Archive for the ‘E-procurement’ Category

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What differentiates SafeSourcing from other Solution Providers?

Friday, May 24th, 2013

Today?s post is by Ron Southard, CEO at Safesourcing.

I was speaking with a prospect today that has a great deal of experience in the procurement space, in particular the e-procurement space.? I was discussing the process that we use in order to source a category at a high level which follows six well defined steps.? Although we believe adhering to this process allows us to run high quality eRFX events, our prospect offered that these are pretty standard steps adhered to by most solutions providers in this space.? So what else makes you different was the follow up question. I could have bragged about our SafeSourceIt? Supplier Database or some of the unique features included in our SafeSourceIt? tool set. I might have event mentioned the? other members of the SafeSourcing? Procure to Pay product family like SafeSurvey?,? SafeDashboard?, SafeDocuments?,SafeContract?, SafePO? or SafeCatalog?. However that?s not the answer I gave. In fact I answered the question almost immediately. The answer was and is our People. Our people are simply the best.? Our team is made
up of project managers that come from a variety of industries, and they are supported by a Procurement Center of Expertise or CEO that have specific category expertise in Retail, Healthcare, Distribution, Logistics, Manufacturing, Energy, Agriculture and a variety of other areas necessary to insure that our strategies and execution are spot on.

At the end of the day, a lot of people can swim but not everyone is Michael Phelps. Lots of people can play basketball but not everyone is Michael Jordon. Millions of people play golf, but there is only one Tiger Woods. People make a difference. Or better yet people make the difference. I?ll put ours up against any solution provider. That?s why our customers and suppliers have had the following to say.

1.??No one else will do the things that you do to help us.?
2.??We would not be where we are with our Indirect Spend if it were not for SafeSourcing.?
3.??The entire experience was very well planned and the tool was easy to use.?
4.??SafeSourcing is a great business partner with terrific customer service and software.?

We?ll impress this customer as well.

If you?d like to learn more about us, please contact a Safesourcing customer services representative.

We look forward to and appreciate your comments

 

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HEY Procurement Senior Management; Are you thinking big enough?

Thursday, April 11th, 2013

Today’s post is by Ron Southard, CEO at SafeSourcing Inc.

I continue to think that most organizations and in fact most people don’t think big enough.  This includes CEO’s, CFO’s and many of the other C level professionals. However this is not limited to just executive leadership, it happens at every level of every organization. And the most troubling fact is that it happens with almost all people. So it is no surprise that it happens in procurement as well.

I have posted on a number of occasions the impact that I personally believe a procurement organization can have on the overall operating results of companies. For the most part this function within retail companies reports to a CFO, CPO or CLO, so the purview is at the highest level where it needs to be.

The following is an excerpt from a post on March 25th of 2011 titled Improving profitability 73% and why more companies don’t use reverse auctions and other e-procurement tools?

Assumptions:

1.  $150M Retail Company with industry average earnings of one percent or $1.5M.
2.  Cost of Goods (COGS) for this company is industry average of 70 percent or $105M.
3.  Company   agrees to source ten percent of their Cost of GOODS or roughly $11M.
4.  Company achieves below industry average savings of ten percent.
5.  Total savings generated  equals $1.1M
6.  Savings drops directly to the bottom or net profit.
7.  All other segments of the P&L perform to current fiscal plan
8.  All savings are recovered during the same fiscal year.
9.  Net profitability improves from $1.5M to $2.6M or a 73%.

Now let’s be realistic, all of the savings are not going to happen in the current fiscal year. With that said, we are only sourcing 10% of the total COGS. We achieved below industry average savings. No unforeseen costs that were not planned for eroded earnings. There will also be switching costs that may a erode some of the savings, but in today’s world they are not that significant.

If the above example is true, why are procurement departments not thinking big enough in order to chase this opportunity? If the company is publicly traded I would argue that there is not much else if anything that could drive similar operating results including acquisitions.

If you look back over many years, today’s bottom line of this industry is eerily similar. All the format changes, product mix changes, new technologies, specialization etc. have not materially improved the bottom line.

An argument from senior management might go like this! “We cannot maintain these savings year over year and our investors and other stakeholders are looking for sustainable results”. “As such, if we in fact deliver these results in the first year we will be penalized in subsequent years if we don’t deliver similar results”.

My rebuttal would be that in our example we only sourced 10% of the COGS. We did not touch expense. We did not put tools in place that would protect savings like a contract management solution. We did not strategize as to how to treat the categories being sourced so that we could take the category to market year after year in order to further compress or maintain cost.

