This generally is dependant on their own offerings which can cover the entire procure to pay process? However at it’s most basic, we are talking about e-RFX offerings such as RFI’s, RFP’s and RFQ’s  and other tools and  services that support them. So, the answer to the above is really yes and no.

My typical response to retailers is that spend management  is the management of your company’s spending across all of your operating expenses and SG&A through sophisticated tools that support RFI’s, RFP’s and RFQ’s at a minimum. Organizationally this process should report to a Chief Procurement Officer or the head of your supply chain with strong ties to the finance area. Success is typically measured by a reduction in cost of goods and services or COGS, improvement in quality or both. In retail, spend is represented in for resale products such as general merchandise, gift cards, frozen seafood, meat etc. Spend is also measured in the expense category or not for resale products and services such as supplies, services, technology, real estate etc.

According to Wikipedia, Spend management is the way in which companies control and optimize the money they spend. It involves cutting operating and other costs associated with doing business. These costs typically show up as “operating costs” or SG&A (Selling, General and Administrative) costs, but can also be found in other areas and in other members of the supply chain.

There are dozens of vendors that have a variety of tools and services that are available to assist companies in the analysis and management of their spend for the purpose of present and future decision making. These range from small boutique software houses to giant corporations. Spend management of which e-procurement tools are a part run the gamut from sophisticated contract management applications, reverse auction tools, purchase order management tools and supplier databases etc. In the most sophisticated implementations, these tools may be tightly integrated with retailers enterprise based support systems or data warehouses.

It is not a surprise that many retail companies are not really aware of what their total spend is, or how many suppliers they spend it with. In addition, many retail companies still do not use these tools today. Often times, product specifications are hard to find if documented at all and in some cases the same category might be purchased by different departments across the enterprise without aggregating the spend.

Today’s tools that supports spend management are largely available as internet based or hosted applications that re much lower cost than older in house legacy applications. As such they can be activated almost immediately. This means savings within your present accounting period is possible.

If you’d like to learn more about this process or these types of tools, please contact SafeSourcing. 

We look forward to and appreciate your comments.

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as MRO or Fleet Maintenance in the distribution space or raw materials used to manufacture components that require special handling, shipping and standards adherence. The amounts of the total spend for an event really has nothing to do with the complexity of the event. The complexity is determined by the data points requiring management in order to drive the best possible value to the buyer and the supplier.

This author would suggest that any event including multiple market baskets, thousands  of  SKU’s all with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity. This can be further complicated by trying to determine the correct decile based sourcing strategies for the event and including product affinities where they make sense.

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support  complex events, your e-procurement provider needs to have an understanding of the specific market place and practices and processes in place that allow them to drive these activities and bring complex events to market  in the shortest period of time. Generally this should occur within less than two or three weeks from event notification to event completion.

Last year, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who’s the customer and who’s the supplier
9. Sales People
10. Third Party Providers
11. Collaboration complexity.

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.

We appreciate and look forward to your comments.

If you’re a business owner, large or small, CEO, CFO, or President of a company you should be asking yourself if your company can benefit from procurement services.  Depending on the size of the organization you may or may not be familiar with all the goods and services that your company is purchasing.  This is where procurement services can come into play! 

According to Wikipedia procurement is “the acquisition of good and/or services.  It is favorable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchases in terms of quality and quantity, time and location.”

This sourcing professional believes that if a company were to review at least 10% of their annual spend, they would find many opportunities to improve the bottom line.  Below you will see a few of the times that would be most beneficial to take advantage of procurement services.

1. 1.Reviewing/Resigning a current contract with an incumbent supplier.  –   If you’ve been with the same supplier for the length of multiple   contracts, it’s time to re-evaluate.  You may not be interested in switching vendors, but by taking advantage of procurement tools you will be able to negotiate a better rate for the goods and services that you’re purchasing.
2. When you start a new task/department within your business. – Every time your business grows or expands is an opportunity to take advantage of procurement tools.  Even if the goods and services that you’ll need to operate this new department are things you’re currently using, the quantity of these items would be a great opportunity to evaluate how much you’re spending to have the goods and services you’re using on a regular basis.
3. When you are analyzing you upcoming budget – Each year when your company monitors your profit margin and areas within your budget that cause you concern is a great time to evaluate what procurement services would be beneficial for you.  For example, you may find areas of your business that are critical for your end product or service, but you feel that you are spending too large of a percent of your budget to produce such results. 

Just think of all the different areas you bottom line is affected by.  Each of these is an area for potential savings thru the use of procurement tools.  By partnering with a procurement professional, you’ll be able to evaluate more than a few areas of your business where you can start saving for your next purchase or contract for your goods and services.

For more information on SafeSourcing and how we can help you evaluate your savings opportunities, please contact a Customer Service representative.

We look forward to and appreciate your comments.

All Retail industry leaders know for a fact that e-procurement improvements can directly improve their bottom line as well as positively impact shareholder and stakeholder equity. In many cases in upper tier companies significant strides have been made to this end.

In? mid tier markets, it?s an? unfortunate circumstance that? procurement departments or purchasing as it had traditionally been known has not evolved significantly beyond its traditional functionality in many cases. Many mid tier companies will introduce you to their category managers. However, it very quickly becomes clear that although many have strong backgrounds as product buyers; very few have been exposed to the most current e-procurement tools available today. This is in no way the fault of the purchasing department or of the retailer. Reduced staff counts and the aforementioned lack of attention from software and consulting providers as well as a lack of near by formal e-procurement training programs combine to make the transition to e-procurement tools difficult.

What can retailers in the mid tier markets do? The answer may be working with boutique software houses that have no where near the overhead of the largest companies in this space. The largest well known companies in the e-procurement space may dominate your web based searches because they can afford to pay for large numbers of key words used in web searches. It may actually pay to drill down a few pages beyond your original search to find companies that have unique e-procurement software offerings that are often developed by highly skilled entrepreneurs that know the retail procurement business and can offer e-procurement solutions for a fraction of the cost associated with the better known legacy providers. The risks associated with this approach are minimal as most offers in the e-procurement space are offered as a hosted service today. All that is required on the retailer?s part is internet access. You might even get treated more like a customer to boot.

We look forward to your comments.