Archive for the ‘E-procurement Solutions’ Category

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How should companies decide what products and services can go through the e- negotiation process?

Monday, April 19th, 2010

There really is no reason to shy away from taking any product or service to reverse auction as part of your overall e-negotiation strategy to compress pricing.

There are however some simple questions companies can ask themselves when considering any product, service, or category for consideration in the e-negotiation process. Several but not all of those questions would certainly include the following three.

1. How many suppliers are available and willing to bid on your business?

It?s obvious your company is already aware of your incumbent suppliers. The more important question is what other suppliers are available and how can you find them.
Several will exist within you own geographical area that you are not even aware of. Many others may be located across the country that are also very interested in earning your business.

2. Does your company have the complete detailed product specifications for this product or service readily available or are you familiar with a source from which you can get them easily?

Are your products specifications kept in some form of central repository or are they in the mind of your buyer? This is the single largest obstacle to successful e-negotiation events.

3. How much of the product or service are you willing to commit to buy over what period of time?

What period of time are you buying for? Is there an opportunity to contract for a longer period of time in order to raise volumes? Is there an opportunity to aggregate dissimilar products in order to increase the e-auction size?

If you are well prepared, there are suppliers willing to bid for your business that offer quality equal to or better than what you are presently receiving for your products and services at a better price and with better service. That?s win-win-win.

We always look forward to and appreciate your comments

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Today is a great time to take a look at your logistics planning and to try out e-procurement tools in order to reduce your freight costs.

Thursday, April 15th, 2010

According to Wikipedia Logistics is the management of the flow of goods, inforamtion and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers. So getting it there at the right price is an enormous challenge.

The constantly fluctuation cost of fuel is causing less stable freight rates and creating concern and worry? in the executive suite about transportation expenses. As such many senior executives are looking to e-procurement solution providers to automate and reduce costs in the execution of their shipping plans.

Reverse auction tools,? electronic RFI?s and other e-procurement tools are being used regularly in order? to? optimize bid collection by helping companies organize detailed information about their shipping patterns so they can? compare daily or weekly offers from vendors.

Believe it or not many companies continue to use time-consuming manual processes to schedule shipments and have not even consolidated their rate tables into spreadsheets let alone assembled data with easy to use e-procurement tools. Many companies also continue to use static rules based on full loads to LTFL to a destination to decide which carrier they should use. The problem with this is that rate, routes, and a particular haulers availability change daily if not more often.

Call your e-procurement solutions provider and ask how they can help.

We look forward to and appreciate your comments.

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Understanding the complexity of contracts and their lifecycles.

Tuesday, April 13th, 2010

Contract Management is the management of contracts with customers, vendors, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing upon any changes that may arise during its implementation or execution.

Contract Management or (CM) can be summarized as the process of systematically and efficiently managing contract creating, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.

A recent study found that 42% of enterprises indicated that the top driver for improvements in the management of contracts is the pressure to better assess and mitigate risks. In addition, nearly 65% of enterprises report that contract lifecycle management (CLM) has improved exposure to financial and legal risk. Common commercial contracts include employment letters, sales invoices, purchase orders, and utility contracts. Complex contracts are often necessary for construction projects, goods or services that are highly regulated, goods or services with detailed technical specifications, intellectual property (IP) agreements.
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A significant problem with the life cycle of contracts today particularly in the retail space is a process called evergreening by which a contract is renewed automatically, often with less favorable terms. These evergreen contracts between two parties will automatically renew after the completion of the contract period. This will occur until the agreement is cancelled by either party.? Without a system in place to monitor or manage contracts, evergreening can add unnecessary costs to businesses, often for millions of dollars as well as damage ongoing relationships between suppliers and buying organizations.

Ask you solutions provider how they can help you in this area.

We look forward to and appreciate your comments.

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If I save and you save shouldn?t we all save?

Monday, April 12th, 2010

Historically this author has heard the buzz phrase that this is a? win win situation? far too often because far to little thought is put in to what it should really mean. As such when I do hear it, it makes me want to puke. What we should be doing is focusing on win-win-win relationship in the supplier-buyer-consumer supply chain model.

E-negotiation tools offer benefits to both suppliers and hosting retail companies which should also provide a benefit to consumers if the retailer and supplier are savvy enough to figure it out. Some but not all to consider follow.

