Archive for the ‘E-supply Chain’ Category

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Rain, Wheat and Pasta!

Tuesday, June 28th, 2011

For weeks, North Dakota and Montana, the nation’s two largest producers of durum wheat have been pounded with heavy rain that will likely mean a drop of up to 47% of durum wheat production. 

Durum wheat, or “macaroni wheat”, is the hardest of all wheat types and that together with its high protein and gluten content make it the perfect wheat to be used in the manufacturing of pasta.

Due to the heavy rains farmers have been unable to get crops planted and even now they are out of time to plant crops in time to avoid the pre-winter frosts and will likely have a little more than half of the durum wheat production as normal, affecting prices of related products all over the world.
Durum wheat was up over 52% in May and the May U.S. pasta prices were the most expensive on record while other durum wheat producers like Canada saw prices jump 47% in May.  With fewer acres of wheat being produced the pasta prices will be affected accordingly.

Companies producing pasta products like Kraft with their Macaroni and Cheese and Campbells with products ranging from noodle-based soups to Spaghettios, have already announced increases in many of their products due to the lack of durum wheat production and subsequent higher durum wheat prices.

In product categories such as this one it is more important than ever to make sure that you are doing everything you can to keep the cost of goods controlled with tighter contracts containing index terminology and keeping the pricing you receive as competitive as possible. 

When the supply of product takes a huge decrease in relation to its demand, the opportunity for competitive pricing events becomes a little more difficult, as vendors will have plenty of places to sell their product. 

This may be a time to get more creative in other ways as far as length of contracts, other services or products you may agree to take on, or other considerations that will allow you to get competitive pricing on a high demand product category.  It is hard to predict what climatic conditions such as all of the spring rain will do  to agricultural products, but smart procurement professionals can learn to leverage other techniques in order to keep their costs for products affected by these conditions under control.

For more information on SafeSourcing and how we can assist your company with sourcing these goods and services, please contact a Customer Service Representative for more information.

We hope you have enjoyed last week’s  Five Part Series and look forward to and appreciate your comments.

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It’s 2011; do you know where your supplier data comes from?

Thursday, May 12th, 2011

Data models incorporated into effective e-procurement supplier data management programs should be extremely complex. This is why they are much more than a simple online directory. In fact, properly designed high quality supplier databases should be able to provide much of the data you might find in the opening pages of a detailed Request for Information or RFI.

A simple query of this data such as, “show me all companies within a 500 mile radius of the home office zip code that provide this defined set of products and that meet the following safety certifications”, should produce an accurate, verified list of supplier options that benefit the buyer and streamline the procurement process. Additional queries are typically used to summarize additional information related to defining the potential suppliers identified. Providing a list of attributes such as business description, sales volume, years in business, corporate officers, product performance ranges, etc. is the logical next step. The drill down through available information continues from here as the results provided become more refined with each query. As you can recognize, effective supplier data management involves the retrieval of valuable information from a data source that includes a substantial number of records and classifies the results according to the parameters defined.

Where does your data come from and how often do you choose a new source of supply provided by this data.

We look forward to and appreciate your comments.

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Why procurement and supply chain professionals need e-procurement tools more than ever.

Thursday, April 14th, 2011

Procurement and other supply chain professionals have developed and nurtured existing relationships within their incumbent suppliers for years and in some cases decades. Too often, this has led to incumbent suppliers becoming to comfortable. The feeling of entitlement begins to creep in and some suppliers feel as though their business will be renewed annually. Too often this is true.

This author has often said that the job of buyers, category managers, procurement executives and other supply chain knowledge workers is the most difficult job in all of retail and retail distribution. These professionals are literally swamped. Quality, safety, environmental issues coupled with the enormous amount of new product offerings is overwhelming. Just conducting the basic research required to identify potential new sources of supply, finding the correct contact information as well as determining if the company has the capability to meet your needs. All of this is before you even sample, price or test new offerings. No wonder it is so easy to just stay the current course. This however would be a mistake.

A general rule of thumb that this author has always ascribed to is if you are doing business with a current supplier for more than three years and are only negotiating with that supplier, your prices are probably too high. The question is how can you find out?

