Archive for the ‘E-procurement Tools’ Category

Evaluating eProcurement Solutions – Part 5 of 5: Service

Wednesday, June 7th, 2023

 

Today’s post is our SafeSourcing Archive!

Strategic sourcing companies each have their own unique offering whether that is based on a price model, category focus, supplier database or some other defining trait, but the overall goal is to help their customers source products and services easier, smarter and with an end result that creates more value than the customer could achieve on its own. Over the past four days we will be looking at some of features and characteristics you should be looking at when evaluating a new or existing sourcing partner. Today we will close out the series by focusing on the one trait that should be examined closer than any of the other five; Service.

Having great data, tools, reporting, or technology will only be as good as the team helping you to run new projects and your partner should be as strong, if not stronger in their customer service offering than anything else they do. Today we will look at a few of the specific areas you should be looking at when evaluating your current or a new strategic sourcing partner.

Experienced – Sourcing experience across dozens of category is not something that every strategic sourcing has. There is a reason why some sourcing partners focus on travel, energy, and logistics only for their customers. Experience in sourcing events from both a consumer, sourcing partner, and supplier side is a big key to understanding the perspective of all the parties involved. This experience helps with the management of the suppliers as well as that of the customer to keep the projects moving and details and communication delivered. Well rounded strategic sourcing companies will have had sourcing experience in IT related products and services, software, warehouse materials and equipment, construction related goods and services, temporary services, For Resell goods, transportation and logistics, commodity goods, and normal indirect spend items to name a few.
Supplier management – The most difficult task in running a sourcing project, outside of collecting the data necessary to run the event, is managing the suppliers during the process. Management begins as soon as suppliers are contacted to participate in the event. Your strategic sourcing partner should be able to assist you with fielding all questions from suppliers, speaking to suppliers on your behalf to get them engaged in the process, handling objections they may have about the process, and training them on how to follow the process and tools with live support. Once a sourcing project begins, your strategic sourcing partner should manage the process and all communications so that your team can be allowed to focus on the important things they will do later. Support should continue through the entire process all the way until the project completes and suppliers have submitted everything requested.

Post event support – In some cases once the sourcing event is completed, handling and communication of the suppliers selected for award goes back to the customer. In many other cases, the sourcing event (RFI, RFP, RFQ) is just the beginning of the evaluation process. Many times samples will need to coordinated, presentations scheduled with the selection committee, scorecards and evaluation materials developed and distributed to the internal decision makers as well as agendas to the suppliers. These are all ways that good strategic sourcing partners stay involved and take the load of the sourcing process off of the customer. Many times the suppliers are used to the customer service member they have been dealing with and having that same person take them all the way through the process is a big advantage to the process going smoothly.

Many things should be looked at when evaluating a strategic sourcing partner and depending on the structure of your department, some characteristics will be more important than others but all should be considered at some point. For more information on how SafeSourcing can assist your team with sourcing projects or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Evaluating eProcurement Solutions – Part 4 of 5: Tools

Tuesday, June 6th, 2023

 

Today’s post is from our SafeSourcing Archives

This week we have been looking at the different characteristics strategic sourcing companies and solutions have that should be evaluated when making a decision as to what is most important to your company. At the beginning of the week we looked at technology, data and reporting capabilities and the different aspects of each and the importance they could play in sourcing projects. Today we will look at the different types of tools strategic sourcing companies can sometimes offer that can make your job as a procurement professional event easier.

Information Gathering – In Tuesday’s blog we discussed the importance of a good supplier database and template library foundation to beginning a sourcing project. This addresses the external data but does not always help explain the internal spend data and specifications especially when the category is a new one to your company. Being able to send electronic surveys to resources within your company in a way that requires very little effort can save a procurement team hours of time in legwork but, more importantly, can ensure that the picture of your spend you are painting for potential suppliers is accurate. Being able to understand who in your company is buying something, what they are buying, how much they historically purchased, how much they expect to purchase and whether they like the current product and supplier are all details which will shape a very successful event and can be easily collected with an online survey tool.

RFx – The concept of moving from Request to Information to Request for Proposal to Request for Quote/Tender is not a foreign one in the procurement industry and virtually every strategic sourcing company offers some type of tool or service to support this flow. Where the differentiator begins to come in is how seamless the flow from one step to another is. Do suppliers need to learn multiple tools? Is it online? Are details from step automatically moved over into the preparation and documentation of the next step? Each step of the RFx process is unique but has common threads that tie each together. Good RFx solutions will tie these threads together in a way that reduces the time it takes run from beginning to end and the amount of repetitive tasks required of the suppliers with each step.

