Archive for the ‘E-supply Chain’ Category

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A Retailer partner asked me today how we built our retail supplier database SafeSourceIt?.

Wednesday, May 5th, 2010

The first part of the answer is that you have to be a student of the database industry to understand what may be available to you without having to do a lot of work. At the end of the day a database is a list albeit a sophisticated list with lots of tables and joins and other database features that allow for the combination and use of data.

As an example, when looking to build a retail supplier database there is certain information you require in order for the data to be believable. UDDI (Yu-di) is an open industry initiative, sponsored by the Organization for the Advancement of Structured Information Standards (OASIS), enabling businesses to publish service listings and discover each other and define how the services or software applications interact over the Internet. These service listings can take a number of different forms such as business registrations, for UDDI they are in the following formats.

1.?White Pages ? address, contact, and known identifiers;
2.?Yellow Pages ? industrial categorizations based on standard taxonomies;
3.?Green Pages ? technical information about services exposed by the business.

Combining these data which is readily available from a variety of sources provides a great start. From there the challenge to add other attributes that are important to you such as certifications, sic codes, detailed company descriptions, sales figures, products carried, experience, ratings etc.

This author has always believed that reinventing the wheel is? a misguided way to accomplish development initiatives and with all of the open source available on the market today and the cost of IT talent as high as it is we have to explore these alternatives to core development if time to market is a critical success factor.

So there you have it, my thinking and process for building our database. The next question is how we keep it fresh an updated. And that my friends are a trade secret.

We look forward to and appreciate your comments.

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Hey retailers; how green are your suppliers? You can not manage something that you do not measure.

Tuesday, April 27th, 2010

When we think about safety and eco standards relative to our supplier partners, I honestly believe that retailers say quietly to themselves; how are we supposed to monitor this with everything else we have to deal with in procuring products?

This issue becomes more complex when you consider that data may be required from your organization relative to your existing suppliers, data from your supplier as to their own interpretation of their adherence and practice and finally other external data that neither organization may have.

Reflecting on safety, the question that retailers should ask all suppliers old or new 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 others? Another area to question should be regarding USDA and FDA inspection history.

Although Green Initiatives fall into the social consciousness area of a company, there are a variety of questions that can be asked in this area as well such as Green Seal, Eco-logo and Green Star certifications and participation in other partnerships that are environmentally focused.

A source that may make it easier for retailers would be to rely on their e-procurement solutions providers for this data if the provider has it included in their portfolio such as a supplier database. E-procurement specification templates can act as a form of scorecard for existing suppliers and potential news sources of supply if they are used as a repository for database queries relative to the above subject matter. This can become a type of automated RFI process which can save retailers a lot effort 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.

Can your e-procurement solutions provider provide these types of data on demand as a normal byproduct of your standard e-procurement process?

We look forward to and appreciate your comments.

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Do suppliers benefit from participation in e-negotiation events such as reverse auctions?

Friday, April 23rd, 2010

A discussion followed relative to incumbent suppliers view and how long the retailer had been doing business with them vs. the opinion of 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 Inc. places a great deal of value in our SafeSourceIt? Retail Supplier Database of over 380,000 retail suppliers located throughout the world. Additionally we also 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 about the soliciting 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. Best practice 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 same day reporting of results of the specific e-procurement event a supplier participates in as well as a detailed supplier feedback questionnaire report.

7. Significant time savings associated with new business development that becomes more and more costly based on fluctuating markets..

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.

It sure does not sound like a bad deal to this author as long as it is explained correctly and supported by the retailer as their way of automating their procurement process and record keeping.

We look forward to and appreciate your comments.

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Supplier scoring may provide Key Performance Indicators to the future.

Wednesday, April 21st, 2010

Quality supplier selection is one of the most important areas of focus in order to insure quality and sustainability in the e-negotiation process.

Having a large database of available suppliers to drive sustainable results in e-procurement events such as reverse auctions is a critical success factor. Maybe even more critical is making sure that the suppliers once selected for participation in an event are of the highest quality, professional, responsive and have your best interests at heart. There are several areas in the early strategy stages of a reverse auction which if properly monitored can be leading key performance indicators as to future performance. These KPI?s are, the initial supplier response and supplier training schedule adherence. If suppliers are not interested enough during these early stages, that may be an indicator of future performance in other more critical areas such as on time delivery, back order management and documentation.

