Archive for the ‘Business Sourcing’ Category

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Comparative advantage suggests we should be looking to Brazil for our future sourcing needs?

Tuesday, October 11th, 2011

Comparative advantage is a theory that advances that in a free marketplace, each entity or country such as the EU or NAFTA or trading countries will ultimately specialize in activities where it has comparative advantage. Examples of such might be technology, natural resources,   local workers skill sets, agricultural advantages, transportation benefits etc. In an  article published this past March at Bloomberg Businessweek titled BG (BG Group Plc, (the UK’s third- largest natural-gas producer), to Export From Brazil as Nation Becomes Key Oil Source, it would sure seem as though Brazil has the natural resources piece down.

Many people are not aware that Brazil is the world’s seventh largest economy. When you think about the relatively untapped natural resources in this country, their impact as an economic power will only continue to grow.

Now let’s just hope that we don’t create and unnecessary trade agreements that eliminate the comparative advantages that we both have and could build upon.

We look forward to and appreciate your comments.

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With the economy moving the public to lower cost products is it time to review your private label strategy?

Monday, October 10th, 2011

Last week the Wall Street Journal published an article by Ann Zimmerman  titled Frontier of Frugality about how the economy is forcing consumers to consider lower priced stores and goods to save money.  With the landscape of retail changing to adapt to this trend many companies are changing their product mix to include more value and private label products.

In today’s blog we will be looking into some new areas of private label sourcing you might not have thought about previously.

Services – One of the areas that companies do not always think of for private label sourcing are services.  Many of these services deal directly with the design and marketing of the private label products themselves helping to develop campaigns for the retailer.  There are other services, however, such as Kosher services and product development services that can also be sourced.

Product Ingredients – In some cases the retailer manufactures or is considering manufacturing their own private label products and the raw materials needed for those products need to be sourced.  Flavorings, chemicals, fragrances, pharmaceutical ingredients and organic ingredients are just some of the items that can be sourced.

Supplies and Equipment – When it comes to private label products there are also unrelated equipment and supplies that are needed in order for the inventory to get to the consumer.  Advertising vehicles, pallets, shelving, signage, coolers and freezers, and doors and curtain systems are just a few of the many types of connected purchases which are necessary in order for private label products to be sold.

Not For Resale – This area of private label spend is growing larger every day as more retailers are beginning to offer food and/or beverages in their stores.  Towels, cups, bags, trays, paper products, and stretch wrap are all additional areas of private label products which can be sourced on a regular basis.

Whatever your private label Sourcing need is, the economy is quickly demanding that companies begin to pay more attention to the mix of products they source for their customers.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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The Holiday Season is right around the corner

Tuesday, October 4th, 2011

Christmas will be here before we know it.  While most of us as consumers wonder where the year has gone, retailers are feverishly planning in preparation for their busiest season.  In the retail industry, the short period from October to December can represent more than half of the year’s sales—which means that planning and implementation are crucial for success.

Retailers don’t panic; procurement services can assist you in your holiday preparations.  For novelty products that are traditionally sold such as gift cards, perfumes, and gift basket items, why not purchase products for the rest of the year?  This can help you have the inventory on hand and allow you to lock in a price—that can surely increase as the holidays ensue.  Planning to maintain appropriate inventory levels especially for Black Friday and beyond can help decrease your costs by not being subjected to inflated prices due to seasonality.

Don’t let the season sneak up on you, plan ahead to ensure you have the most successful Holiday.

For more information on SafeSourcing and how we can assist with this process, please contact a Customer Service Representative for more information.

We look forward to and appreciate your comments.

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What are the risks of e-procurement in a third world county? Part II of II.

Monday, October 3rd, 2011

This author wonders if the use of e-procurement practices could potentially help build an economy in a third world county, what are the risks to using e-procurement that could be challenging the process?  Since e-procurement is quickly becoming a standard business practice in developed countries to realize cost savings, improve efficiency, and control the bottom line what is stopping these companies from sourcing through third world countries?  This author believes that if there were not risks associated with this relationship that more countries would be taking advantage of a larger supplier network. 

Some of the risks that are preventing e-procurement in third world countries are:
  
   1. Some third world countries do not have enforced regulations that prevent the use of child labor.
   2. Many third world countries do not have any regulations in place for pollution control.
   3. By sourcing with a company in a third world country, a host company may increase the cost of their paid warranty claims.
   4. There may be a language barrier between the sourcing partners.
   5. Bribery and corruption can be in issue in come cultures and may be more prevalent in a third world country where the standard of living is lower and the split between economic levels is more drastic.

It is a risk for a company in a developed country to source items from a company based in a third world country that is found to use child labor or bonded labor.  This would have a considerable negative impact for the host company when their supply chain is analyzed and could potential ruin relationships with current or future business partners.

