Archive for the ‘Eprocurement Auction’ Category

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You should consider Lifecycle Costing when calculating savings on new business awards.

Tuesday, February 21st, 2023

Today is a re-post from a long long time ago. What’s changed you ask? NOT MUCH!

It’s true that a reverse auction can create substantial low quote savings. However, much needs to be considered when tracking realized savings once the event has concluded and the award of business is ready to be made.

Lifecycle Costing is a procurement technique which considers operating, maintenance, acquisition price, and other costs of ownership in the award of contracts to ensure that the items or services to be acquired will result in the lowest total cost of ownership during the time the item’s function is required.

If a category is truly returning event savings, it should be able to be tracked from original delivery to contract termination on a companies detailed P&L. The trick is that many of the associated costs go to different departments on the P&L. If you don’t know which ones, your pre-event discovery was not complete and the odds of getting the actual savings reported are at significant risk.

So, give us a call.  And ask us about our e-Procurement solutions and associated white glove services and our SafeSourceIt™ Global Supplier Database  that includes over 557,000 vendor/suppliers. We can get you better pricing on about any category of product or service.

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How are you attacking your shrink?

Monday, June 14th, 2021

 

Todays post if from Ron Southard, CEO at SafeSourcing Inc.

Shrink never goes down. Read all of the trade rags and the numbers stay pretty constant even with the newest technologies and services offerings. And, turnover is as high as ever so unless you have great awareness campaigns in place problem will just recycle itself.

If you want to have a huge impact and have it immediately, clean out those back rooms and move your overstock items using a forward auction. We all know that with all of the new products, store resets, aged inventory and poor sell through that most backrooms are full of items you did not receive money for. That is also shrink!

The first benefit if this strategy is it will force you to look for it. The second benefit once you find it is that it will reduce your inventory shrink.

Why is it that we never hear of retailers running forward auctions? There are dozens of sources waiting to buy your overstock which all retailers know will reduce shrink and improve bottom line profitability.

If you go to any internet search engine and type in the term overstock, the data returned is in the millions of pages. Many of these links are locations  for Business to Business (B2B) and Business to Consumer (B2C) companies that will gladly agree to participate in e-negotiation events in the form of a forward auction to purchase your overstock or liquidated products for resale through their on line offerings.

Online forward auctions are an ideal way to get the best price for capital equipment, materials, overstock and services you may want to sell, such as when you need to liquidate excess inventory.

There are two basic types of forward auctions. The first is a liquidation auction where sellers are reducing inventory from overstock or liquidation and buyers are seeking to obtain the lowest price for items they have an interest in for resale and other purposes. The second type is more of a marketing auction where sellers are trying to sell unique items and buyers wish to obtain unique items. This is typical of an eBay type of offering.

Much of retail shrink happens in the back room or receiving area of retail stores. It just so happens that this is also the location of much of the overstock in the retail community. Much of this product sits there month after month resulting in significant margin hits to quarterly and annual earnings and as such to a company’s stock price.

Contact a SafeSourcing customer services representative to see how we can help reduce your overstock and shrink with forward auction tools.

We look forward to and appreciate your comments.
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Here is some Lasik for retail e-procurement professionals in order to create better focus.

Wednesday, January 27th, 2021

 

I can see clearly now the rain has gone. I can see all obstacles in my way. The lyrics from the 1972 song by…. Johnny Nash titled I can see clearly now should be the mantra for enlightened e-procurement professionals.

Here’s and old post that continues to have merit with a link to another resource from FitSmallBusiness.com

Very often this author gets the question as to where to start in the e-procurement process. Too often I read that one needs to do a detailed discovery. The question is of what and how to get to the right place the quickest. So here is some Lasik for you that will help you see a little more clearly.

Using another idiom, and with renewed focus we hope to make it possible to see the forest for the trees by not focusing on excessive detail that is not needed yet.

There are four areas where you should begin your search for an e-procurement starting point and they are pretty simple.

1.Gross Sales
2.Cost of Goods Sold
3.Gross Margin
4.EBITDA.

