Archive for the ‘Eprocurement Auction’ Category

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What does SafeSourcing do in the E-Procurement Space?

Friday, March 26th, 2010

Our SafeSourcing vision is to be the leader in knowledge driven retail e-procurement solutions that drive down costs and improve quality with an additional focus on safety.??? Beyond safety, we also focus on support of the environment which is a top of mind CSR issue within the retail executive suite.

By assigning as little as 10% of their cost of goods or expense related items to these tools a retailer can improve net earnings by up to 100% while also providing their consumers with safer products that support a reduction in the industries carbon footprint.

With SafeSourcing?s innovative e-procurement tools, a buyer can initiate reverse auctions or requests for information using the SafeSourceIt? e-procurement tools for new contract purchases, spot buys, replenishment, aggregation and collaboration with other buying organizations, saving as much as 30% to 40% in the process and then simply drop that data into our SafeContract? contract management solution to eliminate issues such as ever greening which costs the retail industry millions annually. Alerts can then be set that will remind procurement knowledge workers of required actions in the future as they arise.?

To support the above initiatives our SafeSourceIt?? global retail supplier database consisting of more than 380,000 suppliers contains thirty-five unique certification standards that are supported by our best practice initiatives such as GFSI, ISO 22000, Green Seal, ECO-LOGO, Fair Trade, SQF and Certified Humane Raised & Hand-Led to name a few. As our database continues to grow all SafeSourcing participating suppliers are regularly vetted for their support of ours and our retail partner?s socially responsible initiatives including their eco-friendly practices to insure continuity.

We look forward to and appreciate your comments.

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How does a price index play into e-procurement practices?

Thursday, March 18th, 2010

From a simplistic perspective an index is a system used to make finding information easier. There are any numbers of indexes or indices available to help procurement knowledge workers insure they are sourcing products at the best possible pricing. The key word here is price as what we will be discussing are specifically price indices.

According to Wikipedia a price index (plural: ?price indices? or ?price indexes?) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to measure the economy’s price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.

Normally an index reflects the current and historical price of a variety of commodities ranging from metals to grain. A common index used in sourcing petroleum products is OPIS or the Oil Price Information Service which you can learn more about by visiting www.opisnet.com.? However in order to drive the best possible fuel pricing there are other dependencies such as whether you are doing spot buys or bulk purchases and these strategies will determine what specific index you would want to review as well as it?s relation to other product information sources such as Platts or the Gulf Coast spot assessments.? This will put you in a better position to determine how to bid the product and also earn a discount relative to the lowest common denominator.

All other commodities have similar sourcing issues dependant on what the highest cost item is in their product makeup. An example here might be the cost of grain in the feeding of cattle or poultry.

Ask you solution provider to explain these tools to you and to recommend how you might use them toward the best outcome.

We look forward to and appreciate your comments

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Just what is Strategic Sourcing?

Thursday, March 11th, 2010

Let?s?look first at strategy in general.

As a former military procurement guy if we think of strategy from a military perspective, how an actual battle is fought is a matter of tactics: the terms and conditions that it is fought under or whether it should be fought at all is a matter of strategy.

The next logical step would be to understand that a strategic plan is a way to define a company?s strategy. When this author goes about developing a strategic plan I tend to lean in the direction of aligning my thoughts so that they are in concert with my three basic necessities or tenants of running a business which obviously includes sound fiscal guidelines. The tenants are.
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1. A long-range strategic plan
2. A tactical plan
3. A talent management plan

The ultimate goal is not to do something just to do it, but to do it as a way of beating or avoiding competition and growing at the same time. Think of Dollar Stores in terms of how they avoid competing with Wal-Mart although they are in a very similar space.

If we believe the above, how do we relate that back to Strategic Sourcing?

Strategic Sourcing should be a discipline used to identify, examine, select and implement a variety of sourcing alternatives for? specific groups or categories by evaluating, selecting and collaborating with your sources of? supply in order to achieve improvements in quality, cost, operational efficiency and other benefits that support a companies overall strategic plan. To that end just lowering the purchase price is not necessarily strategic in and of itself.

Some say that based on that definition and an understanding of strategy that Reverse Auctions therefore are not strategic. This author says that depends. If Reverse auctions? are the result of significant discovery and analysis that focuses on identifying the best opportunities to support a strategic objective and it is the result of using the entire RFX sequence, it may in fact be strategic but it could also just be tactical. This author believes we are splitting hairs.

After all one mans pill is another mans poison.

We look forward to and appreciate you comments.
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Retail e-procurement savings. How many times have we heard we can do it better ourselves?

