efficiently?

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.

Today’s post is by Patrick Quinn a Procurement Specialist at SafeSourcing Inc

The price of lumber has taken a few sharp turns over the last two years. A halted economy in 2020 saw a dramatic increase in the price of lumber from March to May, followed by a steady decrease in price from May to July. The price remained relatively stable from July to November, but since December, the price has seen a sharp increase from $534 per 1000 board feet to $1,420 per 1000 board feet. The National Association of Home Builders cites several factors such as supply chain bottlenecks, new tariffs, low production, and supply issues caused by flooding in British Columbia and Washington.

However, several of these factors still don’t quite add up to a near tripling of the price of lumber. Tariffs from Canada are rising from 9% to 17.9%, but that’s still less than the 20% tariff implemented from 2017 through December 2020. Flooding issues only affected the area’s production for a short time in November, too. The difference can be found elsewhere than what the NAHB are saying, though.

During this time, the revenue increase of the home improvement industry has increased $13.4%. One of the top home improvement companies awarded a pay increase for top executives over 40% just before this price spike. A different company also doubled the pay of its top employee. And despite consistently high industry revenue, the gap between consumer cost and profit never saw any change. The largest change in cash flow consistently lands in the same pockets.

To help you find the source of your rising costs, please contact a SafeSourcing Customer Service Representative.

Today’s post is written by Ivy Ray, Senior Procurement Specialist at SafeSourcing Inc.

We have experienced a shift in our economy, due to the unexpected demand on supplies, and supply chain disruptions during the recent pandemic.  Labor shortages and freight issues have caused major issues that none of us could foresee. The inflation rate is soaring, and gas prices are rising at a steady clip which is evident in what it cost to buy food, consumable goods, and appliances.

The global pulp and paper market is projected to grow from $351.51 billion in 2021 to $370.12 billion in 2028 at a CAGR of 0.74% in forecast period, 2021-2028. [i] The main products include wrapping paper, paper packaging material, writing paper, printing paper, tissue paper, rolls, and specialty paper. The leading paper manufacturers in the U.S. are International Paper, Georgia-Pacific, Kimberly-Clark, and WestRock. [ii]  Sales of disposable sanitary items such as toilet and bathroom paper, as well as the use of beverage napkins and specialty wipes in restaurants and bars, have greatly increased. The demand for paper packaging has also increased, partly due to the drive to reduce plastic use.

At the initial surge of the pandemic, retailers were often out of stock on paper products which resulted in a loss of revenue for their bottom line. According to Supermarket News, out-of-stocks cost retailers $82 billion in missed sales last year.[iii]  While consumers and retailers are negatively affected, the manufacturers have profited greatly. Still, the U.S. fast-moving consumer goods (FMCG) sector grossed sales of $970 billion in 2021, up 2.1%. The bath and toilet paper market is expected to rise in both the commercial and residential use. Kimberly-Clark’s annual revenue increased from $18.5 billion in 2019 to $19.1 billion in 2020, a (3.74%) increase (35.1% from Consumer Tissue).[iv]  They experienced a .19% decrease in revenue in 2019 from the previous year. In their current annual report, Georgia-Pacific reported a total revenue of $1,182.1 million for FY2021, representing an 11.3% increase when compared to that in FY2020.[v]

The fact is, increasing costs and low availability is an issue of concern that affects both the consumer and retailer. If you are a retailer with concerns about stock availability and/or cost reduction, allow our SafeSourcing team to partner with you to procure your products and services and get the savings you need.

For more information on how SafeSourcing can assist you in exploring your procurement solutions for your business 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.

References:

[i] https://www.fortunebusinessinsights.com/pulp-and-paper-market-103447

[ii] https://www.fortunebusinessinsights.com/tissue-paper-market-102847

[iii] https://www.supermarketnews.com/issues-trends/grocery-retailers-customers-paying-price

[iv] https://craft.co/kimberly-clark/revenue

[v] http://www.gp-industries.com/IR/data/_uploaded/file/Annual%20Report/2020-2021/GP%20Industries%20Annual%20Report%202020-2021%20LR.pdf

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

Since the beginning of the Pandemic, we have seen drastic changes in our world. We have seen death tolls rise, then fear and doubt seeping into society. Then came the lockdowns and the switch to work from home, with essential workers still braving the frontline. Over the course of two years, we have gradually adapted to new situations and a changed world.

