Archive for the ‘E-procurement Tools’ 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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Retailers, how many of your e-procurement contracts contain evergreen language?

Tuesday, March 16th, 2010

In this case your supplier wins because your contract contains evergreen language. Some retailer?s think this is a good thing and it could be. Paired with other language that might identify escalator or de-escalator language that protects both the supplier and the buyer against abnormal commodity increases this could be win-win. The bigger issue is who is responsible for monitoring the dates and how will you be alerted if the adjustments don?t take place?

This begs the question; just what are are evergreen clauses within a contract and what do you need to do to be careful with them.

According to Black?s Law Dictionary an Evergreen contract is a contract that renews itself from one term to the next in the absence of contrary notice by one of the parties.

The potential problem with an ?evergreen? clause in your contract is that this type of contract automatically renews at the end of the contract term, unless one of the parties notifies the other party that it does not want to renew the contract.? This notice normally must be given within a specified time period such as 60 to 90 days prior to the end of the current contract term. This takes us back to who is going to monitor this time frame and alert you to the fact that something is required?

A significant step in conducting quality e-negotiation events is to understand the contracts you are wishing to negotiate.

We look forward to and appreciate your comments.

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Retail e-procurement. What about your existing relationships.

Friday, February 26th, 2010

I could not agree more with the above comment. So beyond just reducing their prices which should not happen if you are being treated fairly, how else do suppliers benefit from participation in e-procurement events such as reverse auctions so that it is win-win?

Customers quite often ask us why suppliers would want to participate in an e-procurement event. A discussion usually follows relative to incumbent suppliers vs. new sources of supply. In general most vendors in the space would come up with many of the same points listed below. Please read on.

SafeSourcing? places a great deal of value in our SafeSourceIt??? Global Retail Supplier Database? which contains over 350,000? retail suppliers located in Mexico, Canada the United States, China, Korea, The United Kingdom, Japan and other countries. We place a great deal of value on each individual supplier regardless of their size. We believe that well thought out next generation e-procurement tools can provide significant benefits to buyers and suppliers whether they are hosting or participating in e-procurement events.?

Some but certainly not all benefits that suppliers can anticipate from SafeSourcing are:
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1. An easy to use e-procurement tool limited to a single page view where a supplier can be completely comfortable that their company?s best foot is being put forward to the soliciting company.

2. An increase in new business opportunities through engagements they would otherwise not be exposed to.

3. Clean data relative to the soliciting or host company and an accurate listing of their event guidelines, specifications, terms, conditions and other information necessary to build an accurate and successful pricing strategy.

4. High quality training in event participation and strategy development.

5. A clear focus on what?s important beyond price in next generation e-procurement tools such as supplier safety certifications and practices as well as their environmental programs that will differentiate them from other suppliers.

6. Closed loop reporting of results of the specific e-procurement event a supplier participates in as well as a detailed supplier feedback questionnaire..

7. Significant time savings associated with new business development that becomes more and more costly as fuel and other prices continue to rise.

8. Industry pricing trends extrapolated from their view of low quote information during the event if allowed by the soliciting company.

9. Use of these tools for their own procurement needs.

I?m sure many of you can come up with other reasons. E-procurement events have to be win-win if they are going to become part of a retail companies on going business processes.

We look forward to and appreciate your comments.

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Here are some e-procurement produce and perishable replenishment thoughts and principles for retail buyers.

Wednesday, February 24th, 2010

Retail procurement professionals need to be aware of more than just pricing when buying produce and other perishable products with electronic tools. Sometimes we spend to much time watching indices and being concerned about price when there are other issues that can quite frankly be overlooked and impact the quality and safety of what our consumers expect in their produce and other perishable purchases.

There are literally dozens of pesticides sprayed on produce and also many fertilizing techniques used that this blogger is sure none of your consumers are aware of. So who is the watchdog for the products that your buy. The answer is you. There are organizations out there that watch globally like the Environmental Working Group (EWG). But we already know you don?t have time for that.

If you have never been to a farm that grows the products you are buying or visited a packaging facility you need to. So when you set up your e-procurement event for produce and other perishables here are some things to be thinking about daily in your specifications. Don?t make the mistake of just running your events daily without constantly reviewing and adjusting more than quantity and price.

Here are some top of mind items you should be thinking about.

1.?Who grew it
2.?Who picked it
3.?Who packed it
4.?When and where was it picked
5.?When and where was it packed
6.?Was it fertilized with petroleum based products
7.?Was it fertilized with semi solid leftovers
8.?What? synthetic pest controls were used
9.?Local versus not local
10.?Organics versus non organics
11.?What price index should I use
12.?How is it being shipped
13.?Certifications
14.?Grass ?fed
15.?Pastured

We look forward to and appreciate your 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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Retail Procurement professionals should visit the SafeSourcing Wiki?

Monday, February 22nd, 2010

According to the king of all wikis, Wikipedia; a wiki is a collection of web pages designed to enable anyone who accesses it to contribute or modify content, using a simplified markup language. Wikis are often used to create collaborative websites and to power community websites. For example, the collaborative encyclopedia Wikipedia is one of the best-known wikis. Wikis are used in businesses to provide affordable and effective intranets and for knowledge management. Ward Cunningham, developer of the first wiki, originally described it as “the simplest online database that could possibly work”.