Result Management – The information is gathered, the project is complete and the results are better than you could have expected. The problem is that without the tools to put those results into effect, they become worthless. Being able to manage the results of your sourcing events is considered by many to be more important than the results themselves and can take several different forms. Top begin with is a catalog/ordering/purchase order system that will allow your company to place the orders they need at the new pricing you have negotiated. Implementing a catalog system can also prevent rogue spending from unapproved suppliers based on past history. Another useful solution is a contract management tool to track your contracts and important details and dates, ensuring that the contract will not roll over into a situation that costs you even more money than you saved. Managing both aspects of a new deal are critical to maintaining your project’s success.

Having covered the technical, data and tool aspects of strategic sourcing partners and tools, tomorrow we will conclude with the most important piece of the puzzle which is the service your strategic sourcing partners can offer you that can save your team hundreds of hours and provide experience where you may have none. For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Evaluating eProcurement Solutions – Part 3 of 5: Reporting and Audit Trails

Friday, June 2nd, 2023

 

Today’s post is our  SafeSourcing Archives.

Strategic sourcing companies each have their own unique offering whether that is based on a price model, category focus, supplier database or some other defining trait, but the overall goal is to help their customers source products and services easier, smarter and with an end result that creates more value than the customer could achieve on its own. This week we have looked at the importance of data and technology when making a decision on a strategic sourcing partner and today we will be looking at the reporting and audit trail capabilities and how they fit into the mix of successful events. The best supplier research and technology will not be useful without the view of results in a way to make meaningful decisions.

Strong base reports – Every eSourcing solution has a standard set of reporting that they provide their customers when an event is complete. There are certain aspects of this report package which should be present in order to review the most basic details of an outcome. Supplier activity should be captured in a way that timestamps every quote entered in the system and who entered it. This is also part of the audit package described below. Any online notes should be reported on as well as the supplemental documentation many suppliers provide. The final outcome in a detailed and summary view should be provided as well as copies of all of the documents that were involved in the sourcing process. Basic award scenarios and supplier performance during the process should also be included in a standard spreadsheet or executive summary style report.

Capable of additional analysis – As important as the base set of reports you get from event are, the capability of your strategic sourcing partner to be able to provide additional analysis is just as important. There will be times when special circumstances surrounding the event need to be considered, or the way an incumbent factors into an award decision must be reviewed. Your sourcing partner’s ability to provide scorecards, provide additional award scenario details or break down situations where a primary and secondary supplier need to be awarded by location are all realistic and important ways that they can help save your team dozens of hours and allow them to do the other things they need to do for your company.

Audit Packages – There are usually not many times when a company will need an audit trail of what happened during a sourcing project but typically when they do it is of critical importance. So when evaluating technologies or partners make sure they can provide a package that includes copies of all documents and electronic versions of communications that went to any potential supplier. They should be able to provide time stamped documents of all notes and quotes entered into the system as well as who entered them for the supplier. All verbal communication and questions submitted by a supplier to the customer should be captured in a central place that either be accessed by the customer or by the administrators for reporting purposes. This package should be easily available and contain the trail of all communication with the suppliers.

Tomorrow we will look at some of the sourcing tools that are available and being used by many companies. For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to and appreciate your comments.

Evaluating eProcurement Solutions – Part 2 of 5: Data Foundation

Thursday, June 1st, 2023

 

Today’s post is our SafeSourcing Blog Archives

We have begun looking at some of features and characteristics that are important when evaluating a new or existing sourcing partner this week beginning yesterday with technology. While not all characteristics we will cover will carry the same weight from company to company, they are all important factors for consideration when selecting a strategic sourcing partner or solution. In today’s segment we will be looking at the data that supplies the backbone for the projects you work on with your sourcing partner.

Global coverage – While there are obvious advantages from working with National, regional and local providers, it is important to be able to look at other global sources of supply. Having the options gives leverage to be able to make decisions as it relates to primary and secondary sources of goods and services. This is especially true for global companies who need to source goods and services local to their international offices. Working with a supplier that has a global supplier database is important to be able to develop a view that looks at all options of origin.

Feeding itself – Data by itself is useful, but data that gets smarter and fresher be leveraging the fruits of its labor is the key to running a better sourcing organization. For most companies the limited view they have of the supplier community goes only as far as their own experience or research. When you work with a third party strategic sourcing partner and/or tool, you are getting the benefit of experience that company has had with those suppliers, products and services. If a supplier has been great to work with, you should be getting the advantage of knowing that from your sourcing partner or tool. Likewise, if a supplier has not done well with delivering after an award of business, access to that information should be available as well. As thousands of sourcing projects complete each year the data you are looking at should be leveraging that information as much as possible.

