Archive for the ‘Business Sourcing’ Category

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Where does the retail spend data you need for procurement reside?

Wednesday, October 20th, 2010

The problem today is that there is so much retail?data available that?buyers and category managers?could easily suffer business paralysis by data analysis.

Below is just a partial list of systems and places where data resides that is meaningful if not critical to sourcing professionals. Most of you can probably add to this list pretty easily. The unfortunate issue that confronts? retail procurement professionals daily is that most of this data is not integrated in any way and even at very large companies,? to much critical data is sitting on local employee desktops or even worse in their heads. And that is not what we mean by a neural network.

1.?ERP systems
2.?Enterprise Data Warehouse systems
3.?Replenishment systems
4.?Financial reporting systems
5.?Demand Planning systems
6.?Purchase Order management systems
7.?Distribution and Logistics systems
8.?Merchandise management systems
9.?Retail Planning systems
10.?Local employee desktops
11.?Contract management systems

Number two from above the enterprise data warehouse is probably the most logical place to bring all of these data sources or elements together within one logical data model that drives the master data source integrated with a s business reporting and? busyness intelligence front end. Small companies may never make it to this level, but if they can find a business partner that offers these solutions in a SaaS format it will be much better than the current; Hey? Joe, how many of these did we order last year?

We look forward to and appreciate your comments.

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What type of job areas might be involved or impacted by e-procurement?

Monday, October 18th, 2010

SafeSourcing?s SourceBook? is a Professional Social Community for procurement professionals with nearly 1,000 members where just about any subject in the procurement area can be discussed with other procurement professionals.

The answers to the above thread were pretty basic but probably did a nice job of pointing the member who was looking for areas in which to focus a job search in the right direction.

There are certainly many more areas of a company that have e-procurement connections, but the following are probably a pretty good place to start.

1.?Finance
2.?Purchasing
3.?Logistics
4.?Manufacturing
5.?Warehousing
6.?Materials Management
7.?Inventory Management
8.?Supply Chain
9.?Distribution
10.?Transportation

See how SourceBook? can help you with your procurement questions.

We look forward to and appreciate your comments.

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Join the argument. Strategic Sourcing alive or dead? Part II of II.

Monday, September 20th, 2010

In Part I of this blog we posited that in order for a strategic plan to be successful there are certain elements organizations need to know. I?ll just list a few as an example.

1.?Your own company.
2.?Your Industry. Example: Retail.
3.?Your vertical within your industry.
4.?Your competition. Be careful.
5.?Your category.
6.?Your product.

So let?s assume that you have an e-procurement supplier that indicates they have great strategic sourcing tools that can evaluate your data and help you strategically build your sourcing plan which as a result would support your company strategic plan.

Let?s assume a tier two supermarket chain wanted to evaluate their total grocery category. Let?s just look at bottled water which is a sub category of the total grocery category. The first requirement is that they provide access to their sales and cost data. This may be easier said than done in the lower tier one and tier two markets. What is also required here is access to industry data. Data may indicate that their bottled water sales are 2.5% of their total grocery category, but what is the industry standard for this category? Are they already above the average?? Has their category grown year over year? Have industry category sales?? If they have access to both sets of data they have a start but who is their competition?? Are they comparing themselves to other supermarkets and should they be?? What about C-Stores, Drug-Stores, Liquor Stores and Mass Merchants that are close to their stores and get a share of category sales. Are they aware of these competitors category mix such as number of brands offered or private label offerings? All of this information is required for every category in the total grocery category. If they don?t conduct this analysis how would they begin to know what category to address first? The obvious choice is the category that is most out of norm with the industry average. But will sourcing that category have the best impact on the P&L and earnings.

Once this analysis has been completed, their e-procurement solutions provider should also have data that can guide them as to what month is the best month to source specific categories and what commodity markets are doing currently that may also have an impact on finished products.

After all of this is completed and categories are evaluated, ranked and prioritized they should then look for other elements that are incorporated in their company?s strategic plans such as CSR initiatives that support safety and the environment.

So, is strategic sourcing dead? This author does not believe so. However it is a process involving a lot of work, a lot of data, a lot of analysis and more than just tools in order to result in a strategic sourcing plan that can be implemented, scored and adjusted properly over time.

We look forward to and appreciate your comments.

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Are you comfortable with your sources of supply? Are your suppliers comfortable with you?

Thursday, September 16th, 2010

Being comfortable is great. Sometimes however being to comfortable can also create complacency. We all know we have coworkers that come to work everyday and do what only what they perceive their job to be. Nothing extra is ever done, and few ideas come from these folks that are just comfortable with what they are doing and how they are doing it. They do a good job at it, but that?s it.

Let?s apply this type of complacency to knowledge workers in the supply chain. If we are being honest with ourselves; we see this situation all the time.

?A buyer you know has a list of products or a category manager has a category that they are responsible for. There are only so many hours in the day and they have a job to do in order to get product to a distribution center, warehouse, store or some other location on time. They have done business with the same suppliers for a number of years. In fact the person in the job before them did business with these same suppliers and the person before that. So its easy to not rock the boat. It takes to much time to look for new sources of supply and after all one can only manage so many relationships anyway. Finally the buyer is comfortable with product quality and pricing has not gone up to much over time.

