Archive for the ‘E-procurement Tools’ Category

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Should I buy on demand software (SaaS) for my e-procurement needs?

Friday, September 10th, 2010

On demand software or SaaS (Software as a Service) by its nature is an internet based application and as such is accessible from wherever you happen to be as long as you have a network connection. With today?s broad band offerings that literally means anywhere. So the first rule of thumb is that it provides easy access. In addition, since most of the newest versions of SaaS applications are native web based applications, they integrate very nicely with most office infrastructures. With Microsoft being the most deployed environment, data is easily exported or imported to formats that comply with their standards. In many cases these tools can also be made 100% available to you within days of contract signature

Most of us have horror stories about when our PC, Network, Application etc. went down and we were not able to complete tasks at work. When we call our internal service department, the response is normally less than what we would like or hurry up and wait. With a hosted software application, it is the responsibility of the SaaS provider to maintain the application. They know up front that if they don?t do a superior job of support and availability, that you the customer can go somewhere else to find a provider that will. This is not the case with internally installed corporate applications.

Your data at a SaaS provider is also often more secured than the data at your corporate office. Since this is the core business of a SaaS provider, the architecture of the application normally has multiple levels of redundancy, failover recovery and is backed up regularly.

Typically, SaaS applications are easier to change than traditionally installed corporate applications. There are not as many feature upgrade charges with every point release in a SaaS environment because the provider needs to provide these features to continue to attract new customers and to keep up with the pace of the industry.

Finally, the total cost of ownership is much quicker in a SaaS environment than traditional application software installations. Often as much as 100% faster. In fact there are many stories of breakeven ROI?s with your first series of e-procurement events. The biggest question you have to ask of your future provider is are you a true SaaS environment with the newest technologies available or are you a reengineered ASP provider. I?ll comment more on that later.

We?look forward to and appreciate?your comments.

Ron

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E-procurement.What’s in a definition?

Thursday, September 2nd, 2010

I was reading a blog post from the Doctor over at Sourcing Innovation today titled “A Hitchhiker’s Guide to e-Procurement: Terminology” and I thought it was great as well as very timely.

Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.

This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.

We look forward to and appreciate your comments.

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E-procurement.What?s in a definition?

Thursday, September 2nd, 2010

I was reading a blog post from the Doctor over at Sourcing Innovation today titled ?A Hitchhiker’s Guide to e-Procurement: Terminology? and I thought it was great as well as very timely.

Ultimately it is up to practitioners and solution providers of these tools to educate their customers as to what the proper terms are for the tools they are using. As an example E-RFI, E-RFP, E-RFQ. I have numbers of customers that have used other solution providers and not only are the definitions different by customer; they are actually different within a specific company. In some cases everything is referred to as a reverse auction and in other situations the companies have made up their own name for the service or tool.

This author uses Wikipedia and Wictionary quite often as a source and in this case, they have a very good definition that covers most of the terminology in the entire e-procurement space as well as related B2B and B2C internet based or private network based functions. As your company moves in the direction of a computerized supply chain management solution for your company understanding what you are asking for and what you are using will make both your job and that of your solution provider easier.

We look forward to and appreciate your comments.

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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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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 you don?t know what else you can get that is extra from a reverse auctions unless you ask!

Monday, August 2nd, 2010

My wife went to lunch at a restaurant she has never been to before with 7 of her friends the other day. One of her friends called in advance and asked to speak with the executive chef. She told him she was coming for lunch with 7 of her friends and wanted to have the chef prepare a sampling of their best appetizers for the group and would like the restaurant to comp the expense for the group. Are you kidding me that is incredibly ballsy? Here?s the kicker, the restaurant did it. In addition the chef came to the table and explained the selection and what would go well with it for lunch. He also bought each attendee a glass of wine. Most of you are smart enough to figure out the benefit to the restaurant. I can guarantee you we will go there for dinner.

Here?s the tie in.

I always suggest to retailers that there is more to be gained from reverse auctions and other e-procurement events than just price concessions. With that said, cost still tends to be the primary driver or motivation for most retailers. The question always comes back to me; like what? My answer is that you have to use your imagination. Take a look at your product. Ask yourself what more would you like?

1.?A better price?
2.?An extended warranty for free?
3.?Free shipping?
4.?An onsite account manager?
5.?Premium club membership?
6.?One free night for every three nights stayed in a hotel chain?
7.?One car grade upgrade from your standard contract for free?
8.?100 free meals for every $10K spent at a specific restaurant chain?
9.?Free installation services
10.?A donation to your frequent shopper program gifts catalog.

This really becomes a brainstorming or whiteboard event. Once you come up with an idea relative to a certain product, just ask for it in your specification. You?ll never know if you don?t ask.

We look forward to and appreciate your comments.

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Retailers you don’t know what else you can get that is extra from a reverse auctions unless you ask!

Monday, August 2nd, 2010

My wife went to lunch at a restaurant she has never been to before with 7 of her friends the other day. One of her friends called in advance and asked to speak with the executive chef. She told him she was coming for lunch with 7 of her friends and wanted to have the chef prepare a sampling of their best appetizers for the group and would like the restaurant to comp the expense for the group. Are you kidding me that is incredibly ballsy? Here’s the kicker, the restaurant did it. In addition the chef came to the table and explained the selection and what would go well with it for lunch. He also bought each attendee a glass of wine. Most of you are smart enough to figure out the benefit to the restaurant. I can guarantee you we will go there for dinner.

Here’s the tie in.

I always suggest to retailers that there is more to be gained from reverse auctions and other e-procurement events than just price concessions. With that said, cost still tends to be the primary driver or motivation for most retailers. The question always comes back to me; like what? My answer is that you have to use your imagination. Take a look at your product. Ask yourself what more would you like?

1. A better price?
2. An extended warranty for free?
3. Free shipping?
4. An onsite account manager?
5. Premium club membership?
6. One free night for every three nights stayed in a hotel chain?
7. One car grade upgrade from your standard contract for free?
8. 100 free meals for every $10K spent at a specific restaurant chain?
9. Free installation services
10. A donation to your frequent shopper program gifts catalog.

This really becomes a brainstorming or whiteboard event. Once you come up with an idea relative to a certain product, just ask for it in your specification. You’ll never know if you don’t ask.

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; 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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