This of course begs the question of how we might do just that. The first step is to think bigger, to believe that this is possible and then assign the resources to make it happen.

Maybe if JCPENNY had tried to execute this type of strategy their former CEO would still be there and all of his company stock would be worth a lot more than it is today.

Check back tomorrow and we’ll discuss how to think through a category strategically so that savings generated don’t erode over time regardless of the market conditions.

If you’d like to accomplish big results that stick, contact SafeSourcing.

We look forward to and appreciate your comments.

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Preparing for Digital Signage!

Monday, March 4th, 2013

Today?s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing. Mark asks

With the decreased cost and increased value of digital signage, companies are beginning to look more closely at these solutions for their business.? Whether they are simply building upon their brand or doing that in conjunction with offering public information, advertising, or enhancing the customer experience in the business or store location, many companies have already developed some strategies and allocated budgets for this category for 2013.? Today we are going to be touching on some of those areas that you will need to armed with in developing how you gather the information to make your final decisions.

The features ? Buying or renting; internal or external; bundled or itemized; content management or no content management.? These are all great examples of the choices you will have to make when determining your final solution.? How much of the features you know will determine the number of vendors you look at and the depth (i.e. Request For Information as opposed to Request For Proposal) of the information you begin collecting.? Vendors can tell exactly where you are in the decision making process by the complexity of the information request and scope you provide them.? The more you lock down the request, the more likely the responses will be returned in a format to efficiently evaluate.

The responses ? The responses you receive from the Request For Information or Proposal will be tied directly to the details and structure you provide the vendors.? If you know that you have a specific set of criteria that needs to be met in order to be considered then fashion your request in a manner that asks the vendors to structure the information about their companies and solutions in the format you want.? If you know that you want a reputable company who has experience in your industry and has performed projects for companies your size then make sure you have requested that information from them and not focused on questions that will have no bearing in your decision making process.? If there are specific features and service levels you expect, make sure you collect the capability to meet those expectations in a way that will be easy to evaluate at the end.

The pricing ? While the price is not the most important piece of any project it is a piece that needs to be collected in order to evaluate where every supplier falls.? If someone is providing you unmatched value add services it is critical that you understand where the supplier falls from a price perspective.?? Suppliers vary, and some can vary widely from each other.? Requesting item level detail at this stage is good even if you plan to bundle them later for discounting reasons.? Collect everything including add-on services you may or may not need later.? If there are start-up costs, training, annual maintenance costs, or content creation service fees, make sure you know what each vendor charges and if they can provide the services you need.

Digital Signage is an up-and-coming area for businesses but knowing what you want will be critical to evaluating the potential partners in the most complete way.?? For more information about how we can assist you in this process, 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.

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It happened again yesterday! Really it did!

Wednesday, October 24th, 2012

How many times does someone ask you what does eProcurement mean? It happened again yesterday at a $250M retailer. Now the person asking the question was an administrative support team member so we can cut her some slack. Or should we? She was a member of the finance department! I really do think that all associates should understand what their functional area of the company does, or at least be able to adlib based on general knowledge.

So what is procurement or what is e-procurement and who in a company is impacted by it?

It really is a curious question; pretty much along the same line as what is spend management, strategic sourcing etc. My answer however may create more questions, but all of the following functional areas within your company are involved or impacted by procurement or e-procurement?

1. Finance
2. Purchasing
3. Logistics
4. Manufacturing
5. Warehousing
6. Materials Management
7. Inventory Management
8. Supply Chain
9. Distribution
10. Transportation

There are certainly many more areas of a company that have procurement or  e-procurement connections that require collaboration and potentially aggregation, but the above list probably gives you a pretty good idea of the breadth of involvement within any company. In fact, I can’t think of a job that is not impacted by procurement. Maybe I should just say we save every department in your company money every day.

If you’d like to know more about e (hint-internet) Procurement, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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No matter what our current government leaders say, the economy is still terrible.

Tuesday, October 23rd, 2012

This author still can not believe how many companies, buyers and category managers do not advocate for the use of modern e-procurement tools.

The use of these tools preserves and creates jobs as well as generating many other benefits that your business is not receiving today.

The lack of use can really only be one or two reasons at this point. First is that you or your procurement team just go to work and do your job and don’t really care one way or the other. Second is that you do not stay up to date in your trade and have very little influence within your company. If this is not true, why are you still writing your own RFI’s and RFP’s for a small group of suppliers?

