Archive for the ‘E-supply Chain’ Category

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We still need to question CHINA.

Tuesday, July 13th, 2010

There was a point in time that sourcing products from China insured a low cost for your product. Then the price of oil went through the roof and melting down containers returned more than trying ship product in them. Even with oil down somewhat from that time, costs are increasing in China as plant safety and quality and worker safety and quality improves. However, there are still probably bargains to be had, but caution should be your guiding word.

A great example of this is a recent find by Chinese officials of tons of milk products tainted with Melamine. If this sounds familiar, it should. This was an issue in 2008 on which this author posted. The scandal actually killed 6 babies and made hundreds of thousands sick at the time. China actually executed two individuals for producing or selling toxic milk. So here we are in 2010 and the problem has still not been totally corrected and we are talking about products that are only sold in China. It would seem that a country would be more concerned about the quality and safety of products made by the Chinese for the Chinese consumer.

As such, companies need to complete the due diligence necessary to insure that the products you are planning to source include detailed raw materials descriptions, formulas and certifications that are mandated globally to insure product quality, safety and environmental impact standards.

Ask your solutions provider what their vetting procedures are for including suppliers in their database?

We look forward to and appreciate your comments.

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In order to manage your retail supply chain, you first need to know what it is or isn’t.

Friday, June 25th, 2010

Managing a retail supply chain depending on how involved you want to become in the process includes your products and how they get to you, your consumer and the service you provide for the product post sale. This also includes all data about the product in a procure to pay process such as purchase order information, contract information and delivery coordination and status along the way. All of the above requires management of the related financial data such as payment terms and schedules and other financial data. A good place to start is to break this information down into manageable pieces and see how many people are involved in the process internally and externally and how they collaborate with each other if at all. To the extent that you can not connect the lines may include.

As a retailer, you are an obvious part of the consumers supply chain and in some cases also a supplier to other retailers. The network depends on the product but can include yourself,  raw material providers, manufacturers, wholesalers, distributors, third party logistic companies or 3PL’s, and other types of transportation companies. Managing the collaboration of your supply chain is what will ultimately differentiate you from your competition. It’s up to you.

As your procurement solution provider how they might tie all of these disparate organizations together for you.

We look forward to and appreciate your comments.

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Retailers do you have a sustainable e-negotiation program?

Tuesday, June 1st, 2010

If you have a limited source of new suppliers, including new vendors every time you run a new e-negotiation event will be incredibly difficult. Resultantly your process by default ends up as just a new way to continue to award business to the same suppliers over and over again. This process may yield some productivity increases initially, but over time meaningful price compression will be difficult if not impossible.

Solution providers suggest that somewhere between six and ten suppliers are required to drive optimum e-negotiation results, these data suggest that attaining sustainable results from the e-negotiation process has a direct correlation to the number of new suppliers available and willing to compete for your business.

By example let?s suppose you can only find six suppliers to invite to an e-negotiation event. Your customer services team using their best sales skills can probably convince most if not all of these suppliers to participate. This may be fine the first time around. Although this author believes there are better sustainability strategy even given this scenario.

Suppliers that finished first or second or incumbents that were displaced may agree to participate again in the future, but with a smaller number of suppliers and no new sources it will make the rerun of this auction less successful.

Lacking a robust source of new suppliers, and in the above case we only had a total of six available how can companies create a sustainable process.

The lack of a robust global supplier database limits future price compression at a minimum. It may also have a negative impact on quality, process and service. Particularly if history suggests a minimum of six to ten suppliers in order to drive optimum results…

Make sure to ask your e-negotiation solutions provider how many suppliers they have in their supplier database and if you can have regular access, it will determine your future success.

We appreciate and look forward to your comments

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Where can you find retail 3PL?s? Can they help with e-procurement?

Monday, May 17th, 2010

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 SPL?s within retail that may in fact service a single retailer. 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 and also may all be in play at an individual retailer. 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? retailer regardless of size that determines what products they buy and accept delivery of for 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.

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Where can you find retail 3PL’s? Can they help with e-procurement?

Monday, May 17th, 2010

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 SPL’s within retail that may in fact service a single retailer. 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 and also may all be in play at an individual retailer. 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  retailer regardless of size that determines what products they buy and accept delivery of for 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.

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Was the recent e.coli settlement a supply chain problem?

Friday, May 14th, 2010

We have posted many time on the need for a traceable supply chain and the need for better due diligence throughout the procurement process including plant, farm and other source inspections. Keeping this data in a format that is searchable in the supplier vetting process is paramount to mitigating risk to consumers, suppliers, manufacturers and other areas of the supply chain is just to great without it.

Cargill Inc. which is a great agribusiness announced yesterday that they were responsible for the life shattering injuries suffered by Stephanie Smith by eating a contaminated burger in 2007. The parties agreed to settle the law suite and the terms were not disclosed beyond that Cargill agreed to cover her care for the rest of her life.

