Archive for the ‘E-procurement Solutions’ Category

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A blog we repost quite often.” Twenty Five-steps to running high quality e-procurement events”.

Monday, August 23rd, 2010

This author has republished this post in a variety of formats at least 8-10 times as the question never seems to go away when I meet with retailers and other companies interested in successful e-procurement implementation.

Here you go!

1. Executive sponsorship is mandatory.
2. This is required at the CEO and CFO level.
3. Get the entire buying organization together for a kickoff session.
4. Provide an over view of what you are going to do and the impact it can have on the company.
5. Use company financial models to reinforce result opportunities.
6. Discuss and agree on success criteria in advance.
7. Understand that every event will not be a homerun.
8. Singles and doubles score runs.
9. Create a fun environment such as a savings club
10. Consider prizes for the most creative use of auctions.
11. Use scorecards by department with percent of savings.
12. Discuss the meaning and importance of corporate aggregation.
13. Hand out event templates to gather existing product specifications.
14. Put a time requirement on data collection.
15. Don’t overlook any department, product or service.
16. Gather an accurate list of your present suppliers.
17. Work with your sourcing company to identify a top 100 list of events.
18. Calendar the events based on contract status.
19. Prioritize by dollar value, date and strategic value.
20. Conduct department level discovery meetings of 30 minutes to an hour.
21. Investigate existing contract language.
22. Look for auto renewal (evergreen) language roadblocks.
23. Determine alternate sources of supply with your sourcing company.
24. Develop an event rules and instruction template and post with each event.
25. Develop a clear terms and conditions template.

Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.
 
We look forward to and appreciate your comments.

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Sourcing prescription drugs gets easier all of the time.

Wednesday, August 18th, 2010

This was the case years ago, but with the advent of many of the internet based prescription drug sites such as RXlist, Drugs.com and many retailers sites, it is easy to find lists, formulations, directions, dictionaries and generic equivalents. What more could a Pharma buyer ask for. Now all you need to do is use your e-procurement solutions provider to drive your costs down.

According to RXlist, the top twenty prescription drugs in the U.S. are as follows.

1. Lipitor
2. Hydrocodone / Acetaminophen  
3. Hydrocodone / Acetaminophen  
4. Levothyroxine sodium  
5. Amoxicillin  
6. Lisinopril  
7. Nexium  
8. Synthroid  
9. Lexapro
10. Singulair
11. Plavix
12. Simvastatin
13. Hydrochlorothiazide
14. Amlodipine besylate
15. Azithromycin
16. Warfarin sodium
17. Furosemide
18. Azithromycin
19. Levothyroxine sodium
20. Advair Diskus

It’s never been easier to drive down your costs.

We look forward to and appreciate your comments.

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Retailers; how much are you really saving with reverse auctions and other e-procurement tools.

Monday, August 16th, 2010

Further more; your buyers can not save you as much as you might save if you used these types of tools. So when and if you do, make sure you measure and understand the true savings.

There are all sorts of e-procurement companies. Not all focus only on retail. However, all of them have web sites and all of the web sites tout savings that are all over the map. The question is what type of savings are they talking about. Following are some of examples.

1. Total low quote savings.
2. Total low quote company savings.
3. Total savings awarded companies.
4. Total realized savings.
5. Total savings versus budget period to date.
6. Total category savings.
7. Total savings year to date.
8. Total annual realized savings.
9. Total potential savings.

Companies really have to be specific as to what they ask each company relative to savings opportunities and make sure they have a formula in place for calculating savings over the course of the contract period for which the products are being sourced. There are all sorts of missed opportunities associated with actual event based low quote savings that can be created by lengthy review periods, delays in sample evaluation, extended award time periods, delays in contract dates, switching costs within the finance department, delays in shipping, specifications not being matched and specification creep that results in adding more expensive non specified items.

The bottom line is that you may have had low quote savings of 28% and that’s great. You may have had net realized savings of 18% and that’s great too. However if you don’t have a plan as to how you will measure savings you won’t know what caused the leakage and it can’t be fixed.