1.?Suppliers have an opportunity to bid on business they might otherwise not know about.
2.?Forces retailers to formalize their specifications for further use.
3.?Retailers are exposed to far more sources of supply than they were previously aware of.
4.?Focuses the buyer-seller relationship on a fair trade approach to conducting business
5.?The best total solution based on more than just price generally rises to the top.
6.?Focuses both suppliers and buyers on reducing their net landed costs for products and services.
7.?Unbundles costs to reveal and eliminate hidden costs that provide little or no value
8.?Creates a competitive and balanced marketplace.
9.?Offers a lesson that in cost cutting those suppliers should use with their raw material suppliers.
10.?Collectively provides an opportunity for improved margins and earnings
11.?Provides a tool to offer products to consumers that are of better quality, safer and at a lower price.

If this is not win-win-win, someone is not paying attention. Even though I still don?t like the buzz word.

We look forward to and appreciate your comments.

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If I save and you save shouldn’t we all save?

Monday, April 12th, 2010

Historically this author has heard the buzz phrase that this is a” win win situation” far too often because far to little thought is put in to what it should really mean. As such when I do hear it, it makes me want to puke. What we should be doing is focusing on win-win-win relationship in the supplier-buyer-consumer supply chain model.

E-negotiation tools offer benefits to both suppliers and hosting retail companies which should also provide a benefit to consumers if the retailer and supplier are savvy enough to figure it out. Some but not all to consider follow.

1. Suppliers have an opportunity to bid on business they might otherwise not know about.
2. Forces retailers to formalize their specifications for further use.
3. Retailers are exposed to far more sources of supply than they were previously aware of.
4. Focuses the buyer-seller relationship on a fair trade approach to conducting business
5. The best total solution based on more than just price generally rises to the top.
6. Focuses both suppliers and buyers on reducing their net landed costs for products and services.
7. Unbundles costs to reveal and eliminate hidden costs that provide little or no value
8. Creates a competitive and balanced marketplace.
9. Offers a lesson that in cost cutting those suppliers should use with their raw material suppliers.
10. Collectively provides an opportunity for improved margins and earnings
11. Provides a tool to offer products to consumers that are of better quality, safer and at a lower price.

If this is not win-win-win, someone is not paying attention. Even though I still don’t like the buzz word.

We look forward to and appreciate your comments.

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There are a number of places from which procurement professionals can collect or solicit your RFI data.

Thursday, April 8th, 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.

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 Quote (RFQ), Requests for Tender (RFT), and Requests for Proposal (RFP). In addition to gathering basic 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), Request for Tender (RFT) in the government sector, or a Request for Proposal (RFP).

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.

We ?look forward to and appreciate?your comments

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Retailers need to think it through before trying a do it yourself program when it comes to e-negotiation or e-procurement

Wednesday, April 7th, 2010

This author has met with many large companies that are using e-sourcing suites or tools provided by some of the largest names in the industry. After we have reviewed what we do and how we do it and then compare what they are accomplishing the following question always comes up. Why are you generating significantly higher savings than we are?

The answer is pretty simple in most cases. You have bought a software suite or tools and rather than using them as designed you have just incorporated your old practices into new tools. In addition, further training or access to your supplier?s data in the form of sources of supply etc. was not included in your initial cost.

A full service solution provider should be able to create, execute and support all auction activity including but not limited to the following.

1.?Assistance in selecting Auction categories
2.?Market insight
3.?Determine the timing of category auction
4.?Identification of potential quality suppliers in addition to existing
5.?Building on-line auctions
6.?Supplier contacts and training
7.?Execution of live bids
8.?Trouble shooting during live bids
9.?Compiling and communicating reports within 24 hours
10.?Award and Non-Award notifications to Suppliers
11.?Providing ongoing customer support
12.?Monitoring Supplier performance
13.?Feedback from Retailers/Suppliers
14.?Analyze the quality of each auction

The above deliverables if not executed in a self service program will result in less than maximum results and potentially failure of your program.

We look forward to and appreciate your comments.

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Retailers here is a repost of twenty steps to running high quality e-procurement events such as reverse auctions from over two years ago. It still works.