That is where e-procurement tools come in to play. I won’t advertise here, but if you were to Google e-procurement or reverse auctions etc. any number of companies will come up. Or if you were smart, you just click this link and have measurable savings in less than 30 days and often faster. Visit SafeSourcing.

We look forward to and appreciate your comments.

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So you want to source from foreign countries?

Thursday, March 24th, 2011

The idea is that you hope this will allow you to compete with larger companies that have been sourcing lower cost products from these regions for years. So how can you catch up in a much shorter period of time?

If you’re dead set on moving forward and adding this strategy to your tool kit, the first and maybe most important step is to make sure you are working with a quality e-procurement solutions provider that should already have relationships in place with agents, 3PL’s and other companies that can manage much of this process for you and at a fraction of the cost of doing it yourself.

The National Customs Brokers and Forwarders Association of America www.ncbfaa.org can put you in touch with customs brokers and freight forwarders who can help you import your goods. Many of them offer informational websites that contain what is required in order to find the right customs broker or freight forwarder for your shipments. Your e-procurement solutions provider can also help you manage this process with third party logistics providers or 3PL’s in areas like ocean bound freight and national and local delivery and distribution that you may not have any experience in.

Companies can also visit the following website www.aapa-ports.org  (American Association of Port Authorities) for assistance with the technical aspects of the logistics industry including directories of custom brokers and freight forwarders.

This process is fraught with risk, but for growing companies that plan properly and use the right resources, there is profit to be made.

We appreciate and look forward to your comments.

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Supply Chain Disruptions Come Without Warning

Tuesday, March 22nd, 2011

Most of my customers know that I recommend Sourcing Innovation very highly as a world class source of supply chain and sourcing information.

 The following post titled Supply Chain Disruptions Come Without Warning that focuses on the multitude of issues that can have an immediate impact on our supply chain. Enjoy.

Everyone is still talking about the recent Japan earthquake and the ramifications it will have on your supply chain for weeks, months, and years to come. No one is talking about the fact that, thanks to global warming, forest fire season is now upon as and that more than 30 wildfires raged through Oklahoma last weekend (Source) and that it only takes one fire to destroy a plant or distribution centre.

But it doesn’t take a natural disaster or a political uprising (such as the recent ones in Egypt and Libya) to instantly shut down your supply chain. A simple regulatory decision can have ripple effects through your supply chain. On March 10, the US Transport Security Administration (TSA) issued an emergency amendment to security measures that would take effect immediately that required freight forwarders with air cargo operations at non US locations to request additional information for all shipments on each master airwaybill (MAWB). As a result, Air Canada had to embargo all cargo flown to the US until further notice until they could be sure they were in compliance. (Source) Now, this embargo only lasted a day, but it could have lasted a week had the regulatory change been more onerous. But like a natural disaster, this disruption came without warning to shippers who relied on Air Canada to deliver their goods to the US.

That’s why you need contingency plans drawn up and ready to go, because you never know when you will need them.

We look forward to and appreciate your comments.

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Social Media for the Supply Chain?

Tuesday, March 15th, 2011

We don’t think so, because there already is one with a lot of members.

It’s called Sourcebook. Welcome to Sourcebook the procurement industries first professional social network. Enter your profile, choose an avatar, participate or lead threaded conversations with your peers.

We appreciate your comments.

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Trying to make sense of product traceability!

Monday, February 28th, 2011

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.

When we hear organizations like the FDA use the above term what they are referring to is the capability of bidirectional traceability or tracing products one step back one step forward. This means identifying the immediate supplier of the product and identifying the immediate recipient of the product, which is not the answer we need.
 
However the process also requires some level of common sense. I’m a man of faith, but blind faith really gets us no where when we are talking about food product traceability. GS1 has created a certification for traceability in cooperation with a number of organizations such as FMI, CIES and BASF.

So from a common sense perspective one would believe that all products we consume are safe, that all produce and grain products are traced back to the seed level. Unfortunately this is not the case.

Let’s just examine milk products or byproducts. In a post from two years ago, this author discussed what is happening in China where 13,000 babies were hospitalized and over 53,000 babies affected and that it could happen in North America. As recently as last week we heard that this was happening again in China with another protein look alike other than melamine. We are talking over two year’s folks.