We look forward to and appreciate you comments.

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Retailers should run more RFI’s, particularly for new products or services they have not sourced before.

Monday, August 9th, 2010

According to Wikipedia and others a Request for Information (RFI) is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes.

So a Request for Information (RFI) is primarily used to gather information to help companies make a decision on what steps to take next. RFI’s are therefore most often the first stage in the procurement process particularly with new sources of supply. They are used in combination with: Requests for Proposal (RFP) and Requests for Quote (RFQ).  In addition to gathering basic company capabilities and information, an RFI is often used as a solicitation sent to a broad base of potential suppliers for the purpose of preparing a supplier’s thought process in preparing for a Request for Proposal (RFP) and a or a Request for Quote (RFQ).

Much of the data required for an RFI is generally available and can be found on company websites, U.S. Security and Exchange Commission (SEC) filings for publicly traded companies in their Edgar system, industry guides from companies like Trade Dimensions, or from sources like Dun and Bradstreet.

The challenge for most companies is that they do not have the necessary resources to complete this research. Therefore providers of supplier data should be able to make this data available in templates that companies can begin with. Simple data should always be available in any database as to Company Name, Annual Sales, Product category expertise, contact information, e-procurement experience and product specifications. This data should be easily exportable to a variety of formats such as MSFT Excel.

A simple request of your e-procurement supplier should get you well on your way to completed RFI’s that lead to quality RFP’s and RFQ’s without spending a lot of your valuable time on basic research. If they do not, we’d be glad to hear from you.

As an example, we recently completed and RFI for a customer where 18 suppliers were invited to participate and after evaluation and scoring only 8 were invited to the final RFQ. Much of the data was already available in our SafesoureIt™ supplier database and only required verification from suppliers. The entire process took less than two weeks.
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, here is another acronym to confuse you. What is an NMFC number?

Friday, July 23rd, 2010

An NMFC number is a National Motor Freight Association Classification. The code is a numeric indicator that identifies each specific type of product that can be shipped by a LTL (Less than full Load) carrier. The National Motor Freight Association presets these product classifications quarterly. If you have the NMFC number on your bill of lading you can avoid constant re-classification and therefore accurately identify each product you ship.
?
Typically you would use LTL to deliver these products when they weigh over 150 pounds and fill less than because it is less expensive than using parcel post services but is less than a truck load (TL). However be ware that in LTL shipping there are a lot of potential added costs

When your item weighs more than 150 lbs., truck transportation is more economical than using a parcel post service. Common carriers transport your item on a truck with additional small shipments from other companies so that the costs for transportation are shared. Any service that isn’t considered “standard procedure” may require additional fees such as lift gate pick up or delivery, inside pick up or delivery, notification prior to pick up or delivery, sort and segregate for delivery by the driver, HAZMAT fees and many more.

If you?re going to buy it knowing the terminology, where to get the data you require and how to actually ship it may help you from avoiding leakage of savings attained during your sourcing of the product.

We look forward to and appreciate your comments.

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Retailers; can you compete with these top ten retailers in your market?

Tuesday, July 20th, 2010

Every one of the companies listed below use e-procurement tools to lower their cost of goods and services. They probably don?t even need to based solely on their sales volumes, but the do anyway and as a result get even better pricing.

1.?Wal-Mart
2.?Kroger
3.?Target
4.?Walgreen
5.?Home Depot
6.?Costco
7.?CVS
8.?Lowe?s
9.?Sears
10.?Best Buy

The reality is that you can?t compete with them on price alone. What you can do is improve your own margins and earnings so that you can stay in business and focus on what you do well. The ten retailers listed above cover every type of format and every type of product offered in retail from fashion to fuel.

So what can you do? First, try conducting a spend analysis of your detailed profit and loss statement and compare it to the industry leaders and other retailers in your market area. Look for anomalies where you may in fact have an advantage based on product mix and then try to figure out how to exploit it. Second, use e-procurement tools for existing and new products and services sourcing. Third, use contract management software to make sure that the savings you generate make it to your P&L.

