Archive for the ‘E-procurement’ Category

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This author loves all kinds of Salami. Is it traceable?

Monday, January 25th, 2010

Rose said, ?toughie (their nick name for me) get out of the Salami?. I had this bad habit of reaching in the refrigerator (possible contamination) and taking 5 or 6 slices that had been cut in half for pizza and stuffing them in my mouth all at once. The Salami was either Genoa or Volpi or some other top quality brand. I did not even know where it came from and I?m sure that neither Rose nor Margaret (both from Italy) the proprietors could trace it either.

Today I live in Arizona. We have a few good Italian eateries here but not a very large Italian community. I was reading the Arizona Republic today when an article jumped out at me titled R.I. Company recalls salami. This article was attributed to the Associated Press. Being as Rhode Island is very close to Boston and also has a great Italian section called Federal Hill and the subject was salami I read on. As you are aware, my most recent post was also on product safety and traceability, titled Procurement Professionals can aid in product safety adherence.

The article went on to say that a Rhode Island meat company had recalled 1.24 million pounds of pepper coated salami after month?s long investigation of a salmonella outbreak that sickened 184 people in 38 states by comparing shopping receipts of those who got sick. This certainly supports one forward and one back accountability from a retailer?s perspective but this author is not sure that the intention of the rule is to have to chase down receipts which is extremely time consuming, costly and a strategy that provides the possibility of an extremely limited sample.

The definition of traceability according to Wikipedia refers to the completeness of the information about every step in a process chain. Traceability is the ability to verify the history, location, or application of an item by means of documented recorded identification. Doing this systematically is where the retail industry needs to be.

This author has discussed this in numerous previous posts. One of my favorites is from September of 2008 titled Traceability-also-requires-sensibility-if-you-want-a-safe-supply-chain.? So what can you do as a retailer? Begin by asking your e-procurement solutions provider how they address traceability with their tools.

We look forward to and appreciate your comments.

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What consitutes a complex e-negotiation event or reverse auction.

Thursday, January 14th, 2010

Definitions are often tied to the concept of a set of parts or elements which have relationships among them differentiated from relationships with other elements outside the relational regime.

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as generic drugs in the retail space or raw materials used to manufacture components that require special handling, shipping and standards adherence.

This author would suggest that any event including multiple line items each with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity…

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support? complex events, your supplier needs to have an understanding of the specific market place and practices and processes in place that allow these activities t bring complex events to market? in the shortest period of time. Generally this should occur within less than two weeks from event notification to event completion.

In a two part post from October of 2008, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1.?Supply Chain complexity.
2.?Rate of change in the global supply chain.
3.?Long term inherited supplier relationships.
4.?Lack of retail procurement staff.
5.?Lack of time.
6.?Multiple sources of supply.
7.?Limited view of new sources of supply.
8.?Confusion as to who?s the customer and who?s the supplier

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.

We appreciate and look forward to your comments.

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Creating a sustainable e-procurement or reverse auction program is based on more than just savings.

Tuesday, January 12th, 2010

Primary success in e-procurement programs such as reverse auctions of which there are many types is in many cases measured by cost reductions. That?s because within a budget period they drop directly to a company?s bottom line plus or minus some switching costs. On more than one occasion I have heard; ?did we hit a home run?? Less emphasis seems to be placed on cost avoidance in an up market and creating a sustainable process. This often results in less spend be assigned to these very effective tools then should be.

In order to ensure that results are sustainable; the strategies for all targeted e-procurement categories require consistent deployment across all departments throughout the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier selection, and a solid strategy that is well understood by all buyers and category managers for negotiation and the award of business process.

Supplier selection and management is a critical stage that requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone within the procurement or supply chain organization could negatively impact the potential results of an e-procurement event. Historical long term relationships that drive behind the scene comments like; ?don?t worry we?ll be fine? to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your program. Not to mention the potential legal implications.

If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tool?s that are offered in the form of? Software as a Service or cloud computing, ask your provider why?

We appreciate and look forward to your comments

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Why is the use of reverse auctions by retailers up?

Monday, January 11th, 2010

From mid tier one retailers on down the use of reverse auctions has been very limited since their inception at the end of the 1990?s. The reason is because there was very little focus on the retail segment and the tools were also very difficult to use and expensive. If retailer?s think a tool is so complicated that they can not do it themselves, they won?t use them.

We are seeing a small uptick in e-negotiation tools in retail and this author believes that some of the following quotes from the folks watching a reverse auction last week may be the reason why.