A simple process for measuring these KPI?s would be to measure the number of days between the project start date or initial supplier contact and the event start date, where the supplier has been sent an invitation but has not responded either positively or negatively. Maintaining an active status of response dates could be scored based on the number of days it takes invited suppliers to respond. Obviously the longer it takes to respond the lower KPI score the supplier would receive. Another possible KPI measurement or filter once the invitation has been accepted would be the number of days between the date accepted and the event start date, where the supplier has accepted an invitation but has not completed their training.

These are not intended to be punitive measures. In most cases suppliers will perform beyond your expectations. Sustainability and quality require measurements regardless of how simple.

As always we appreciate and look forward to your comments.

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A procurement lesson! The CPSC issues Guidance on Repairing Homes with Problem Drywall from China.

Monday, April 5th, 2010

Last year I posted on offshore sourcing and the related problem of homes built with drywall from China. Now the CPSC has issued guidance as to what consumers should do. You can bet that this is not the end of this story. The first question I would be asking is who my contractor bought the drywall from in this country.

Inez Tenenbaum of the Consumer Product Safety Commission told the Associated Press, ?We want families to tear it all out and rebuild the interior of their homes, and they need to start this to get their lives started all over again.?

Below are some procurement recommendations:

1. Verify the name and address of the supplier or suppliers and their manufacturing addresses, phone numbers, email addresses and fax number. Conduct a cross-reference search of this information and the company name against other supply chain sites

2. Only deal with a company that has a specific company address and other professionally listed contact information.

3. Place multiple calls to the supplier at their provided contact numbers over a period of time and inquire about their company and the primary contacts. Ask for a management breakdown and to speak with at least two members of senior management.

4. Ask for references in the USA or another developed country that you will be doing business with.

5. Inform the supplier that you will be visiting their location for an office/factory tour. There are a number of third parties that can conduct a background checks on your behalf. These companies also have reference reports available. They are well worth the small associated cost.

6. Never agree to any up front payment without a sample or test of the products to be procured. These pre-shipment inspections are a must for any new supplier. You want to ensure that the goods are of adequate quality before placing or accepting any new products.

We look forward to and appreciate your comments.

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Part II of II. Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?

Friday, April 2nd, 2010

Continuing from Part I of II Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?

The following scenario offers one example as to how the careful management of your suppliers and a little strategic thinking can drive the type of results you desire as well as a long term sustainable process.

Suppliers will almost always not be of the same size. This does not mean however that they are not of the same quality. Smaller vendors that have accepted your invitation will most likely bid early during your event and then drop out after the early rounds. These suppliers will most likely not agree to participate in the future as they consider their chances of winning the business unrealistic. This too is manageable however back to our first premise. Suppliers that finish first or second or your incumbent that may have been replaced will in most cases agree to participate again, but? a lack of new competition will make the auctions less successful.

Thinking more strategically, an apparently logical question might be… If we only have six suppliers available how many should we invite to participate the first time and is more always better over the long run? Should we invite them all? Every company will answer this question differently. When considering the future, do we want successful early events or would we like a continual process improvement that drives continuous savings?

There are several possible solutions to consider. One scenario might be to only invite four participants to your first event. This will create a competitive environment for your reverse auction. After all it only takes two suppliers both interested in your business to drive quality results. Now back to our story. Let?s make the assumption that in twelve months or in the next purchasing cycle when you wish to repeat this auction that the two largest suppliers from the previous event agree to return. You could now invite supplier?s number five and six that were not included in the original auction. You have now created a competitive auction for the second year or purchasing cycle. An additional thought might be to not invite all of the largest suppliers to your first reverse auction, in order to manage the quality of your suppliers for future auctions. This type of critical thinking supports continual process improvement in e-procurement implementations.

We look forward to and appreciate your comments.

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Here are Ten Steps that procurement professionals can use to insure safer and more eco-friendly procurement.

Monday, March 29th, 2010

1. Be pro-active in driving product safety within your company and also supporting eco-standards in the procurement process that support your companies CSR initiatives.
2.?Pay it forward with all of your trading partners by sharing what you are doing, how you are doing it and asking them what they are doing to support yours or similar initiatives.
3.?Educate your employees and trading partners about common safety standards and guidelines such as the SQF Certificate www.sqfi.com? or ISO 22000.
4.?Educate your employees and trading partners about common eco-standards such as Green- Energy National Standard www.green-e.org or EcoLogo www.ecologo.org.?
5.?Point associates and trading partners to free educational websites such as www.safesourcing.com to use their free SafeSourcing Wiki or the Sourcebook professional social network for procurement professionals.
6.?Only use trading partners that follow your lead.
7.?Train your team to understand and use all available tools that insure supply chain safety such the free daily safety in sourcing blog at www.safesourcing.com? or the low cost SafeSourceIt Supplier Database and Reverse Auction Tools.
8.?Impose a system of measures and controls to monitor performance against clearly defined goals.
9.?Start at the top and engage all levels of your company.
10.?Measure your company?s progress with Triple Bottom Line Accounting or TBL.