One of the biggest changes we have seen has been the rise of corporate profits. The need for essential workers forced companies to compete for employees, which then triggered rising wages. These wages have ultimately been passed on to the consumer through increase in goods. The problem is that overall, the increase in wages does not account for the high rate of inflation that we have seen in multiple industries, primarily the meat industry. This notion is confirmed when we see some meat companies have seen record profits in 2021 after setting record high prices.

So how did it happen? First, during the pandemic, many meat companies had to shut down their operations. There were people getting sick and unable to work, while others feared going to work and getting sick. The companies were forced into a labor shortage that turned into a product shortage, raising prices for the consumer. Then there were federally mandated safety measures that had to be implemented, which was supposed to reduce the number of people exposed, but the spread continued, continuing to affect the industry workforce.

In addition, those in the meat industry were facing additional costs themselves in feed, transportation, and labor. All these factors have affected the costs of meat to rise drastically, which most of us have noticed at the grocery store. But the numbers do not quite match up. The inflation costs associated with the meat industry are higher than expected. This has led to record profits in many corporations, including those in the meat industry. According to one source, profits have been up to 40% higher than in previous years, while their costs have gone up but far less than the prices they are charging. In addition, the largest companies have been the only ones to make it through the pandemic mostly unscathed, making smaller companies shut down. In fact, this even has gained the attention of President Biden, who called out the largest companies for their “market domination, which he said is driving up prices and hurting consumers.”

While the costs going up are affecting everyone, there are some things you can do to help. By using a procurement partner, like SafeSourcing, you can get your organization’s costs under control, possible even locked in for a contracted term. We can help you find the products you need in the meat industry at the best costs, helping to secure your supply chain, ensuring consistent and timely arrival of the products you need, while avoiding addition cost increases.

For more information on how SafeSourcing can help your organization or on our Risk-Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

Source:

https://www.fooddive.com/news/tysons-profits-soar-amid-higher-meat-prices/618564/

Today’s post is by Ron Southard, Chairman and CEO at SafeSourcing Inc.

The following is an excerpt from our White Paper “The Art of Collaborative Procurement”!

The concept of the whole being greater than the sum of its parts is important, but the art of the process is in defining the “why”. At least that was my intent when I began this paper. A company’s survival may depend upon mastering that art.

Some companies have shied away from new eProcurement tools and collaboration with other companies because either they don’t think their individual spend was large enough to make a difference or they don’t know how to find other companies to partner with. The old saying about the whole being greater than the sum of its parts has a role even in eProcurement, and solution providers can provide the direction required to accomplish this. That is, if it’s the right solution provider. Think about how this concept could help find savings in procurement.

1. Coordinated effort leads to the benefits of scale. SafeSourcing regularly runs events where multiple customers reap the benefits of going to market with a combined larger spend.

2. Working together offers different things to different companies in different proportions. All companies may not be buying the exact items as each other, but combined, the similar items give a vendor the opportunity to offer greater savings than would otherwise be viable.

3. Collaborating can prevent companies from seeking different procurement solutions in the first place. The benefits of working with others may go beyond the simple numbers initially calculated.

4. Collaborating in and of itself might be a new procurement strategy, but a tool and expertise are still needed to facilitate the process.

5. For companies concerned that these tools are an impersonal solution, time is revealing that the internet and electronic solutions are anything but impersonal. They are different and they allow interaction in ways that were not possible before due to communication and time barriers.

Summary

Middle of the road traditional procurement practices will not work in the art of collaborative procurement. The same old same old does not work. The pace with which change occurs today requires companies to be able to turn on a dime and think outside of the box. For that, procurement leadership is required, leadership that looks at the art of the process. Leadership that creates and innovates is required for the benefit of all involved in the collaborative process based on their individual needs

If you would like to learn more about how our customers and suppliers collaborate and work together, please contact SafeSourcing.

Today’s post is by Ron Southard, Chairman and CEO at SafeSourcing Inc.

The following is an excerpt from our White Paper “The Art of Collaborative Procurement”!

In the Retail Sector Retail collective buyer organizations and consortiums have evolved primarily in order to compete with the mega retailers and category killers in support of independent retailers. These business structures have been around for a long time. Many have evolved to use innovative negotiation and procurement tools. Their retailer members are also benefiting from the use of these tools in order to reduce their net landed costs in many different ways.