This is really to say that if you take a look at your top line or Gross Sales and your bottom line or EBITDA and they are out of whack relative to your plan or industry averages you need to look at the above the gross margin line or Cost of Goods Sold or below the gross margin line which is expense related items for as an e-procurement focal point..

As such a couple of terms whose definitions you should be aware of are as follows.

According to two separate sources, Wikipedia and FitSmallBusiness.com Cost of Goods Sold or COGS is a financial accounting term which includes the direct costs attributable to the production or procurement of the goods sold by a company. This amount can include the materials cost used in creating the goods along with the direct labor costs used to produce them. It excludes indirect expenses such as distribution costs and sales force costs. COGS appear on the income statement and can be deducted from revenue to calculate a company’s gross margin.

Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA which is an approximate measure of a company’s operating cash flow based on data from the company’s income statement. EBITDA is calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.

Based on the above a lot is determined by who built you annual plan and how realistic it was to begin with.

Tomorrow we will review what underperforming these measure means and how it should point you in the direction as to where to begin your e-procurement focus.

We look forward to and appreciate you comments.

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During a Pandemic like COVID-19, Is there benefit to a large retail supplier database?

Tuesday, August 4th, 2020

 

Todays simple post is from Ron Southard, CEO at SafeSourcing Inc

Maybe you’re looking for KN95 face masks, gloves or other medical safety equipment. Do you know all of the off shore suppliers and how to contact them? We do!

Maybe your current supplier can’t handle your volume any more because of the Pandemic! Where do you look.

Once you are armed with a robust Global Supplier Database such as  SafeSourcing’s  SafeSourceIt™ Global Supplier Database  and it’s easy to use query tool.

If you need assistance, just contact us at 1-888-261-9070 or  marketing@safesourcing.com.

We’re here to help!

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Building Projects On Strong Data

Sunday, December 15th, 2013

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

I was asked the other what my thoughts are on the challenges that exist in the procurement and supply chain industry and my answer is the same is it was 5 years ago?.without strong data many events will not deliver the types of results and participation you are hoping for. In today?s bog we will take a look at what that means and some of easy areas you can be using to get a better handle on categories you are sourcing.

Survey the landscape ? One of the most useful ways to get a handle on a category, especially one that spans across the entire company, like temporary labor, is to ask your locations and divisions basic questions about what they are doing today. Many times companies will have summary information about what remote locations are doing from a spend perspective but no detail into what is making up that spend at each location. Surveying your locations with a simple tool like the SafeSurvey? will allow you to understand who the locations are doing business with, what their satisfaction level is, what other services they are receiving that are not defined in a contract, or whether or not a contract or agreement even exists. This will also allow you to confirm pricing you think you are getting.

Leverage your incumbent ? There will seldom be a time when any source has as much insight into what you are currently spending and receiving in the way of goods and services than your actual incumbent. Your activity is what keeps them alive and they will know exactly what level of business you do with them. If you aren?t already, you should be getting monthly or quarterly detailed reports about what you are spending with a supplier and in many cases, scheduling a quarterly business review with your suppliers to ensure the processes being used and services and goods being obtained are still the best for your company. Until that point, having your supplier run Year-To-Date reports at an item level will give great insight into what you are doing today.

Poll the suppliers ? In some cases where a service or product will be new for your company, you will not have access to an internal or external data source to help build the foundation of your sourcing event. In these cases taking a Request For Information/Proposal out to vendor community will need to be a step to build that understanding both of the level of service you will need but also to understand the basic pricing structure of the industry. Requests for Information are good to understand the broad picture but they should be used to immediately create a statement of work for you company which combines the details from the responses you like the best. Standardizing what you want before heading to a request for proposal will save time in the end.

Understanding what the data is telling you before you start a sourcing event is critical to achieving the best results. At SafeSourcing we run dozens of events every month for our customers and constantly help our customers build the foundation of strong projects. Our process truly is focused on the greatest value for our customers with price being only one component of that value. For more information on how SafeSourcing can assist you 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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No matter what our current government leaders say, the economy is still terrible.

Tuesday, October 23rd, 2012

This author still can not believe how many companies, buyers and category managers do not advocate for the use of modern e-procurement tools.