Tuesday, February 23rd, 2010

And for those very large retail companies that have very expensive internal tools that were sold to you by the largest players in the space. Ask yourself why your event savings are much less than those reported by companies who have outsourced this functionality? If you want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time; and have a sustainable process moving forward keep reading..

The question one needs to ask is; what type of event services does my e-procurement provider offer? If your company is deciding to try self service, which is to be 100% self-sufficient, you need to know if your provider offers readily available classroom education that can be conducted on-site in order to train your team in all the nuances of event support. These skills are the foundation that allows e-procurement providers to support large volumes of events in a full service mode, which drive greater savings over the long term. Knowledge transfer in this area is one thing; the passion, skill and headcount to carry out these practices on a day by day basis are what drive results.

Typically event services falls into two broad categories:

1. Event management
2. Event monitoring and support.

Event management provides end to end e-sourcing support that begins with a companies overall strategy and ends with the actual execution of the e-procurement event. This is a true cross category effort that includes a rather lengthy list of services that may include buyer training, supplier selection, category discovery, supplier communication, the strategy for taking a category to market, training and overall supplier expectation management.

Event monitoring and support is actually the tactical implementation of the over all e-procurement event management process. This may include all communications with suppliers on the day of an event including making sure they have access to the system, get logged in properly, don?t have problems placing quotes, monitoring supplier and buyer system communications techniques during an event such as notes and texting and being available post event for questions as needed.

These services are normally provided by people behind the scenes with a very specific skill set. If you plan to do self service it would be very wise to make sure you have them covered at the same quality level.

As always, we look forward to and appreciate your comments.

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Why use E-Negotiation, e-Procurement or Strategic Sourcing tools?

Tuesday, February 16th, 2010

This author has discussed on many occasions the various benefits to retailers of using e-negotiation tools. Not the least of which is significant profit improvement. Simply put 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.

If you are wondering why most companies are not enjoying these benefits, the following are the objections we to often hear during initial discovery meetings with managers that have not been exposed to e-negotiation 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.
8.?What about my relationships.

One thing you may notice is that the companies almost always include me or I and almost never we. To much individual emphasis is not a good thing. Healthy skepticism is. 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 your objections against them.

As always, we look forward to and appreciate your comments

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A customer asked me what a reserve price reverse auction was today.

Friday, January 29th, 2010

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.net spot fuel or rack rate updates.. 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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Creating a sustainable e-procurement or reverse auction program is based on more than just savings.

Tuesday, January 12th, 2010

Primary success in e-procurement programs such as reverse auctions of which there are many types is in many cases measured by cost reductions. That?s because within a budget period they drop directly to a company?s bottom line plus or minus some switching costs. On more than one occasion I have heard; ?did we hit a home run?? Less emphasis seems to be placed on cost avoidance in an up market and creating a sustainable process. This often results in less spend be assigned to these very effective tools then should be.

In order to ensure that results are sustainable; the strategies for all targeted e-procurement categories require consistent deployment across all departments throughout the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier selection, and a solid strategy that is well understood by all buyers and category managers for negotiation and the award of business process.

Supplier selection and management is a critical stage that requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone within the procurement or supply chain organization could negatively impact the potential results of an e-procurement event. Historical long term relationships that drive behind the scene comments like; ?don?t worry we?ll be fine? to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your program. Not to mention the potential legal implications.

If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tool?s that are offered in the form of? Software as a Service or cloud computing, ask your provider why?

We appreciate and look forward to your comments

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SafeSourcing Website experiences significant traffic growth.

Thursday, October 22nd, 2009

During the last ninety day period the SafeSourcing website www.safesourcing.com has experienced significant growth globally. According to a number of rating services including Alexa and Google Analytics our website has had visitors from thirty seven (37) countries. Our reach which is a percentage measure of global internet users has grown 130%. Our traffic rank has increased 168% and our page views have increased 150%.

This growth places us amongst the top websites in the procurement space. Spend Matters and Sourcing Innovation continue to be the ranking leaders in our space. Both are required daily reading for this author.

We are very proud of our growth as it indicates that SafeSourcing is providing valuable content to regular visitors as well as registered members. We are also enjoying a good mix of both returning and new users. In reviewing these data the entire website is being explored on a regular basis including the following areas.

1. Sourcebook our professional social network for procurement professionals.
2. The SafeSourcing Wiki
3. The SafeSourcing daily Blog
4. SafeSourcing environment and safety alerts
5. SafeSourcing specifications template library
6. The SafeSourceIt? Supplier Database
7. The SafeSourcing Query tool
8. SafeSourcing Product Information Sheets
9. SafeSourcing White Papers
10. SafeSourcing Press Releases.

Thank you to those of you that have allowed us to achieve this growth.

As always, we look forward to and appreciate your comments.

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