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?

So what does this all mean for retail procurement professionals? It means that 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.

This all adds up to a focus on retailers entire spend both indirect and direct as well resulting in increased utilization by middle market and large retailers alike.

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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Happy New Year 2010 from SafeSourcing

Friday, January 1st, 2010

History shows that in selected categories, buyers have saved as much as 30-40% with SafeSourcing?s e-procurement services. Studies indicate that a 5% saving in procurement costs translates into an effective increase in sales growth of 30%.

Our SafeSourceIt? North American Retail supplier database of over 350,000 suppliers contains more than? twenty-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-Fed.

SafeSourcing is committed to proactively supporting safety and environmental standards in the global supply chain. We donate 10% of our net profits to retail education and green and safety initiatives as mandated by our customers.

To simplify your procurement process and reduce your procurement costs throughout 2010, contact SafeSourcing! We look forward to assisting you!

Thank you for all of your support in 2009. We look forward to and appreciate your comments.

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Some closing thoughts on e- procurement goals and resulting resolutions for the New Year.

Wednesday, December 30th, 2009

As an example, let?s take an individual look at our? #10? procurement thought ?Evaluation of low cost technology solutions?

Each and every year companies spend millions of dollars developing new business plans for the upcoming year. Basically these are the company?s New Year resolutions. Most of the fourth quarter of every year is focused on this endeavor. As we discussed in our first post of this series this means there is no excuse for not having your e-procurement goals written down.

Because of new open source software applications you should no longer have to shell out a ton of money for license fees. Your current e-procurement solution provider if using the most current technologies should not have to charge you an arm and a leg for using their application. In fact, your prices should be continuing to scale down. The need to pay increases in license fees or use fees today to have software installed behind your firewall or in a hosted environment should be compressing dramatically as a result of lower development costs for newer versions of applications based on the use of inexpensive or in some cases free open source tools. The resulting applications are then being offered in the form of Software as a Service or Cloud Computing where you use only what you need and pay accordingly.

Companies can begin to seek lower fees by simply asking their present solutions provider; why their costs have not dropped. The size of your providers IT organization adds to your providers overhead and as a result to the fees you are paying for using their tools. These organizations should be shrinking. If a current application has its roots in the late 1990?s or early in this decade you are paying more to use it as a result of the embedded cost to develop it. More current applications that use a variety of freeware tools make it possible? for today?s developers to do? multiples of the work? a single developer could accomplish as little as five to ten years ago.

Next generation applications should also include a level of intelligence that was not available five to ten years ago. Whether that is simple language versus HTML or the use of intelligent agents, the result should be easier to use applications resulting in shorter cycle times and not increases in new service offerings to compensate for reduced development costs.?
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What this all leads to for the e-procurement knowledge worker is lower embedded development costs, lower ongoing support costs and more flexibility relative to customization requests going forward. It also means that it is easier to change providers because there is relatively no technology cost required and ramp up time is almost immediate. This in and of itself will hold your current solution provider accountable to the service levels you require.

Have this discussion with your e-procurement solution provider; it may save you thousands or dollars.

We appreciate and look forward to your comments

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More thoughts on e- procurement goals and resulting resolutions for the New Year.

Tuesday, December 29th, 2009

Companies with as few as three stores and companies with thousands of stores are often looking for the same types of issues. The process and the results are very similar regardless of scale and as such require the same careful focus to drive those results. If we were to white board what should be included in our goal or resolution setting it would certainly include many of the following areas.

1.?Lower costs
2.?Consistent and improved quality
3.?Products that guarantee safety for your consumers
4.?Smooth transition to new supplier relationships
5.?Quality product specifications
6.?Unlimited new sources of supply
7.?Well thought out internal and external collaboration and aggregation
8.?Support for environmentally focused products
9.?Support of CSR Initiatives.
10.?Evaluation of low cost technology solutions
11.?Joining and collaborating with a share group
12.?Review of Incumbent suppliers
13.?E-Sourcing or e-procurement training.
14.?Existing procurement tool evaluation
15.?Existing contracts evaluation
16.?Spend evaluation
17.?Alternative geography sourcing
18.?Sourcing and Supply Chain Knowledge transfer
19.?For resale sustainable practices review
20.?Perfecting The expense category
As your organization develops their list similar to the one above, prioritization and elimination sessions will lead you to a best few focus from which you can refine your e-procurement goals and or resolutions for 2010. Please use the above guidelines as a source for your thinking. Simple goals written down are the most achievable. During the balance of this week, we will focus on many of the above five areas in more detail.