The use of these tools preserves and creates jobs as well as generating many other benefits that your business is not receiving today.

The lack of use can really only be one or two reasons at this point. First is that you or your procurement team just go to work and do your job and don’t really care one way or the other. Second is that you do not stay up to date in your trade and have very little influence within your company. If this is not true, why are you still writing your own RFI’s and RFP’s for a small group of suppliers?

Maybe now there is a final chance to step up and try or recommend using e-procurement tools including reverse auctions? Who knows, maybe you’ll save enough money to save someone’s job, hire someone new or insure that your job will still be there when next years planning is complete.

Although they may not impact your job directly, the reduction of cost of goods, expenses and preservation of capital are all immediately achievable if you’ll just take a look.

A customer recently told me that they would not be adding any new jobs to their procurement department next year. In fact they have already more than doubled the size of their departments staff to drive  down costs through the use  of the SafeSourceIt™ family of procure to pay tools. This customer went on to say that others in other departments will in fact be able to keep their jobs as a result of the work we’ve done together. So in the worst economy since many of us have been alive, this customer has added jobs, protected jobs, saved significant money, improved quality with the use of SafeSourcing products. Another benefit is that we also continue to add jobs to support our customers during this same time.
In addition to all of the benefits listed above, here are some additional quotes from a CEO and his team that watched their first reverse auction.
1. “This was pretty simple to do”
2. “If we hired someone we could do these ourselves with you guys”
3. “This is fun”
4. “You mean the reports are already available”
5. “I love the sports concept”
6. “It was easy to follow the marquis and what was going on from one screen”
7. “The multiple color schemes were great”
8. “I can’t believe how fast you guys set this up”
9. “We saved that much money and only have to pay what we discussed”
10. “Can we do another one today”
11. “I may get a promotion out of this”
12. “I love that calculator at the end of the bid process”
13. “I like all of the supplier data that was accessible during the auction”
14. “Now I know how the big guys get the pricing they do”

It’s too bad our current political combatants for the highest office in our land can not be this detailed during their debates.

Why not join others that have come a little late to the party. You can still benefit because today’s tools are easier to use, more interactive, maintain your attention during an auction, integrate gaming technology to keep it fun and are lower cost than their predecessors. If you happen to have already been doing this for years, why not find an easier way or do it less expensively.

If you would like to have fun, save money and do it quickly, please visit us at www.safesoucing.com.

We look forward to and appreciate your comments.

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Nothing is ever too easy!

Tuesday, October 16th, 2012

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

We recently ran a very basic event for some office supplies for one of our new customers.  During the review of the event which saved over 25% they admitted they were skeptical of what we could achieve because they had been working with their vendor for so long and felt that the spend was too basic to get much more of anything else.  They were, of course, ecstatic about the results.

While the eProcurement process should never be solely about price, the fact is that in this arena, just like life, no one wants to pay more for the products and services that they really want.

For someone new to the process of negotiating with several vendors instantly in a forum that allows them to know where they stand, let’s take a look at some of the categories that companies may think they have taken as far as they can go but that likely still have a lot of savings and value left in them.

Shipping/Office Supplies – Many companies feel like they have improved the deals in these categories as far as they can.  Because of the shrinking list of National players, long-term relationships and the view that many of these items have become commodities, all contribute to the incorrect perception that they are not good candidates to work with your eProcurement company on.  The reality is that many companies can still receive 15-20% in additional savings, rebates and add-on services than what they have today, even from their incumbent.

Printing Services – Printers are typically some of the longest standing relationships that a company has with a vendor.  Due to this fact the business aspects of these relationships rarely get closely reviewed as long as there are not major price swings.  The reality is that technological improvements in printing have dramatically lowered most printers’ costs leaving a great opportunity to explore for companies looking to understand all of their expenses.

POS Supplies – The retail Point of Sale industry has exploded over the past couple of decades with Value Added Resellers (VARs) coming from everywhere to provide you the products you need to run the front-end of the retail business.  As manufacturers step back and let the VARs handle the customer portion of the business, VARs have become more aggressive in the extra services they can offer even if they can’t always change their pricing.  Point of sale supplies are great areas to discuss with your eProcurement partner.

