Archive for the ‘Business Sourcing’ Category

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Entering the Unknown?

Friday, June 29th, 2012

Today’s post is by Dave Wenig, Manager of Customer Services at SafeSourcing.

You may have heard people use the expression; “you don’t know what you don’t know.” Personally, I enjoy this saying a great deal. It is a simple truism. When applied to a procurement project, it can represent any number of unknowns or variables that have yet to be determined, but could affect your results.

The question is; how exactly do you find out what you don’t know? It may even be possible that you also don’t know the questions to which you need answers. Well, the good news is, there are some options. In no particular order, here are a few.

1. Internal Survey – Although you may not have a complete grasp of a certain category, others in your organization might. Using an internal survey tool, these associates can be polled for information on product or service details based on their current usages.
2. External Survey – In some cases, an internal survey may not provide enough detail. In that case, use an External Survey that asks the vendors directly what they are currently providing. This step might also be done concurrent with an Internal Survey to maximize the data available.
3. Historical Experience – Ask your strategic sourcing partner about their experience in this category. Any experiences they have had will lend direction to your project. Note: They can also propose the questions for your Internal and External Survey.

For what it’s worth, you will always not know what you don’t know. Hopefully, these suggestions will encourage you to find out what it is that you don’t know one project at a time. I find that knowing that there are options tends to make daunting tasks seem a little more manageable. 

If you’d like some help uncovering what you don’t know about your sourcing projects, contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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Eight Percent decrease in Earnings due to contract lapse?

Thursday, March 29th, 2012

Today?s post is by Danielle Begley, Account Manager at SafeSourcing.

In a recent article in the New York Times, Walgreen?s has reported an eight percent decrease in earnings in the second quarter due predominantly to the discontinued relationship with Express Pharmacy network.? After failed attempts at contract negotiation, the two companies let the contract expire resulting in a 7 cent loss per share for Walgreen?s.? As the largest pharmacy, Walgreen?s blames a combination of the expired contract and a mild cold and flu season for the decrease in earnings.

Is your organization heavily reliant on a large supplier, or supplier that will greatly impact the overall financial health like Walgreen?s and Express Pharmacy?? If so, you could benefit with the use of a contract management tool, such as that of SafeSourcing.? Using such a system allows for planning through notifications of impending contract expirations.? In addition to expirations, contract management tools offer a much more efficient way to manage current and future contracts while allowing the ability to receive notifications on potential e-sourcing events that should be re-run based on contract expiration.

Mother Nature and the economy are two factors that cannot be easily managed or forecasted however don?t let your organization?s financial health be damaged by a contract lapse.

For more information on contract management please contact a SafeSourcing ?Customer Service Representative for more information.

We look forward to and appreciate your comments.

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If you want negotiating success; try turning the game around.

Thursday, March 22nd, 2012

I was reading the Sourcing Innovation post today titled ?Procurement Game Plan: A Review Part II.3?. Part of the discussion was about negotiation preparation where the question asked was; So how does a skilled negotiator prepare? There were six responses, the 1st of which is as follows.

Try to find the win-win:
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If the only way for the buyer to get better terms is for the seller to sacrifice margin, it’s going to be a tough fight. But if the buyer can offer something to the seller that can look like a win in the rep’s pocket — such as more volume than expected, better production batch sizes, co-marketing — which may not cost the buyer much, the pie can be expanded and both sides can win. While the negotiation will still be tough, it is much easier to get a bigger slice of a bigger pie than to try and take the few scarps the sales person has left on margin.

Although much of what is listed above is accurate, the first question in preparation is or should be; does the supplier have any margin to share with me? Answering this question is pretty simple if you are negotiating with publicly traded companies because you can look up their results, press releases and other information on line. You also already know how long you have been doing business with your incumbents, which is worth something.

Let?s assume you have been doing business with an incumbent supplier for more than two years. This is plenty of time for them to use the same tools you plan to use in order to reduce their costs and improve their margins. If so, the question is have they shared those savings with their best repeat customers (you). The answer, probably not. Unfortunately for publicly traded companies, Wall Street holds them accountable to continual growth in terms of total revenue, margin and earnings. If they release numbers that are off in any one of these areas, their stock takes a hit.