We appreciate and look forward to your comments

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E-sourcing and e-procurement Auld Lang Syne.

Monday, December 28th, 2009

?“Auld Lang Syne? is a Scottish poem written by Robert Burns in 1788 and then set to the tune of a traditional folk song. Roughly translated auld lang syne literally means old long since but can be paraphrased into statements such as long long ago, the olden days, for old time?s sake or the good old days.

However, pining to much for the old days can have a negative effect on your planning for the days, weeks and years ahead. I?m sure as this author has, many of you have heard sourcing individuals say things such as ?we?ve always done things this way? or ?that won?t work for us?. In today?s world with all of its economic and global pressures, this is particularly dangerous way of thinking for sourcing professionals. The good news is that we still have some time before the New Year and we should use it reflectively to build our resolutions for the upcoming year that should then drive our sourcing business goals.

Although a number of strategies can be used for this thinking for both individuals and groups. The most important thing is to capture the data in its most raw form and then refine it from there. This may occur in group open discussions and white board sessions with a moderator or in private free thinking session where you personally write down all of your own random thoughts. The important thing is to write them down. Statistically people who write down their goals have over an 80% higher success rate of achieving them. Research tells us that of those people that do make New Years Resolutions only 75% make it past the first week of the year and the numbers drop dramatically from there.

We will be discussing our thoughts on e-sourcing and e-procurement resolutions for the New Year over the next few days in order to provide our readers with a base from which to draw for their own refinement.

We look forward to and appreciate your comments.

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New Moon Rising!

Wednesday, November 18th, 2009

The above can be applied to just about any subject. In this case we are talking about e-procurement, strategic sourcing, e-negotiation, reverse auctions and e-RFX which are all terms with similar meanings. You can visit Google, Yahoo, Bing, Wikipedia and other internet search sources and you will be taken to a link to a provider?s home page or to a web page with a definition of these key words. Some definitions have been updated; some solutions offer more current technology at a lower price. However the bottom line is still the same. If you assign a good amount of your spend to these types of tools the following is a partial list of benefits you should enjoy.

1. You will compress your pricing
2. You will improve your earnings
3. You will find new sources of supply
4. You likely will improve terms and conditions
5. You will likely improve quality
6. Your procurement team will be more productive
7. You will have process improvement
8. You will directly support safer products
9. You will directly support the environment
10. You will hold suppliers accountable to the line item detail.

Historically these tools have not been highly used by retailers other than the largest of corporations and even in those cases large amounts of spend have not been assigned to their use. These tools can be used for small spends, large spends and just about any spend in between. Since there is always a new moon on the horizon, there is always an opportunity for newly enlightened companies to take advantage. We are about to end the first decade of the twenty first century. Isn?t time to look at things in a new way?

We look forward to and appreciate your comments.

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Retailers; who monitors your supplier?s safety performance?

Tuesday, November 17th, 2009

This is an even more complex issue when you consider that in order to do so data is required from your organization relative to the historical performance of your existing suppliers, data from the supplier as to their own assessment of their historical performance and finally other types external data that neither you or your incumbent may have.

When we talk safety, the question that retailers need to ask their suppliers is pretty simple. What certifications do you carry relative to food safety such as Safe Quality Foods (SQF), Global Food Safety Initiative (GFSI), American Humane Certified and many more? Additionally you should question all suppliers and manufacturers relative to their USDA and FDA inspection history.

Although Green Initiatives fall into the area of the social consciousness of a company, there are a variety of questions that should also be asked in this area as well such as what are your own companies green product initiatives such as Green Seal, Eco-logo and Green Star certifications and participations and how do your existing and new suppliers support or plan to support these same initiatives.

As retailers consider their alternatives in these areas, it may be easier for them to rely on their e-procurement solution providers for this data if the provider has it included in their supplier database. Pre-populated e-procurement templates can also act as a form of scorecard for existing suppliers and potential news sources of supply. This is actually a type of automated RFI process which can save retailers a lot of work and time when trying to find additional sources of supply or when trying to drive cost down with existing suppliers. These data may also help to protect retailers from harmful litigation when products end up not being as safe as promised.

If your existing e-procurement provider can not provide these types of data on demand as a normal byproduct of your standard e-procurement process at no additional cost, you should consider changing providers?

As always, we look forward to and appreciate your comments.

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