More than the basics – Along the same lines as “feeding itself” your data should be more than just the basics about who a supplier is, where they are from and how big they are. Strong supplier databases should provide the level of detail on par with a mini-RFI before a project ever begins. This data should include who their biggest competitors are, what new products or releases they have completed in the last 2 years, who they are doing business with and where their core strengths lie. This should also apply to categories and having access to template libraries with starting documents for RFIs, RFPs, and online bidding specifications.

Data is still the key to succeeding in the business world. The more information you can get to help make informed decisions before projects begin, the quicker your projects and results can be put into effect and realized by your financial department. Tomorrow we will take a look at the points to consider from an audit perspective and how your eSourcing solution should be helping to provide you the trail of communication during a sourcing event. For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Retailers it’s really pretty simple; just look at your Gross Profit.

Thursday, October 20th, 2022

 

Todays post is by Ron Southard, CEO at SafeSourcing Inc.

How many times do we hear all of the reasons for a retail company’s performance being off? It’s the cost of doing business over seas, the economy, the cost of fuel, heath care costs etc. How often do we hear, that we are doing better than the same period a year ago or we are exceeding plan. All of that is nice stuff, but the bottom line is your bottom line. If you top line sales are up and your net profit is up it does not necessarily mean that you have all of your procurement issues under control.

Let’s start with some numbers you might want to look at. Don’t just assume that profit is a good thing because profit could be caused by an imbalance in your category margins.

Here are a few good questions to ask yourself.
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1. How do your cost of goods compare to the rest of the industry for a chain of your size?
2. How do your operating expenses compare to other chains of your size?
3. How do your gross margins compare to other chains your size?

All of the above can be good indicators of overall company health and certainly procurement health. If your cost of goods is higher than industry averages for a chain of your size, why is that? Is there a specific category that is causing the issue? Do you know how to isolate the problem and then eliminate it?

If you don’t have or know this information, you should ask your e-procurement provider if they have it, because they should if they want to model an improvement plan for you.

As an example, here is an example of a previous years U.S. based convenience store chains targets for non fuel.

1. Cost of Goods Sold should run somewhere around 71% or 72%
2. Gross Profit should run around 28% to 30%
3. Operating Expenses should run around 26% to 29%
4. Net Operating Income around 2%

While these numbers are certainly off based on Pandemic issues, product  or services mix, you can build a case model on them to compare before and after for you company. That is if you have a tool like SafeBIM™ from SafeSourcing. BIM stands for Business Impact Model.

If you are way out of balance with these numbers and want to understand how to rebalance them, contact a  SafeSourcing Customer Services Associate.

 

The importance of RFx in the Procurement Process – Part I of II

Wednesday, March 2nd, 2022

 

As businesses continue to use reverse auction tools more frequently to reduce their costs and introduce competitive pricing from existing and new suppliers, it is inevitable that the events will also begin to increase in complexity.  With complexity comes the need to understand the offerings of the invited companies before price is ever brought up.  You need to know that the companies you may be dealing with have experience and can handle your business.

To ensure that the right companies are involved in competing for your business many times it is necessary to run a Request for Proposal or Information (RFP or RFI) to gather information about the suppliers before a pricing event is run.  Some of the important things to keep in mind when doing this are:

• Be Specific! – Make sure the RFP/RFI is specific about the types of information requested.  Leaving the document open-ended will result in several completely different responses that will be difficult to compare to each other.

• It’s ok to run an RFx for something you have already purchased.  Many times, especially in technical product purchasing, the landscape can change so fast from contract to contract that running an RFx is not only a possibly but is probably the wisest thing to do especially if the spend is large and/or the contract is longer than a year.

There will be more tips in my next post but if you would like more information about the SafeSourcing Rfx tools and professional services, please contact a Customer Service Representative today.

We look forward to and appreciate your comments.

Do you know how a price index plays into e-procurement best practices?

Wednesday, January 5th, 2022

 

Todays post is a repost by Ron Southard, CEO at SafeSourcing Inc.

Todays post is a little long in the tooth, but still relevant for sourcing professionals.

Being overly simplistic an index is a system used to make finding causal 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.

If you’d like more information, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

Here are Five Basic Tips for Writing a Strategic Online Survey!

Monday, April 26th, 2021

 

Todays post is from our SafeSourcing Archives

Creating an effective, quality written Online Survey that produces the detailed information you require from respondents can be a challenge. In this post, we’ll review 5 quick tips for writing a Strategic Online Survey.