These types of organizations can go by many different names, such as wholesaler, collective buyer, consortium, cooperative, share groups, and more. Even large Private Equity Companies that control exceptionally large portfolios of vastly disparate companies have adopted these methods and they all have one thing in common; they endeavor to consolidate purchasing volumes for a wide array of business structures to try and compress or contain cost in order to improve financial performance.

In the retail vertical, companies may actually belong to several different buying groups because their primary group does not offer expertise in a certain area or category. Examples can come from direct or indirect spend and can be as specialized as safety equipment and technology or a wide variety of specialized sectors like legal services.

Buying groups and consortiums are also evolving and beginning to focus on mixed markets where it makes sense. Historically, these groups tended to be vertically focused, such as a drug industry consortium with the members generally representing the drug industry only. Some consortiums are beginning to market themselves outside of their vertical to retailers or other companies who want to take advantage of learned expertise in the categories that are common across more than their own vertical and offer increased volumes. An example of this might be drug stores sourcing remarkably comparable products that health care organizations such as hospitals source. Although this may seem like a stretch for most, it is now quite common within retail for non-vertical specific players to work together.

Today’s advanced e-negotiation or e-procurement tools, such as the SafeSourceIt™ eProcurement family of products, make it much easier to accomplish collective buying and aggregating outside of a consortium’s initial area of expertise. Large and small retailers alike now have the capability of viewing a much broader universe of suppliers through the use of supplier databases, like the SafeSourceIt™ Global Supplier Database, while also coordinating and participating in collaborative events from hundreds, if not thousands, of miles away. Suppliers now have an opportunity to earn business they did not know about and could not have competed for in the past.

All companies should ask their respective collective buyer organizations how they plan to make use of today’s advanced procurement tools, many of which are cloud based and offered in the form of Software as a Service (SaaS), which means they can be deployed almost immediately with no IT involvement and with extremely attractive ROI’s. They should also ask what the GPO has to offer in terms of introductions to other companies beyond their current group for increased collaborative aggregation volume. This is also a significant benefit that eProcurement solution providers like SafeSourcing Inc. can assist with.

If you would like to learn more about how our customers and suppliers collaborate and work together, please contact SafeSourcing.

Today’s post is by Ron Southard, Chairman and CEO at SafeSourcing Inc.

The following is an excerpt from our White Paper “The Art of Collaborative Procurement”!

The fact is neither internal nor external aggregate collaboration is happening on a large scale in many companies and collective organizations. This is especially true in mid-tier or loosely organized larger national and multinational organizations. The terms collaboration, collaborative partners, collaborative supply chains, collaborative commerce, and collaborative networks are often used when discussing procurement. It rolls off the tongue like everyone knows what they are talking about. According to Wikipedia, “Collaboration is a recursive process where two or more people or organizations work together toward an intersection of common goals,” and, “an aggregate is a collection of items that are gathered together to form a total quantity.” Since collaboration can happen with groups or organizations of any size working together toward the same goal, it can also apply to virtually any business function. When we combine it with the word “aggregate” to form the collective eProcurement term “Collaborative Aggregation,” however, we arrive at something potentially meaningful. Collective buying organizations and share groups often combine purchasing volumes of comparable products and services in order to drive better discounts. Large companies often aggregate their purchases among departments and are doing the same thing across different operating groups or companies within a larger organization in order to drive economy of scale in purchasing. The unfortunate truth is that not much out-of-the-box thinking, or art is going on in this process. They are so involved in the process (weeds) that they cannot see the forest for the trees.

Check back tomorrow and we will talk about collaboration in the Retail Industry

If you would like to learn more about how our customers and suppliers collaborate and work together, please contact SafeSourcing.

Today’s post is from our SafeSourcing Archives

What are some of the ways to actively use sourcing tools to help reduce your company’s loss?”

What ever state the world economy is in, is no longer  newsflash material for anyone.  As governments and businesses actively pursue the steps to improve results, issues within business, especially in retail, that were once concerns are now becoming major problems as they battle theft and loss both internally and externally.

In the course of dealing with “loss” head-on, many companies are looking to improvement their infrastructure, processes and coverage by researching companies that specialize in providing goods and services to help reduce loss.  Today we will be covering a few areas that sourcing departments or 3rd party sourcing partners can help you so that you know what is out there and to help make the best decision for your company to procure.