For more information on how SafeSourcing can help you with these of any of your other spend categories, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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Don?t Stand on the Sidelines!

Wednesday, May 30th, 2012

Todays post is by David Wenig Manager of Customer Services at SafeSourcing.

Generally speaking, the greater the spend amount, the more interest you will get from potential vendors. As a result, many of our customers have been turning to collaborative eProcurement events in order to benefit from the additional savings that higher volumes can generate. Let?s take a look at a few of the benefits of getting involved.

1.?Higher savings due to aggregate volumes
2.?Improved payment terms
3.?Larger vendor pool
4.?Greater ROI
5.?Source smaller category spends

Based on the five benefits listed above, perhaps it?s time to try a collaborative. You may ask; ?how would we become involved?? The answer is simple. Contact your eProcurement representative and ask if there are any open or upcoming opportunities in which you could participate. Similarly, if you have any upcoming projects either large or small, ask your partner to attempt collaboration within their customer base.

Here?s an example of savings generated from a recent collaboration. In this scenario, our customer was in need of a relatively small spot buy for replenishment. Their spend in this category was actually quite low and was actually the lowest overall amongst the participating companies. In this example, the customer saved almost 37%. I find it difficult to imagine that they would have done so well without the eProcurement process. Further, this is evidence of the benefits of the collaborative process as their pricing was likely much better off as a result of the aggregated spend.

So, are you ready to get involved, or will you continue to stand on the sidelines?

We look forward to and appreciate your comments.

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Don’t Stand on the Sidelines!

Wednesday, May 30th, 2012

Todays post is by David Wenig Manager of Customer Services at SafeSourcing.

Generally speaking, the greater the spend amount, the more interest you will get from potential vendors. As a result, many of our customers have been turning to collaborative eProcurement events in order to benefit from the additional savings that higher volumes can generate. Let’s take a look at a few of the benefits of getting involved.

1. Higher savings due to aggregate volumes
2. Improved payment terms
3. Larger vendor pool
4. Greater ROI
5. Source smaller category spends

Based on the five benefits listed above, perhaps it’s time to try a collaborative. You may ask; “how would we become involved?” The answer is simple. Contact your eProcurement representative and ask if there are any open or upcoming opportunities in which you could participate. Similarly, if you have any upcoming projects either large or small, ask your partner to attempt collaboration within their customer base.

Here’s an example of savings generated from a recent collaboration. In this scenario, our customer was in need of a relatively small spot buy for replenishment. Their spend in this category was actually quite low and was actually the lowest overall amongst the participating companies. In this example, the customer saved almost 37%. I find it difficult to imagine that they would have done so well without the eProcurement process. Further, this is evidence of the benefits of the collaborative process as their pricing was likely much better off as a result of the aggregated spend.

So, are you ready to get involved, or will you continue to stand on the sidelines?

We look forward to and appreciate your comments.

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Part II of III. There are all types of Reverse Auctions.

Thursday, December 15th, 2011

In a reserve price reverse auction, the buyer establishes a ?reserve price?, the maximum amount the buyer will pay for the goods or services being auctioned. This is also sometimes called the desired price, or a ?qualification price?. Careful thought is required on the part of the retailer in determining their reserve price. I personally have seen retailers try to just use their existing price from their last contract. This type of practice may set unreasonable expectations, particularly if the market has changed dramatically in an upward direction since the last award of business. In today?s market, fuel would be a great example of something that you would not set a reserve price based on a previous contract if you wanted incumbent or new suppliers to take you seriously.

Traditionally, if the bidding does not reach the ?reserve price?, the buyer is not obligated to award the business based on the results of the reverse auction. However once the reserve price is met, the buyer is obligated to award the business to a participating supplier or group suppliers based on previously published auction rules.

Additional pricing considerations can be given to adding other price points or qualifiers in a reserve price reverse auction such as entering a market price. In the case of fuel, this may be from a price index such as OPIS. This information can be visible or blind to the supplier, but let?s the retailer compare a suppliers mark up strategies. This also offers a nice opportunity to calculate cost avoidance during an up market.

We look forward to and appreciate your comments

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