Ask your e-procurement solutions provider how they can help. If you don?t get a good answers call SafeSourcing at 1-866-623-9006 or visit our website www.safesourcing.com and click on Contact Us.

We look forward to and appreciate your comments.

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What’s new in retail e-procurement?

Friday, July 16th, 2010

A small retailer said to me last week that he did a form of reverse auction on his own. I asked how he accomplished this. The answer did not shock me, but I did chuckle a little. I’m glad he was a friend because he asked why I was smiling. The answer was that he sent out an email to three suppliers that he knew and asked for a price on a specific product. He told them in the email to make sure their price was there best offer and then called each once received and pressured them down with the threat of the other offers. We won’t get into the number of calls he had to make, the time it took to create the specification, the number of emails sent back and forth or lack of knowledge as to any new or additional sources of supply. We also won’t discuss the underlying psychology of a reverse auction and the tools that encourage quality bidding. The basic premise was solid and helped to reinforce why an automated system would out perform his results every time as well as provide a detailed audit trail.

At least in the example above, my friend was trying in his mind. What continues to concern this author is that many retail companies from lower tier I companies through all of tier II companies are not using any type of e-negotiation solution. Most of these solutions are relatively low cost hosted or SaaS oriented tools and available to them covering the entire P2P (procure to pay) process. In addition many of them belong to wholesalers that may use these tools themselves but don’t pass on all of the benefits to their customer.

I will continue to focus on this issue in the hope that if one company reads, watches, prints and uses any of this information and then executes because of it any or all of the following benefits may befall them.

1. Profits can and should improve
2. Quality can and should improve
3. Product Safety can and should improve
4. Environmental impact can and should improve
5. Prices can be compressed
6. New sources of supply can be found
7. Risk can be mitigated
8. Evergreening of contracts can be held in check
9. Existing jobs can be protected
10. New jobs can be created.

If these were the only reasons to try and get out the message as to the stunning effect that today’s e-procurement tools can have on an organization it would be enough. But we all know there are many more good reasons beyond the ten listed above.

We look forward to and appreciate your comments.

Posted in , , , ,

What?s new in retail e-procurement?

Friday, July 16th, 2010

A small retailer said to me last week that he did a form of reverse auction on his own. I asked how he accomplished this. The answer did not shock me, but I did chuckle a little. I?m glad he was a friend because he asked why I was smiling. The answer was that he sent out an email to three suppliers that he knew and asked for a price on a specific product. He told them in the email to make sure their price was there best offer and then called each once received and pressured them down with the threat of the other offers. We won?t get into the number of calls he had to make, the time it took to create the specification, the number of emails sent back and forth or lack of knowledge as to any new or additional sources of supply. We also won?t discuss the underlying psychology of a reverse auction and the tools that encourage quality bidding. The basic premise was solid and helped to reinforce why an automated system would out perform his results every time as well as provide a detailed audit trail.

At least in the example above, my friend was trying in his mind. What continues to concern this author is that many retail companies from lower tier I companies through all of tier II companies are not using any type of e-negotiation solution. Most of these solutions are relatively low cost hosted or SaaS oriented tools and available to them covering the entire P2P (procure to pay) process. In addition many of them belong to wholesalers that may use these tools themselves but don?t pass on all of the benefits to their customer.

I will continue to focus on this issue in the hope that if one company reads, watches, prints and uses any of this information and then executes because of it any or all of the following benefits may befall them.

1.?Profits can and should improve
2.?Quality can and should improve
3.?Product Safety can and should improve
4.?Environmental impact can and should improve
5.?Prices can be compressed
6.?New sources of supply can be found
7.?Risk can be mitigated
8.?Evergreening of contracts can be held in check
9.?Existing jobs can be protected
10.?New jobs can be created.

If these were the only reasons to try and get out the message as to the stunning effect that today?s e-procurement tools can have on an organization it would be enough. But we all know there are many more good reasons beyond the ten listed above.

We look forward to and appreciate your comments.

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