Maybe now there is a final chance to step up and try or recommend using e-procurement tools including reverse auctions? Who knows, maybe you’ll save enough money to save someone’s job, hire someone new or insure that your job will still be there when next years planning is complete.

Although they may not impact your job directly, the reduction of cost of goods, expenses and preservation of capital are all immediately achievable if you’ll just take a look.

A customer recently told me that they would not be adding any new jobs to their procurement department next year. In fact they have already more than doubled the size of their departments staff to drive  down costs through the use  of the SafeSourceIt™ family of procure to pay tools. This customer went on to say that others in other departments will in fact be able to keep their jobs as a result of the work we’ve done together. So in the worst economy since many of us have been alive, this customer has added jobs, protected jobs, saved significant money, improved quality with the use of SafeSourcing products. Another benefit is that we also continue to add jobs to support our customers during this same time.
In addition to all of the benefits listed above, here are some additional quotes from a CEO and his team that watched their first reverse auction.
1. “This was pretty simple to do”
2. “If we hired someone we could do these ourselves with you guys”
3. “This is fun”
4. “You mean the reports are already available”
5. “I love the sports concept”
6. “It was easy to follow the marquis and what was going on from one screen”
7. “The multiple color schemes were great”
8. “I can’t believe how fast you guys set this up”
9. “We saved that much money and only have to pay what we discussed”
10. “Can we do another one today”
11. “I may get a promotion out of this”
12. “I love that calculator at the end of the bid process”
13. “I like all of the supplier data that was accessible during the auction”
14. “Now I know how the big guys get the pricing they do”

It’s too bad our current political combatants for the highest office in our land can not be this detailed during their debates.

Why not join others that have come a little late to the party. You can still benefit because today’s tools are easier to use, more interactive, maintain your attention during an auction, integrate gaming technology to keep it fun and are lower cost than their predecessors. If you happen to have already been doing this for years, why not find an easier way or do it less expensively.

If you would like to have fun, save money and do it quickly, please visit us at www.safesoucing.com.

We look forward to and appreciate your comments.

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What’s important to you in the development of your negotiation strategy Part II of II?

Wednesday, October 17th, 2012

During Mondays post we discussed that before you can negotiate effectively you will have to go back to the drawing board and develop a procurement strategy. Once that’s in place negotiation best practices can follow.

Here’s some of what you might consider. Remember this is not how we will negotiate (tactics) this is what do you want for a result set that supports your overall procurement strategy?

Result Thoughts:  What are you looking for from your negotiations?

1.  Alternative or additional sources of supply?
2.  Better quality products!
3.  Lower costs!
4.  Where possible products that support a reduction in your carbon foot print!
5.  Products and Services that are safe for your associates and consumers!
6.  Clear and concise contracts!
7.  Elimination of quick deals!
8.  A win-win result (define) for your company and your supply partner!
9.  Open unbiased treatment of all suppliers during the process!
10. A collaborative process that eliminates stove pipes and supports logical aggregation without maverick buying!
11. Internal subject matter experts (SME) going forward!
12. Standardized specifications and Terms and Conditions!

There is certainly any number of items that could be added to this list, but it should get you started. As a result you should have a procurement strategy and a negotiation strategy in place. The next step would be the tactics.

If you’d like more information please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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Nothing is ever too easy!

Tuesday, October 16th, 2012

Today’s post is by Mark Davis; Sr. Vice President of Operations and CTO at SafeSourcing. Mark asks

We recently ran a very basic event for some office supplies for one of our new customers.  During the review of the event which saved over 25% they admitted they were skeptical of what we could achieve because they had been working with their vendor for so long and felt that the spend was too basic to get much more of anything else.  They were, of course, ecstatic about the results.

While the eProcurement process should never be solely about price, the fact is that in this arena, just like life, no one wants to pay more for the products and services that they really want.

For someone new to the process of negotiating with several vendors instantly in a forum that allows them to know where they stand, let’s take a look at some of the categories that companies may think they have taken as far as they can go but that likely still have a lot of savings and value left in them.

Shipping/Office Supplies – Many companies feel like they have improved the deals in these categories as far as they can.  Because of the shrinking list of National players, long-term relationships and the view that many of these items have become commodities, all contribute to the incorrect perception that they are not good candidates to work with your eProcurement company on.  The reality is that many companies can still receive 15-20% in additional savings, rebates and add-on services than what they have today, even from their incumbent.