Enterprise Software – There are many companies that provide enterprise software for gathering and monitoring the data that flows through your business every day.  Hundreds of successful RFPs are run every year to gather the information necessary to compare these companies and offer you valuable insight into the solution that is best for you.  Make sure you have all of the facts to be able to compare the companies evenly.

Video Equipment – With literally hundreds of video manufacturers on the market offering DVRs, cameras and the software that goes with them, not to mention new technology that leverages IP devices and video analytics to intelligently monitor the video, it is a perfect time to review the current video condition of your company.  Begin to gather the details and competitive pricing from these vendors to upgrade or improve your company’s current video infrastructure.

Consulting Services – While enterprise loss analysis software and video capabilities are important for many companies, not all companies have the staff to monitor and deal with what is being provided out of these systems.  Due to this issue, many consulting companies have appeared with terrific loss prevention experience to help you use your tools to reduce your loss, whether that is reviewing exception based reports, video or handling the interviews of potential theft activity in your company.

Alarms & Safes – Alarms and safes are terrific categories to be looking at due to the fact that with so many companies selling them, there is a terrific common ground from which a company can evaluate the pricing from multiple companies easily.  Because the field can be so competitive on pricing it is also a good time for customers to get additional “value-add” from vendors that are offering more services in order to get the alarm or safe business.

Security Companies – Security and doo/fire alarm monitoring companies have been in existence for years and many offer similar services.  Now is a good time to look at your existing supplier and see what else they are doing that is new that you might be able to leverage.  While doing this process it is probably a good idea to take a look at some new companies and see if they are offering anything that may help your company reduce either your loss or your costs.

Whatever your Loss Prevention need is, the global environment is quickly demanding that companies begin to pay more attention to the amount of money and product they are losing and look for ways to reduce that loss and the above categories and suggested steps in examining what is right for your company are just a few of hundreds.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.

We look forward to your comments.

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

Below is the conclusion from a white paper Titled “Construction Sourcing with eProcurement Tools” that I wrote many years ago. Surprisingly not a lot has changed, particularly in the retail space. Too much money is being left on the table and to much grey area is being left in contracts.

There are many companies that have not used eProcurement tools for construction sourcing. In fact, below the Fortune 500 level, it is possible that as many as 80% of companies do not use these tools, as they have historically been too expensive. There will be a continuing struggle to change the way companies operate and collaborate internally on procurement initiatives in more current productive ways. However, with the advent of SaaS cloud-based solutions like SafeSourceIt™, these tools are now available to any company, regardless of size, that wishes to use them. There really is no spend too small or category to complex, because there are always suppliers available that are interested in earning new business. In many cases these suppliers are also beginning to use these tools to make their sourcing easier and more cost effective. As a host you may not know who they are, but the use of these tools will help you find them, improve your processes and your company’s profitability. At the executive suite this is what companies expect and what business and free markets are all about.

Here is the thing, same store sales growth and profit can only hide underperforming contracts for so long. Many in construction related procurement need to catch up with the operations, risk, and loss prevention teams among others in order to drive down cost that re artificially high.

If you would like to understand how we can accomplish that in your current quarter, click the link and we’ll talk.

Invasion, war, and you

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

If you closely watch the global news, there seems to always be some sort of invasion, war, or conflict. While the location of these conflicts and the underlying issues behind them can vary, it is always something felt by many. Recently Russian has been in the news and their presence within Ukraine. Hopefully, things will calm between the two countries, but things can escalate, and if so, you will likely feel that in yourself.

First, whenever there is a high-profile conflict, gas prices tend to rise. People get nervous and may rush to the pumps to ensure they have enough fuel to get where they are going or perhaps they just want to make sure they fill up their own tanks before prices rise. Whatever the reason, conflict tends to bring the consumer in at a higher demand than normal and this alone can raise prices.

In addition to fear and demand driving prices up, foreign conflict can have an enormous impact on the supply chain and lower the available supply of many different items.  Conflict can hinder the logistics of supplies throughout the world and additional sanctions on a country can further delay if not altogether stop supply routes. This may drive prices even higher, making the effects of conflict even closer to home.

Finally, the surge of fleeing refugees from within a conflict zone can also affect things economically. From housing and travel to regular foods essentials, and toiletries, the increased number of people within any country can greatly affect the supply and demand globally. Having a procurement partner, like SafeSourcing, helping your organization navigate disruptions in supply and logistics can help your business stay on track.

For more information on how SafeSourcing can help your organization or on our Risk-Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.