We look forward to and appreciate you comments.

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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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Why do we hear that reverse auctions are not as successful the 2nd time around?

Friday, March 19th, 2010

As we discuss this further, one area of commonality they frequently discuss is a lack of new suppliers. Another is the price being too high for the same event that has already been built and will result in lower savings the 2nd and 3rd time around.

A simple focal point to begin a discussion of this issue is the lack of availability or the related benefit of a large retail specific supplier database. However unless we discuss how? retail companies should use this type of data when available is just as important if there is a true desire in growing their percent of spend with e-negotiation tools?

There is a proper way to insure the sustainability of your e-negotiation events going forward. Following these guidelines will also encourage senior management to consider placing more spend under the control of e-negotiation tools and specifically reverse auction tools. Armed with a robust retail supplier database and related tools:

1.?Conduct a detailed category discovery
???? a.?Learn all there is to learn about the way a company conducts their?? business.
???? b.?Walk distribution centers and warehouses
???? c.?Walk an array of stores and understand all formats of the enterprise.
???? d.?Compile a list of all corporate categories
2.?Rank categories by
???? a.?Total spend
???? b.?Importance
???? c.?Sourcing frequency
???? d.?Quality objectives
???? e.?Look for aggregation opportunities.
3.?Conduct supplier discovery
???? a.?Rank suppliers
??????? i.?Size
??????? ii.?Experience
??????? iii.?References
??????? iv.?Environmental certifications
??????? v.?Safety Certifications
4.?With? the above in hand; develop a three year game plan
???? a.?Identify suppliers for each event over the three years
???? b.?Develop savings targets by category
???? c.?Develop a three year time line for all categories
5.?Role Play internally? the first year for a test category
???? a.?Ask the following questions
???????? i.?How will you award the business
???????? ii.?Review alternate scenarios
???????? iii.?Review savings by scenario
???????? iv.?Determine which suppliers will be invited back
???????? v.?Determine what new suppliers from your database search will be invited to participate next year

Now ask your e-procurement solutions provider to demonstrate their capability in this area

We look forward to and appreciate your comments.

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Retailers sourcing strategic plans sometimes have too many guidelines and to little action

Friday, March 12th, 2010

From a retail perspective buyers and category managers have a lot to do. Try to get some of there time and watch their phone ring of the hook if you don?t believe me. So in the retail vertical let?s start implementing specific short term tactics that can drive some immediate results…

A great example of the above might be augmenting the manual process that many retail sourcing professionals use today to find new sources of supply interested in bidding for their your rather than continuing to live with the same small, known group of suppliers that you have used for years. Historically this has been a very time consuming practice that results in few if any new sources of supply. This represents a great opportunity to deploy a tactic that can have an immediate impact for an organization without the need to implement an entire new sourcing strategy.

There is a specific process to follow that will encourage new sources of supply to want to bid for your companies business beyond just calling or sending them an invitation. Simply having your buyer assigned the task of picking up the phone and calling new sources of supply will not result in new suppliers agreeing to bid for your business. There are specific objections to overcome and questions to answer that require a specific skill set.? This is a perfect opportunity for Software as a Service implementations of supplier research. Skilled providers in this area can provide companies with as many as a half dozen or more willing new sources of supply in as little as thirty minutes? that may in fact reside within a companies existing zip code or area code. In most cases you will never have heard of these companies and they will have solid reputations and good references.

Sourcing tactics can be isolated procurement related actions or events that take advantage of opportunities offered by the gaps within the strategic plan such as lack of new sources of supply mentioned above.? So our tactic here would be to find additional sources of supply that you can invite to compete for your company?s business across a variety of categories. The fact is that additional sources of supply competing for a companies business will result in compressed pricing and often better quality products and better terms. There are also an optimal number of suppliers that will encourage optimal results.

We appreciate and look forward to your comments.

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