So what best practices does your company deploy to protect your customers and theirs?

We look forward to and appreciate your comments.

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IT Sourcing and the Relationship Between Hardware and Software

Tuesday, February 22nd, 2011

We live in a world that is moving so technologically fast that it is difficult to be an expert on everything that is happening.? Because many of us have businesses and responsibilities that have nothing to do with all of this emerging technology, we rely on 3rd parties such as consultants and sometimes our own vendors to help make decisions that relate to these areas.

One of the places that I consistently see businesses make mistakes on when they take direction from an outside source is to buy the hardware they need to go with the software they purchased from the software vendor.? While it can be cost-effective in some cases, generally if a software company is selling hardware they don?t manufacture, you are either paying too much for it now, or you will down the road when it comes time to upgrade or repair that hardware.

Many times vendors will claim that a company must get the hardware from them because it was made specifically for them.? Frequently this is just not the case, and when it turns out to be the case, it is probably time to evaluate the vendor/company you are using for that software.

I ran across a blog the other day that actually dealt with this very topic.? In the blog the author was discussing how important it was for the customer that they select software that is completely independent of the hardware used in it.? It also went on to detail that the best software will integrate with several types of hardware giving the customer the choice to select the products that fit them the best when it comes to features, functionality and price. As the consumers you have the power to demand these types of options, make sure you select vendors that will give them to you. Blog

We look forward to and appreciate your comments.

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The experts say that the price of everything is going up! Can NAFTA offer a clue as to how to control this?

Wednesday, February 16th, 2011

As oil heads north of $100 per barrel again, the resulting higher fuel costs will again force global trade to focus on such as USA, Mexico and Canada versus the Asia Pacific region which is more than 7500 miles away.

Hopefully we learned our lesson less than three years ago? If so, we should all be aware of suppliers that will not require us to buy goods from so far away that transportation and logistics costs will kill our P&L.

Let?s remember that the North American Free Trade Agreement or NAFTA allows us to not just near shore many of our purchases but to localize them. This reduces transportation expenses. North America is made up of the United States, Canada and Mexico. Although NAFTA is primarily focused on agricultural products traded between North American Country?s it also represents one of one of the most successful trade agreements in history and has contributed? significantly to increases in agricultural trade and investment between the United States, Canada and Mexico. There are plenty of opportunities in the regional low cost manufacturing bases could have a related regional impact on keeping? costs lower on many types of retail products.

Finding tools that can aide our search in finding new sources of supply is imperative as demand rises and causes strain on commodities. Are you aware that a tool like this already exists which can provide data at a glance on 928 general merchandise suppliers located in Mexico, 1,585 Grocery Suppliers located in Canada, and 1,940 Pharmaceutical suppliers located in the United States. If not, please visit the SafeSourceIt Query Tool to learn more. Your P&L will thank you and so will your customers when you don?t raise their prices.

We look forward to and appreciate your comments.

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The U.S. Consumer Price Index rose 1.5% in December.

Tuesday, February 8th, 2011

For every commodity that rises there are also commodities that fall. For every company that raises their prices to their end user be it consumer or company, there are others that want your business bad enough to keep prices stable if not lower them. The issue is that companies have to be willing to put the work in if they want to keep prices down. Too many companies continue to operate in a business as usual manner. It?s pretty easy to spot when individuals or companies operate from the ?this is how I learned it and this is how I do it? point of view. Some clues are;

1.?They buy from the same suppliers over and over again.
2.?The do not have a? view of their contracts.
3.?They do not have a view of their performance against those contracts.
4.?They do not have a view of additional sources of supply.
5.?They do not put their products and services out to bid on a regular basis.
6.?They do not have basic specifications.

I was reading an article in U.S. TODAY last Friday February 4th titled Prices starting to creep higher By Paul Davidson. The sub title was Businesses hit point where they can?t absorb higher costs. The article sited several manufacturers and retailers that were raising their prices as a result of increased costs.

Here?s a promise. If you can?t figure out how to keep your costs down, call us at SafeSourcing because we can.? As a matter of fact call me personally 480-773-7524 or email me at ronsouthard@safesourcing.com.

We look forward to your comments.

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