Printing Services – Printers are typically some of the longest standing relationships that a company has with a vendor.  Due to this fact the business aspects of these relationships rarely get closely reviewed as long as there are not major price swings.  The reality is that technological improvements in printing have dramatically lowered most printers’ costs leaving a great opportunity to explore for companies looking to understand all of their expenses.

POS Supplies – The retail Point of Sale industry has exploded over the past couple of decades with Value Added Resellers (VARs) coming from everywhere to provide you the products you need to run the front-end of the retail business.  As manufacturers step back and let the VARs handle the customer portion of the business, VARs have become more aggressive in the extra services they can offer even if they can’t always change their pricing.  Point of sale supplies are great areas to discuss with your eProcurement partner.

For more information on how SafeSourcing can help you with these of any of your other spend categories, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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Do you think you understand the elements of an effective e-Procurement Program?

Friday, August 17th, 2012

Critical components for the buyer include but certainly are not limited to the following:

1.   A comprehensive database that is developed maintained and continually updated by the e-procurement service provider.
2.   Scope and accuracy of information that goes well beyond that of a simple on-line directory.
     a. Global and local sources of supply
     b. Detailed Vendor Information (capabilities, financials, history, safety  and environment information)
     c. Historical procurement details
     d. Industry Alerts
3.   A sophisticated software application program that provides extensive functionality:
     a. Allows for quick and easy access to information.
     b. Provides detailed information based on the buyer’s defined parameters  and queries, similar to that found in the opening pages of a comprehensive RFI.
     c. Allows for the easy retrieval of information that includes a substantial number of records.
     d. Classifies the results according to the parameters defined
     e. Communicates the information clearly in an uncluttered format
     f. Directs the application to carry out the required e-procurement action steps.
     g. Results in a summary presentation to the buyer that provides the best price scenarios that maintain the required level of quality and service.
4.   Software alone is insufficient. Those responsible for purchasing/spending need training, guidance and support.

The above definition is a part of a document that was developed by one of our customers after they had used our tools and experienced our services in order to define the process to their investors.

If you’d like to learn more about how you can use these tools to reduce costs and much more, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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Are you paying to much for your Retail E-Procurement solution?

Wednesday, July 18th, 2012

When you review using retail e-procurement tools you may not always get what you pay for. In fact you are probably paying way too much.

There are too many companies that have been at this for a long time whose pricing formula is way too high in the retail marketplace based on what they provide.

I was speaking to a large retailer recently that had an unlimited use tool in place behind their fire wall from a very large player in the e-procurement space. The recently converted to this companies cloud based SaaS offering without a significant reduction in cost. I asked what type of savings they have been able to achieve and how many additional associates they had assigned to write RFI’s and RFP’s as well as handle events, supplier communication, hosting support, training, report generation, specification building, data collection etc. The answer was a lot.

After we had discussed at least 20 different categories, it occurred to the both of us that the savings from our cloud based SaaS events were at least a third higher than the savings from the use of the unlimited tool in either configuration.  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. Obviously staff additions have to be calculated into the ongoing cost. Supplier research is limited, the number of participants is fewer, training is inadequate and the result is lower savings and sometimes overall quality. Older companies also do things in old ways. There are proprietary cost frameworks to the SafeSourcing solution that will also drive higher savings. I won’t share that information here.

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. An example of this is the cost of IT infrastructure in an open source world. As such the 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 over time. 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 associate host?
2. What are you doing to automate your solution in order to take out cost?
3. Will we pay the same in year two as we paid in year one for identical events?
4. What percentage of your associates work virtual?
5. Is your cost higher because of your investment in office space?
6. Is your cost higher because of your headcount required to run events?
7. What are your average savings for events over $100K?
8. What are your average savings for events under $100K?
9. Can you even run events under $100K?

There are certainly more questions but you get the idea. Be careful out there. If you want the lowest cost and the best service in the industry give SafeSourcing a call.

We look forward to and appreciate your comments.

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Are you running enough RFI’s? Are you running any?

Friday, June 15th, 2012

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

So a Request for Information (RFI) is primarily used to gather information to help companies make a decision on what steps to take next. RFI’s are therefore most often the first stage in the procurement process particularly with new sources of supply. They are used in combination with: Requests for 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.

If you’d like to learn more, please contact a SafeSourcing customer services associate.

We look forward to and appreciate  your comments.

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