With the help of your e-procurement solution?provider, this situation is easily rectified, but you need to be open to change. This is normally led from the top of the organization. The following is a partial list of what you can do to eliminate complacency and support the fact that you knowledge workers don?t have a lot of free time.

1.?Provide your e-procurement company with a list of your suppliers by category.
2.?Provide your e-procurement provider with a complete list of products carried by each supplier.
3.?As your e-procurement provider to produce a list of new sources of supply located within a fifty mile radius of each distribution center or warehouse
4.?Ask your e-procurement provider to provide data on each supplier?s including incumbent?s safety certifications such as GFSI and ISO.
5.?Ask your e-procurement provider to provide supplier background information such as years in business and user references.
6.?Select categories or products to source from your incumbents catalog and cross reference with new suppliers offerings.

The additional steps to this process can be provided by SafeSourcing as a part of our best practices deliverables which are included in our event pricing. The SafeSourceIt? Supplier database includes over 360,000 global sources of supply that can be sorted by a variety of filters such as country, county, postal code or mileage from a particular location, plus many more.

We look forward to and appreciate your comments

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Let’s revisit an updated post from last year titled “Neither a leader nor a follower be”.

Tuesday, August 10th, 2010

With BPA back  in the news and chief executives leaving  the biggest companies in the world let’s take a look at what we would all like to see or not see from our leaders.

Middle of the road does not work. 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. For that leadership is required. Not leadership that only looks at the bottom line. We require leadership that creates and innovates to both your benefit and that of the global community.

The leadership this author is speaking about is visionary actionable leadership. Not reactionary leadership. We need leadership that looks at the sate of their company and its products as well as the needs of the community at large and in offering their solution to the collective problems faced by these entities, does it better, faster, cheaper and for the general good. This is more about walking the walk before any one else does because it is the right thing to do. If these represent the guiding principles of a company, the money part will follow. This is not something that can be learned or taught in business school.

According to Wikipedia, leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task”.

A second definition which I like better and is more inclusive of followers comes from Alan Keith of Genentech who said “Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen.

As an example of less than stellar industry leadership, let’s look at a recent news article on a subject this author has posted about on a number of occasions “BPA”. I was reading an article recently Titled “Firms aim to fight BPA ban” by Lyndsey Layton of the Washington Post. A quote from the article that follows speaks volumes to the lack of leadership in solving this problem. “Frustrated industry executives huddled for hours Thursday trying to figure out how to tamp down public concerns over the chemical bisphenol A, or BPA”. You have to be kidding me.

In tomorrows post let’s dig a little deeper into this article and suggest how industry leaders should be looking at this specific opportunity that has now grown beyond can linings and plastic bottles; and how they can help buyers from all companies source products that are safer and have a better impact on the environment instead of continuing to follow the same practices they have been since the 1950’s.

We look forward to and appreciate your comments.

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Retail buyers need to think individually and act collectively in their e-negotiations.

Tuesday, August 3rd, 2010

This is as true for e-negotiation events as it is for personal negotiations. The question is how the tools you are using allow you the flexibility to do so.

I was reading an article in the USA TODAY on Friday July 30th by Jillian Berman titled “Negotiate your way to savings”. ?The lead in was Cable TV, cell phone bills are ripe for cutting. This author would add the following; so is everything else.

So what is a negotiation? According to Wikipedia, negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.

In terms of our discussion and the article we are talking about pricing and services. The article goes on to suggest what they call tenacious bargainers tips. Two of the tips are; don?t be afraid to complain and negotiate away extra fees up front.

Retail buyers need to do the same and the ability to think individually and act collectively when they develop the specifications and rules of their e-negotiation events. What would you ask for if you were buying this product or service for yourself and then be just as aggressive when it comes to your department and company?

We look forward to and appreciate your comments

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Pricing for Retail E-Procurement can be interesting!

Tuesday, July 27th, 2010

In other words, there are too many companies that have been at this for a long time whose pricing is way too high in the retail marketplace for what they provide.

I was speaking to a large retailer recently that has an unlimited use tool in place from a very large player in the e-procurement space. I asked what type of savings they were able to achieve and how many people they had assigned to handle events, supplier communication, hosting support etc. These are all of the normal questions.

After we had discussed at least 20 different categories, it occurred to the both of us that the savings from our events were at least a third higher than the savings from the use of the unlimited tool.? Even if you added in our fees, the savings were still substantially higher on event by event basis with SafeSourcing. There are a number of reasons for this. One is that to many times when retailers deploy a solution internally or as a SaaS offering they default back to their old way of doing business with a new tool once the solutions provider has left. Supplier research is limited, the number of participants is less, training is inadequate and the result is lower savings. There are also proprietary benefits to the SafeSourcing solution that I won?t share.