As an example of the above, last year, major waste management companies unnamed here released significant growth and earnings numbers. Did your waste management costs go down? How much is a fair amount for a company to earn without sharing it with their customers. Several of these points are why more companies today would rather be private than public.

Let?s sum up. You have an existing contract in place with your incumbent for more than two years; your costs have not gone down, you incumbent supplier has just announced significant revenue and earnings increases as have their competitors who also want your business. Do you need to give anything else away? Probably not! Can you expect savings on your new contract as a result of having this information? Absolutely!? Why will you get the savings? Because you were prepared and asked for it! And most importantly because most of your competitors don?t prepare properly and as such did not ask for it.

Now in order to maximize your savings, make sure you use the most advanced e-procurement tools like reverse auctions to get the savings you deserve.

We look forward to and appreciate your comments.

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Gingrich says he can get gas to $2.50 a gallon! Do you believe him?

Wednesday, March 21st, 2012

One thing is for sure; if you don?t ask you will never know.

There are a lot of factors that drive prices, if that was not true, why can I drive 5 miles from my house and pay twenty cents less per gallon than right around the corner. Why is gas cheaper in Boston than it is in Scottsdale? Why do eggs cost less at the local inner city convenience store than they do at the local chain that won?t come in to the inner city and buys from the same wholesaler? There are a lot of answers to these questions; many of which consumers would not like.

Many companies think that because commodity indices are up that they should not even bother to try and compress pricing.

This is the precise reason why some companies are profitable and others are not. Just because the commodities that are the basis for products we buy are up, is no reason to not try and compress pricing through the use of e-negotiation tools or other more traditional methods. With that said e-negotiation tools will make the process much easier and insure compression in a much shorter period of time.

Whether or not a retailer is willing to share savings with consumers when using these programs is a whole other discussion and could be a reflection on some of their other? program offerings they have not been successful.

There is a lot that goes in to the products companies buy and maybe even more in the prices they pay. Two things are certain. There will always be suppliers that want to bid on your business. There will always be suppliers that are willing to invest to get your business. This dynamic is what will allow you to compress prices in an up market.

Understanding everything about what you re buying and what drives its pricing and using the proper tools to leverage the supply base can and will result in price savings even in an up market.

We look forward to and appreciate your comments.

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For e-negotiation events, when is a specification not just a specification?

Thursday, March 15th, 2012

Often is services sourcing a good SOW may in fact be the specification.? A statement of work or SOW is another document that is typically added to e-negotiation events in order to bring clarity to what is included in a bid. In essence the document lists the work activities to be agreed upon, the deliverables and a timeframe in which a supplier will be expected to perform against. The SOW requires agreement as do other documents prior to a supplier being allowed to place bids.??

Areas that are normally included in a Statement of work might include but are not limited to the following.

1.?The actual scope of work to be completed
2.?The time period in which it is to be performed
3.?The location of work.
4.?A list of the detailed deliverables
5.?A Schedule of all deliverables
6.?A standards adherence document.
7.?Acceptance criteria
8.?Other requirements.

Make sure that when you are running e-negotiation events that you make sure that all of the above information is considered and captured before you approve of an event being passed on for suppliers to review.

We look forward to and appreciate your comments.

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A Truism – Why some buyers think e-Procurement will never work.

Wednesday, March 14th, 2012

This author has discussed on many occasions the various benefits to retailers of using e-Procurement tools. Not the least of which is that if a retailer were seriously to assign twenty percent of their above the gross margin line spend to these types of tools, they could increase their net earnings by up to 100%. In addition, much of the following would also happen.

1.?They would continue to source high quality products.
2.?They would continue to have great supplier relationships.
3.?They would free up time to do other tasks.
4.?They would improve their company?s net earnings by up to 100%.
5.?They would support our fragile environment.
6.?They would support global food and product safety initiatives.
7.?They would have a larger audience of piers to converse with daily.
8.?They would have a single source of information about their profession.
9.?They would be instantly alerted to product recalls.
10.?They would support a traceable supply chain.
11.?They would have an endless source of new suppliers to review easily.
12.?They would have product specifications at their finger tips.