  1. Create a naming convention for the survey and write a brief summarizing introduction. A Survey name and a brief introduction are great ways to give your respondents some detailed background and a frame of reference.
  2. Write a summarizing, brief survey. Begin with an outline of details as to what is important to know for the project. Formulate a question only when the answer will provide data you can use and need.
  3. Think ahead as to how the analysis of the information will look, as in what your end game will look like. This should impact how you format your questions. Statistical reporting may not be able to be performed if your questions to not adhere to the results framework you have pre planned.
  4. Attempt to use closed-ended questions. Limit the number of open-ended questions as these provide and opportunity to the respondent to get off track. Respondents usually have a better understanding of closed-ended questions because they are more straightforward and offer responses they can choose from. An excessive number of open-ended questions can frustrate the respondent and affect the quality of the answers they may provide.
  5. Craft a well-written pertinent subject line for the invitation email you plan on sending with the survey in order to capture your respondents’ attention.

Although these five simple steps are enough to get you started in the right direction reaching out to professionals like SafeSourcing about their SafeSurvey™ tool for additional guidance will guarantee the results you are looking for. A well-written online survey has much higher completion rates and is an effective method for gathering disparate data from differing sources in a format that us usable.

If you’d like to learn more about the SafeSourcing  SafeSurvey™ please contact a SafeSourcing Project Manager.

We look forward to and appreciate your comments

What is a Third Party Logistics Provider or 3PL and how do retailers use them?

Tuesday, April 13th, 2021

 

If you are having difficulty with your current distribution model, compress your spend using eProcurement tools and then source a reputable 3PL.

According to Wikipedia a third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or “third party” logistics services to companies for part, or sometimes all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

As such, there are a number of types of 3PL’s within retail that may in fact service a single retailer as well as smaller buying groups of small retailers. All might fall under this umbrella including wholesalers such as SUPERVALU, collective buyers such as TOPCO or even a retailer collaborative that may in fact just coordinate aggregated purchases and in fact pick other 3PL’s to provide warehousing, picking and packing and distribution. Each of these providers may in fact provide some or all of the same services. The later or collaborative of multiple retailers might even be looked at as a non asset based 3PL.

In all categories of third party logistics providers however it is still the end user or retailer regardless of size that determines what products they buy and accept delivery of in their stores. As such, it should be no more difficult for smaller retailers to run e-negotiation events? There will need to be discussions as to costs that are purely associated with the warehousing, slotting, picking and distribution of products by a 3PL once an e-negotiation event has been planned, but these items should be easy to break out for bid or add to the final pricing prior to award of business as a flat fee. This is a practice that all 3PL’s should be familiar with already. Retailers should anticipate that their existing 3PL depending on services offered would rather not have you conduct these types of events as it negatively impacts their volumes with manufacturers and other providers and as such their company’s margins.

Understanding your options and the flexibility that 3PL’s can provide may actually make it easier for all retailers to use e-negotiation tools to impact their bottom line.

We look forward to and appreciate your comments.

Why should retailers be concerned with evergreen contracts?

Friday, April 2nd, 2021

 

Todays post is a rework by Ron Southard, CEO at SafeSourcing Inc.

This author has been asked on numerous occasions why I am so concerned with evergreen contracts. First, let’s discuss what an evergreen contract is. A simple definition is that it is a contract or an agreement between two parties (you and your supplier) that is automatically renewed or rolled over after each completion period which is typically a year, until canceled by the either party.

This does not sound so bad at first glance, particularly if the current terms of the contract such as price, performance, quality, service or service level are all being met and are to your advantage when they automatically renew. However this is not normally the case, particularly with contracts that are driven by commodity markets such as oil, chemicals, resins, pulp, steel and many others. In addition you can bet if the advantage is in your favor in the initial contract that your current supplier will notify you in writing within the specified period which is usually 60 days that they are going to let the contract expire or want to renegotiate.

In large parts of the retail trade, there are very few sophisticated contract management solutions deployed, the cost to the industry annually runs in the billions of dollars. This is because the original contract normally has language that includes price increases above the current contract when it auto renews and the auto renewal is normally for a year if the supplier is not notified in writing prior to the anniversary date. Once renewed you are stuck. This happens because most buyers or executives think they will remember in time to notify your supplier when in fact this almost never is the case. As most retail companies have thousands of contracts in the place the amount of data requiring review is unmanageable.

The worst case I ever reviewed was a contract written nine years earlier that had renewed every year. The customer was actually paying the uplifted prices and substantially more than a much smaller company was paying for the same type of service at significantly lower volumes. This did not even include newer technology benefits.

Contract management solutions that offer alert subsystems based on contracts Meta data are the best solution to this problem and typically provide near immediate ROI based solely on the cost avoidance associated with evergreen contracts.

SafeSourcing offers an easy to use solution called SafeContract™ to help our customers with this problem. Ask your solution provider how they can help you. Or contact SafeSourcing.