Tuesday, April 6th, 2010

At any rate and regardless of the specific naming convention used there are certain rules which when followed will create higher quality e-procurement events for the retailer as well as the supplier? Following these steps will result in maximizing savings opportunities or cost avoidance in tough markets

The importance of focusing on a clear process will also increase event participation. As a result of? paying attention to quality and detail your existing trading partners and potential new sources of supply will respect your process and will keep them coming back in the future to compete for your business.

1.?Executive sponsorship is mandatory from the C- Suite.
2.?Get the entire buying organization together for a kickoff session.
3.?Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4.?Discuss and agree on success criteria.
5.?Every event is not a homerun. Singles and doubles score runs.
6.?Create a fun environment.
7.?Consider prizes for the most creative use of an auction.
8.?Use scorecards by department with percent of savings.
9.?Discuss the meaning and importance of corporate aggregation.
10.?Hand out event templates to gather existing product specifications.
11.?Put a time requirement on data collection.
12.?Gather an accurate list of your present suppliers.
13.?Work with your sourcing company to identify a top 100 list of events.
14.?Calendar the events.
15.?Prioritize by dollar value, date and strategic value.
16.?Conduct department level discovery meetings of 30 minutes to an hour.
17.?Investigate existing contract language.
18.?Look for auto renewal (evergreen) language roadblocks.
19.?Determine alternate sources of supply with your sourcing company.
20.?Develop an event rules and instruction template and post with each event.

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.
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We look forward to and appreciate your comments.

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Retail spend management basics for e-procurement professionals and knowledge workers.

Wednesday, March 31st, 2010

I meet with buyers or other e-procurement knowledge workers on a regular basis that want to know what categories are the best to select in the short term to prove the benefit of e-procurement or e-negotiation tools. This quite honestly is not a bad approach for pilot selection as it creates an almost sure thing that results in a lot of excitement and the energy to move the process forward within a company.

Quite often before meeting with a new client, I will analyze their annual report and their summary P&L to get a good idea of where the opportunities are hiding that can have quick hit impact. However in order to have long term viability as a way to conduct the business of buying, a more detailed analysis is required. Quite frankly before you can even begin to discuss vendor or supplier selection, management or evaluation this process is critical to long term success.

Key data required to prepare you for this analysis can consist of but is certainly not limited to the following. All of this data is readily available from a variety of industry sources. Quite often the data is a year old but you can bet it is better than anything else your customer may be using today.

1.?Research and accumulate your specific Industry data
2.?Analyze last years P&L
3.?Compare your cost of goods with your Industries averages
4.?Compare your gross margins with you Industry averages
5.?Compare your net earnings with your industry averages
6.?Conduct the same comparisons with selected retailers with whom you compete
7.?Compare your departmental sales and contribution margin results to those of your specific industry.
8.?Look for department level anomalies
9.?Look for specific product anomalies within major and sub departments.
10.?Select top categories that are below plan and outside industry average for cost of goods and margin.
11.?Select top products that are underperforming to industry averages and plan

An example of the above might be to look at the major department of grocery and the major category of pet care then drill down to the sub category of cat and dog products and a list of all accessories. Now look at what products are underperforming to the industry and plan.? Continue your analysis with other underperforming categories.

Ask you e-procurement provider how they can assist you in accomplishing this with their tools.

We look forward to and appreciate your comments.

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Here are twenty-one reasons why all retailers should use E-Procurement tools.

Tuesday, March 30th, 2010

Since this is not Late Night with David Letterman, our list is not ranked in order of importance although many might argue that not much is more important than improved earnings.

1.?Guaranteed to improve net earnings
2.?Guaranteed to improve safety
3.?Guaranteed to improve Corporate Social Responsibility.
4.?Guaranteed new sources of supply
5.?Retail has less spend assigned than any other industry
6.?Streamlines the? procurement process
7.?Holds suppliers accountable to your standards.
8.?Improves quality
9.?Cost avoidance in a volatile market
10.?Creates a competitive environment
11.?Drives reliable market pricing
12.?Maintains a reliable history for future comparison
13.?Educates suppliers as to how retailers wish to procure products
14.?Supplier training eliminates questions
15.?Improved and consistent product specifications
16.?Improved negotiation.
17.?Improve carbon footprint
18.?Simple award of business process
19.?Frees up time for other tasks
20.?Works for procurement of all product categories
21.?Provides a detailed audit trail.

This author is not sure why a derivative of this list could not become the mission statement for any procurement department.

We appreciate and look for ward to your comments.

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