Now you might wonder why many companies are not enjoying these benefits already. The following are the objections I hear all of the time after we have presented to a prospect that has not been exposed to e-procurement tools in the past.

1.?I already get the best cost.
2.?We?ve done business with this supplier for years.
3.?I don?t have product specifications.
4.?I don?t have time for this.
5.?Switching costs will be too high.
6.?I can?t insure the same quality.
7.?We need to adhere to certain standards.

If you have an objection that is not listed above, or they pretty much fit your thinking, please review the dozen benefits above and weigh it against them.

We look forward to and appreciate your comments

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A Truism – Why some buyers think e-Procurement will never work.

Wednesday, March 14th, 2012

This author has discussed on many occasions the various benefits to retailers of using e-Procurement tools. Not the least of which is that if a retailer were seriously to assign twenty percent of their above the gross margin line spend to these types of tools, they could increase their net earnings by up to 100%. In addition, much of the following would also happen.

1. They would continue to source high quality products.
2. They would continue to have great supplier relationships.
3. They would free up time to do other tasks.
4. They would improve their company’s net earnings by up to 100%.
5. They would support our fragile environment.
6. They would support global food and product safety initiatives.
7. They would have a larger audience of piers to converse with daily.
8. They would have a single source of information about their profession.
9. They would be instantly alerted to product recalls.
10. They would support a traceable supply chain.
11. They would have an endless source of new suppliers to review easily.
12. They would have product specifications at their finger tips.

Now you might wonder why many companies are not enjoying these benefits already. The following are the objections I hear all of the time after we have presented to a prospect that has not been exposed to e-procurement tools in the past.

1. I already get the best cost.
2. We’ve done business with this supplier for years.
3. I don’t have product specifications.
4. I don’t have time for this.
5. Switching costs will be too high.
6. I can’t insure the same quality.
7. We need to adhere to certain standards.

If you have an objection that is not listed above, or they pretty much fit your thinking, please review the dozen benefits above and weigh it against them.

We look forward to and appreciate your comments

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Understanding the trends that impact your customers!

Monday, March 12th, 2012

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

The world evolves more quickly every day; not too many would doubt that.? As the population changes, grows and reshapes those that cater to who they are and what they buy need to be aware of emerging trends and what they can mean to business.? Those that find success will be the ones that can capitalize on trends by quickly adjusting their business to take advantage of them.

In today?s post we will be looking at some of the important trends to keep in mind as you discuss strategies, technologies, marketing messages and the future.

The Couponers ? According to a study performed last year by Scarborough Research, coupon usage for households has gone up 26% since 2006.? With the changes in the economic landscape, this? number is not a surprise to anyone,? particularly as families continue to struggle? in order to find ways to make ends meet.? What is important here is that the study showed that 1/5th of couponers utilizes electronic coupons/discounts in order to save money.? This trend is important as it allows companies to leverage their existing technologies such as Email, texting, Twitter, Facebook etc.? to launch campaigns to an audience that prefers their media in a way that costs them significantly less than traditional? methodology.? Finding partners who can help you immediately leverage evolving trends is key.

The Boomers ? For decades, the generation of the population known as the ?Baby Boomers? (those Post- World War II babies born between 1946 and 1964) have held significant purchasing power as advertising, television programming, marketing, product development have all placed emphasis on catering to this group of the population which represents close to 1/3 of the population and which just began entering retirement age in 2011.? The years to come will not likely change this trend, in fact, they will likely demand more attention and change as average lifespan continues to lengthen and the baby boomers require those who sell to them to adapt their services and products to their needs as they enter the next stages of their lives.? Understanding these new needs will allow good companies to react and focus their efforts on a group of the population who will continue to be influential for many years to come.