Another way that retailers over pay, is when an older company comes in and matches the lower cost of doing business with a newer and better provider in order to win the business. This model will not last because many of these older companies are not structured in such a way that will allow them to absorb these lower fees profitably on an ongoing basis. Over time your price will continue to rise. In fact next year, your price should go down if you are running the same event again. Hasn?t most of the work already been done in the past?

Some good questions to ask your prospective solutions provider would be the following.

1.?How many events per month can one of associate host?
2.?What are you doing to automate your solution to take out cost?
3.?Will we pay the same in year two as we paid in year one for identical events?
4.?Is your cost higher because of your investment in brick and mortar locations?
5.?Is your cost higher because of your headcount required to run events?
6.?What are your average savings for events over $100K?
7.?What are your average savings for events under $100K?

There are certainly more questions but you get the idea. Be careful out there.

We look forward to and appreciate your comments.

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Retailers here are twenty additional reasons why you ought to be running reverse/forward auctions.

Monday, July 26th, 2010

This author has posted a number of times on twenty reasons why retailers should use e-procurement tools including everything in the procure to pay process. I post that subject a number of times a year. Quite frankly there are many more than twenty reasons. Here is a different type of look at the same subject.

1.?It?s about the money.
2.?It?s not about the money.
3.?You don?t have specifications even if you think you do.
4.?You will have specifications once the event is complete.
5.?You have great relationships with all of your suppliers.
6.?You don?t have great relationships with all of your suppliers.
7.?You don?t know where to find additional sources of supply?
8.?You will have at least 8-10 new sources of supply for every category you run.
9.?All of your management team collaborate and make sure they aggregate their purchases. No they don?t.
10.?You are getting the best prices in the market according to your buyers.
11.?Believe me; you are not getting the best prices in your market.
12.?All of your contracts are less than two years old! Ha, Ha Ha! They should be.
13.?All of your overstock and out of cycle inventory has been removed from the back rooms of your stores! If it had, your shrink would be lower.
14.?You are aware of all of your suppliers green and safety programs?
15.?You are taking advantage of all of your suppliers green and safety programs.
16.?You are measuring all of your commodity purchases against the appropriate indices.
17.?You are getting the best use of your team because they have all the tools they need in order to source products and services efficiently.
18.?Your people could be spending more time on more important projects if they used low cost SaaS e-procurement tools.
19.?You have never had a contract auto renew or evergreen that cost you money.
20.?All products and services you buy are top quality because you evaluate them regularly.

If you can only find three issues above that plague your operation, then you should be using e-procurement tools. Call us today. We?ll do the first one for free.

We look forward to and appreciate your comments.

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Retailers; what is your green or sustainable sourcing plan?

Wednesday, July 14th, 2010

Unfortunately, elsewhere is most likely your competition if they want a job in retail procurement.

In a recent USA TODAY article by Trevor Hughes titled More Colleges using green as a selling tool; the author discusses the impact that green programs have on college students deciding where they will attend College or University. It is a safe bet if these students are using this as criteria for selecting where they will spend the next 4 years of their life, that they will also use the same criteria to make their career decisions.

The article goes on to quote results form The Sustainable Endowments Institute survey in 2009 which found that 27% of colleges and universities included sustainability messaging in their admissions process and that in 2010 69% did. That is a 156% increase in one year.

The Sustainable Endowments Institute focuses on areas such as food sourcing, recycling, and energy efficiency.

Quite often when this author asks this question of mid level managers, associates and employees, I just draw a blank stare. If you have this discussion with investors, the eyes just roll and you can see the note caption saying blah, blah, blah.

If you don?t have a plan you can not blame anyone but yourself.

We look forward to and appreciate your comments.

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“I never saw a purple cow” and other fictitious animals that can ruin a bloggers day!

Monday, July 12th, 2010

The “Purple Cow” is the name of a well-known poem by Gelett Burgess that was written in 1895 about a fictitious cow.

The original “Purple Cow” poem went like this.

I never saw a purple cow;
I never hope to see one;
but I can tell you anyhow;
I’d rather see than be one!

Although this author had nothing to do with a Purple Cow last week I did in fact encounter another type of barn yard animal that you will all want to avoid at any cost. It was a horse. In this case the Trojan Horse. Although the poem listed above is about a mythical animal, the one I encountered is all too real and named after the Trojan Horse Story in Greek mythology that appeared as a gift that hides its ultimate purpose.

So what kind of Trojan Horse can affect a blogger? In this case we are referring to malware which is named Trojan Horse which appears to perform desirable functions for a user prior to running or installing applications, applets or other file based features but instead facilitates unauthorized access of the user’s computer system. “It is a harmful piece of software that looks legitimate. Users are typically tricked into loading and executing it on their systems. And then the real fun begins.

Once you have been tricked, one may begin notice a system slowdown, access slowdown or lockups that cause you reboot multiple times and ultimately and scan your system for viruses. Files are indentified by that process that are infected and flagged for cleaning, not deleting. If you unknowingly delete them you may compromise the operation of your operating system that may result in a reload and rebuild of your entire system that can be time consuming and provide a test of your backup processes including password storage.

Be careful what you click on. We’re Back.

We look forward to and appreciate your comments.

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