“Wiki? is a reduplication of “wiki”, a Hawaiian word for “fast”. It has been suggested that “wiki” means “What I Know Is”.

So, what is the SafeSourcing Wiki and why is it any different? SafeSourcing is a company dedicated to procurement, to retail and to e-negotiation while also supporting a supply chain that is safe and environmentally sound. It makes sense that the SafeSourcing Wiki would be referred to as a specialized wiki (in this case retail e-procurement) that concentrates at a minimum on any or all of the following.

1.?Retail procurement terms and links.
2.?Safety standards and definitions and links.
3.?Environmental certifications and definitions and links.
4.?Educational content for procurement and supply chain professionals.
5.?Procurement templates for commonly sourced products and services.

The nice thing about wikis is that the definitions are not static. Authorized users or members can add to definitions or create new definitions and terms as well as rate site content. In this way a body of work can grow from the collaborative contribution of all users and visitors and assist in to providing a reliable source of data for professionals in a specialized field.

Please visit the Safesourcing wiki regularly and add your comments, terms, definitions and suggestions. This section of the SafeSourcing website is free tool, and it is for your use as a retail procurement and supply chain professional, the most difficult job in retail.

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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Quality retail e-negotiation in a time of heightened Corporate Social Responsibility (CSR)

Friday, February 12th, 2010

Why do some companies succeed while others continue to implement program after program with no measurable benefit. First among these is the recognition that effective e-negotiation initiatives like any successful program requires strong support from the executive suite. In Retail this is important because the industry lags well behind other industries in utilization rates of e-negotiation tools. At a minimum in order to get off on the right foot, this means the involvement and sponsorship of your CEO, CFO, CLO or CPO is critical. Once you have this involvement directives can be issued. This will help in the required next step which is to identify savings targets across all corporate spend categories. Once these targets are identified and ranked, a category specific attack plan can be developed that best maximizes savings opportunities. It is important to note, that savings alone do not create a successful e-negotiation plan. What can not be sacrificed in the name of cost reduction is quality, which can include safety as well as Corporate Social Responsibility (CSR) goals including environmental support programs.
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A key challenge for any procurement team directed to implement e-negotiation tools across all of their unique spend categories, is to not over complicate the process into something that can?t be maintained. At a high level, the following 10 steps which are in no particular order offer some assurance that you are headed down the right path.

1.?Identify and rank all opportunities by spend
2.?Locate all contracts and identify termination language
3.?Document your safety and environmental goals
4.?Develop a total company strategy
5.?Source qualified suppliers
6.?Identified fragmented or maverick purchasing and aggregate
7.?Negotiate final terms and conditions
8.?Award of business
9.?Contract completion including review of evergreen and termination language
10.?Results Analysis

Most quality e-negotiation? solution providers have well developed and well thought out plans that will aid you in developing and implementing your best practices while maintaining quality and supporting your CSR initiatives.

We look forward to and appreciate your comments.

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What type of category savings can you expect from the use of E-RFX tools?

Tuesday, January 26th, 2010

There are probably at least a dozen websites that speak to category savings. Each discusses different numbers. The reason the answer depends on who you ask is that to begin with every company defines categories differently. A simple example might be something like bottled water. Is bottled water really a category or is it a sub category of beverages which is a sub category of grocery. The first question that requires an answer is?Are you looking for true category savings or are you looking for specific product savings?? A follow on question might be; Are you asking for actual realized savings or are you asking for savings that are reflected at the end of an E-RFX event? If you are asking for true realized savings, there are a multitude issues that need to be discussed.? If the successful supplier is your incumbent, then the savings may actually be closer to those viewed during the E-RFX event; however, reality indicates that a large number of incumbents do not end up with the low quote.? If the supplier is not the incumbent, there are actually quite a few elements that result in realized savings that have to be considered.? By in large, they can be included in a catchall phrase referred to as switching costs. To begin with the supplier that you plan to award your business to may not be an authorized vendor in your data base. As such, the IT department and or the finance department are needed to add them to your database. A new contract may also be required with a company that you have not done business with before which requires the involvement of your legal department and may, in fact, add delays to the process that requires you to order additional product from your existing supplier at potentially higher prices than awarded during the E-RFX event.? If products are being delivered to a distribution center, slotting requirements are needed and pick lists require updating in order for the product to be available when ordered by individual store locations.

Now, let?s go back to the actual E-RFX event for a minute. At the end of the E-RFX event when business was awarded were the savings the same as displayed during the event? Did the E-RFX event just provide you with high level savings made up of all low quotes; or, if business was awarded to multiple suppliers ,were savings calculated in that manner?? Were funds, if included in the winning bid, included in the savings and treated the same way that your company treats them from an accounting perspective? Is shipping included in the final price and was it included in the price from your previous contract?? Are pre-event historical savings a result of how companies awarded business; or are you being quoted a historical average of all low quotes run through a system even though business was not actually awarded that way and savings may not have been realized?

So, what can you expect for category savings in an E-RFX event? The answer is it depends. It is however critical that you make sure you are working with a provider that knows what they are talking about.

We look forward to and appreciate your comments.

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