Hispanic Focus ? As a cultural group that represents 17% of the population and a buying power north of $1 trillion, it is no surprise that companies have expanded their marketing focus to include emphasis on this growing demographic.? In an article this past Friday, in MediaDailyNews, a review of the Association of Hispanic Advertising Agencies study? stated that as the Hispanic demographic continues to grow over the next decade (5.7%), companies that have already begun expanding their approach to include direct efforts toward the Hispanic population have seen a noticeable increase in revenue from this group.? Companies that are able to work with their internal and external teams to expand their marketing will find that they have a better-rounded message to their customers and a higher level of loyalty from those groups.

For more information on how you can adapt your services to meet evolving trends or to locate vendors to partner with that are already providing this support, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

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An effective procurement strategy is a key to supply chain risk mitigation.

Tuesday, March 6th, 2012

Supply chain risk management is the process of identifying factors that could disrupt the production process.? Because conducting business is such a complex activity, the sources of such disruption are going to be many and varied; but because they cost the people who run and work for the business so much time and money, these people will naturally want to have some way to minimize the amount of risk.? One of the most effective means of supply chain risk management is establishing a sound, effective procurement strategy. Let?s define procurement as the acquisition of goods and services, in both the proper quantity and at the proper quality, when they are needed, where they are needed, and usually by means of a contract.

There is a company that devotes itself to helping other business owners determine which procurement strategy will work best for them.? SafeSourcing has developed an e-procurement process which is enhanced by the use of multiple tools? The SafeSourceIt Database, which has 380,000 suppliers and uses a set of twenty- five safety certifications to screen suppliers, a highly innovative and simple to use e-negotiation tools called SafeSourceIt? where buyers and sellers have an entire RFX library at their disposal. If you?d like to learn more about the entire SafeSourceIt? family of products, please contact a SafeSourcing representative.

The proper procurement strategy can help company?s avoid financial challenges.

We look forward to and appreciate your comments.

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Part II of II. New Technology: Helping Businesses to Compete !

Tuesday, February 28th, 2012

In yesterday?s post, this author asked, ?With so much new technology being introduced every day, how are you using it to help your business be more competitive??? I now would ?like to offer a little more detail relative to the following four areas you?re your consideration.

The Cloud? ? There have literally been thousands of articles, an equal numbers of blogs, including ones on this site like this one about the benefits of cloud computing.? Cloud computing allows companies to have all of the advantages of an IT data infrastructure just like the Fortune 100 companies without the overhead of staff to support, equipment to run, software to manage it and worries of assuring it is always available.? These are all of the financial reasons why cloud computing makes sense for companies but the? feature advantages are equally important as companies with resources all over the world can more easily collaborate on projects through the virtual environment clouds create.

IP Phone Systems ? On the heals of discussing what can be done with a ?cloud? network structure it makes sense to bring up IP phone service companies.? Tens of thousands if not millions of dollars were typically required for a company to install a Private Branch eXchange (PBX) for their company.? The complexity of maintaining such a system either required a fulltime expert employee or high-priced consultants in the past.? Now companies can have all of the features of those PBXs at hugely reduced prices through companies like RingCentral and Windstream who tailor plans for businesses based on their needs and budgets to give them everything they want.

Dashboard Communication?? The days of HR departments running around answering phones and letters about benefits, providing forms, and printing expensive newsletters is quickly becoming a thing of the past as companies are beginning to understand how cost-effective internal portals and dashboards can be to handle all of this traffic.? Third party companies that offer HR portal solutions allow employees to service many of their own needs which frees up a typically overloaded HR staff to concentrate on the things that matter most to the business.

Virtual Staff?? All three of the above mentioned items are useful tools that aide in companies being able to employ more and more virtual employees.? The financial benefits of virtual employees have long been documented as have the added benefits of increased and quality work done by virtual employees who are allowed to better control the flow of their work day.? Advances in cloud technology and video and webinar offerings make employing virtual staff even more practical to do.? It is also important to note that when companies increase their virtual staff they instantly remove the geographical boundaries that sometimes prevent them from going after the best employees across the country.?

As small and medium companies increase their contribution toward our Nation?s economy, their ability to compete at cost-effective levels will become increasingly more important and technology will play a huge role in them getting there.? For more information on finding vendors in any of these four areas or in other areas that might help your business, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

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