Within the United States and many other developed countries there are government regulated environmental restrictions.  The compliance with many of the regulations is what can attribute to a company’s carbon footprint.  Many third world countries do not require any kind of regulations on a business to take care of the environment.  By sourcing with a company in a third world country it could negatively affect the company’s carbon footprint as well as generate negative publicity from many of the environmental watch agencies.

Another growing concern for sourcing with a company in a third world county is the issue concerning warranty of the product you are selling or distributing to your customers.  Even though you may receive a large cost savings from the products you’re sourcing, the quality of the product may not be comparable and could cause issues with the overall quality of the product you are producing for your customers.  This could negatively affect the amount of warranty claims you will have to pay.

A language barrier could present an issue for the e-procurement process.  Many times companies in a third world country could be doing business in a second, or even third, language.  To avoid issues with this a host company needs to clearly outline objectives and terms and have a clear knowledge that the sourcing company understands them.

Corruption throughout a supply chain could affect the wages being paid to workers.  In order to overcome this challenge in a sourcing relationship, the purchasing company can require as part of the conditions of the sourcing relationship that the supplier sign a code of ethics that ensures that the workers are compensated for their efforts.

If a company from a developed country is interested in sourcing products or services from a company in a third world country there may be risks, but with the proper knowledge and steps in place to overcome them the benefits can outweigh the risks.  By including a company from a third world country in your supply chain you could be contributing to the global economy with a more positive impact.

We look forward to and appreciate your comments.

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What you should know about sourcing Cloud Computing Alternatives

Monday, September 19th, 2011

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

One of today’s industry buzzword / concepts is that of “cloud computing”.  Cloud computing is a generic labeling that has been applied to just about any hosted service that is accessed via the internet. It is one of the most rapidly growing technology areas in all business sectors today savings promises associated with a reduction in computer hardware  needs andn the related manpower associated with the same versus a company doing everything internally.

Today we are going to be focusing on three main categories of cloud computing that are available and the types of services that can be procured for your company in each one.

Software-as-a-Service (SaaS) – The most common category of cloud computing is the Software-as-a-Service model.  In this category are software packages that are physically hosted by another vendor in their environment, on their hardware, and supported by their resources.  The obvious advantage of this approach is having full-time support of an application that is maintained and upgraded by a staff you do not have to employ.  These models are usually priced on an as used basis making the ROI much easier to measure.  Examples of this model would be Retail Loss Prevention, POS and Pricebook applications such as those offered by companies like Retail Anywhere.

Platform-as-a-Service(PaaS) – For those who are a bit more advanced and have some internal development resources  in their IT department, the Platform-as-a-Service model provides them the capability to design, test and deploy their own software applications in an environment over the internet.  With database, design studio and web engine license fees being so expensive in order to stay current , this provides a way for companies to develop and stay current with their tools without bearing the exorbitant fees required to do it internally.  Currently the Google Application engine is one example of successful offering using this model.

Infrastructure-as-a-Service(IaaS) – The final category of cloud computing is Infrastructure-as-a-service delivering all of the hardware, network components, memory, hard drive space and processing power for a business and as such, effectively becoming the major component of an organization’s IT infrastructure.  The advantage of this approach is the capability to quickly and easily scale the model to fit a company’s needs without the major investment in the equipment and software.  This model can be as simple as providing data centers for your company or as complex as being responsible for almost everything an IT department represents in a company.  Amazon Web Services is one of the larger and more well-known offerings in this space.

With an ever increasing competitive landscape for many businesses where the call for reducing expenses is constant, these types of services will continue to gain increased favor while providing great value to those companies that can determine the best ways to leverage their collective or individual power. 

For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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Many Mid Tier One and Tier Two retail companies can not afford advanced analytic software! The truth is they also can’t afford to not have it! So what to do?

Friday, August 12th, 2011

Let’s first try to understand what analytics actually is. According to Wikipedia’ a simple definition of analytics is “the science of analysis”. A practical definition, however, would be that analytics is the process of obtaining an optimal or realistic decision based on existing data. Business managers may choose to make decisions based on past experiences or rules of thumb, or there might be other qualitative aspects to decision making; but unless there are data involved in the process, it would not be considered analytics.

So why can’t many companies afford analytics? The answer is because they are complex. In my early days of selling data warehouses with one of the industry leaders, in fact the best in the space today the combination and analysis of data from disparate functional areas of a business were nearly impossible. As such if a company was advanced enough to have this type of information it most likely existed in islands that evolved into departmental data marts like category management systems. These data marts ultimately evolved to complex databases with relational data models that allowed access of data contained in these  disparate systems and then into on line analytical systems capable of managing massive amounts of data .

It’s probably no surprise that the early adopters of these technologies were the biggest of the big companies and governments. So when we get to analytics that support e-procurement systems or procurement systems in general, the systems that provide the analytics have to reside within a company’s corporately supported data model. If not, they initially at least have to have a procurement data model that supports data contained in ERP systems, Financial systems etc. Since the trend is not a backwards direction of recreating islands of information,  pilots of these systems that show significant benefits, will only end up as a corporate roll out through integration within the corporate framework and data model.

I could go on to explain the expense and time associated with these implementations, but there is a reason that these solutions are not readily implemented within lower tier one and tier two retailers. Number one is that many still do not have easily accessible corporate views of data. Number two is the cost; resources and time to implement them are difficult for these companies to justify.

As such there continues to be a need (niche) for providers that understand retail from an operational and financial perspective that know where to look, what to ask for and can assemble, analyze and report on data the old way to support the procurement data requirements of mid tier one and tier two retailers.

We look forward to and appreciate your comments.

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Great data discovery drives great results! So what’s required?

Thursday, August 11th, 2011

There are a number of valuable possible sources of information to consider. However don’t make the assumption that just because you have systems with a big sounding impressive name like an Enterprise Resource Planning system or ERP that the data they contain will be complete or clean. That depends entirely on the proper deployment and use of the system as well as its maintenance after the fact.

Here are some but not all areas of opportunity and pieces of information that you should look to. In fact the more of them you have access too the better prepared you will be for a great discovery session.

1) General Ledger
2) Detailed P&L
3) Purchase Orders
4) Contracts
5) Detailed Vendor Listing
6) Product List by Vendor
7) Invoices
8) Product cut sheets
9) Copies of orders
10) Brochures

There is also a strategy of how to use this information to your best advantage and no system will do it all for you.

We look forward to and appreciate your comments.

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How socially focused or responsible is your company.

Thursday, July 7th, 2011

Well if that’s the case why not apply for B Corporation certification. In essence this would be putting your money where your mouth is. At this point there are no real hard financial incentives for a company to do this. At least four states  have passed or proposed B Corp legislation, but it is pretty clear that all will in the future.

So just what is a B CORP? I’m glad you asked. If you visit the Certified B Corporation website you’ll learn that Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.  B Corps are unlike traditional businesses because they:
        • Meet comprehensive and transparent social and environmental    performance standards;
        • Meet higher legal accountability standards;
        • Build business constituency for good business

SafeSourcing is going to add B Corporation certification to our database of supplier certifications and ask companies our customers’ partner with what their plans are to achieve B Corp Certification as part of their current or future CSR initiatives. We do the same for over 30 other certifications today such as Eco Logo, SQF and LEED.

If we do a small part and our customers do a small part and their suppliers do a small part, the parts will add up. Pay it forward and do your part.

We look forward to and appreciate your comments.

Ron Southard CEO SafeSourcing

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Buyers; Soybeans are down and the Corn harvest will be up. So What?

Friday, July 1st, 2011

It appears as though the corn crops will be better than expected this year and as a result drive prices down on the supermarket shelves. The reason is because farmers planted more corn than usual based on what the futures market was telling them relative to other crops. Because they planted more and the yield will be higher futures actually went down. This should impact the price we pay for a variety of products impacted by corn.

If you don’t think that corn impacts many products, think again. Corn impacts beer, aspirin, livestock feed, carbonated beverages, Ethyl alcohol, textiles, soaps and hundreds of other products.

If you’re a buyer, you need to be aware of this as the impact in the market typically trails the crop by about 3 to 6 months. So while you are buying products you need to understand that costs should come down before year end and make sure the language in your contracts allows you to take advantage of this. Think de-escalator language on any contract between now and year end.

We look forward to and appreciate your comments.

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Procurement deserves more attention from the executive suite now!

Wednesday, June 15th, 2011

Procurement when looked at properly has the largest single impact on a company’s financial performance. In fact more than any other area of the company. The fact is that when additional sources of supply compete for a company’s business, it results in compressed pricing that drops directly to the bottom line and also often delivers better quality products or materials. Coupled with the prevention of possible disruptions in a company’s regular source of supply – like the situation businesses have experienced during the last several years, e-procurement tools offers many advantages that can not continue to be overlooked. Companies that are more profitable grow and companies that grow generate jobs.

The benefits to be realized in using e-procurement tools beyond savings include faster time to purchasing decisions and more effective supplier management. Today’s easy to use tools are a result of technology advancements, enhanced data mining techniques and data management best practices  driving significant improvements in the e-procurement process.

In today’s tight business environment, lowering costs through the use of e-procurement tools are proving to be a valuable aid to ensuring profitable operation.

If you are not using them, you should be. If you are reducing staff in your procurement area you should not be.

We look forward to and appreciate your comments.

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