The debate on food safety continues and as it does drives the need for compliance at all levels of the supply chain from the farm to the table and the capability of tracing finished goods from the consumer to the source in order to. Without these tools issues like this will continue to happen.

We look forward to and appreciate your comments.

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Supplier management may be your most important issue during a time of economic recovery.

Wednesday, May 12th, 2010

In the Monday May 10th issue of USA TODAY the Money Section carried an article titled “Suppliers can?t meet demand” by Paul Davidson. The article went on to discuss that the economic rebound has been so robust that manufacturers are struggling so much with demand that it is causing huge bottlenecks in the supply chain. The article also went on to discuss that companies are reluctant to hire to meet the demand because they are not totally convinced that the current rebound will last.

The retail supply chain is something that this author has posted on dozens of times from the importance of a robust retail supply chain to how to manage your relationships with current and new sources of supply. A significant part of that is to have secondary and tertiary sources of supply that you can rely upon. By example, during the most recent H1N1 flu outbreak, Safesourcing was able to provide multiple sources of surgical mask suppliers to one of our customers that had not been able to find them elsewhere for sales in their stores. They did not know of these suppliers. They are also a very large company. Although this particular issue was caused by panic buying, it is still a supply and demand problem and correlates very well to the USA TODAY article. The message here is, don?t wait until a time of panic or increased prosperity to work and plan for spikes in the supply chain that may cause your customers pain.

Following are five Safesourcing blog posts from 2008 that should provide some good base reading on this subject.

1.?Is critical thinking in supplier selection a key to quality auctions? You bet!
2.?Supplier Open Communication. A key to high quality e-procurement events.
3.?Supplier-selection-this-may-be-the-most-important-decision-you-make
4.?What is retail supply base management?
5.?What is the benefit of a large retail supplier database and how do companies use the data to support growing their spend with reverse auctions?

The SafeSourceIt? Retail Supplier Database contains over 380,000 vetted suppliers.

We look forward to and appreciate your comments

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Safesourcing Inc. completes a successful year two.

Friday, May 7th, 2010

It hardly seems possible that we launched our company two years ago. At the time there were indicators for those paying attention of trouble in the global economy but know one had any idea just how bad it was going to get. In hindsight what a time to launch a company. When customers and business partners asked me why, my response was if you are doing what you believe in and the results you promise are true, then there really is no bad time to launch a business.

Our promise has been the same from day one, to reduce the cost of goods and services regardless of a company?s size or the size of the category being sourced. And, while doing so improve quality, safety and environmental focus. Today, two years later our customers will attest to the fact that we have held true to that promise.

Following is a short list of accomplishments that we are very proud of.

1.?Over 700 educational blog posts relative to e-procurement issues of importance.
2.?Over 1500 useful procurement related wiki terms and definitions.
3.?Added an average of more than one new customer for every month in business.
4.?Grew our supplier data base to greater than 380,000 retail suppliers
5.?Sourced 100?s of categories from commodities to finished goods and services.
6.?Sourced categories as small as $5K with savings > 30%.
7.?Sourced categories as high as $80M.
8.?Never held an e-negotiation event that did not result in savings.
9.?Conducted every process in e-procurement including RFI, RFP and RFQ.
10.?Installed our product in Asia in a multi lingual implementation.
11.?Averaged over 24% savings over two years.
12.?Developed a unique process for sourcing small spends for the retail mid market.
13.?Grew our database to over a terabyte of data.
14.?Helped companies source with environmental and social consciousness
15.?Today released SafeContract? a fully featured hosted Contract Management System.

To our customers thank you for your support. We endeavor to earn your business every day. To our business partners thank you for your guidance during a tough economic period. To the retail industry our goal is to be your best vehicle for reducing costs and improving earnings with an increased focus on corporate social responsibility.

Thank You.

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As a follow up yesterdays post, the next question was; what is the benefit of a large retail supplier database?

Thursday, May 6th, 2010

Retailers should have continuing success when running prior e-procurement events over again, one area of commonality that has historically made this difficult is a lack of new suppliers.

There is a proper way to insure the sustainability of your reverse auctions going forward.? Since you have already conducted or should have conducted your detailed discovery and analysis a robust retail supplier database will allow you to do the following.

1.?Conduct a detailed supplier discovery
a.?Rank suppliers
i.?Size
ii.?Experience
iii.?References
iv.?Environmental certifications
v.?Safety Certifications
2.?Develop a three year supplier game plan
a.?Develop a three year time line? for all categories
b.?Identify suppliers for each event over the three years
c.?Develop a three year rotation schedule for the selected suppliers.
3.?Role Play internally? each year for a test category
a.?Ask the following questions
i.?Who will you invite and why
ii.?Keep in mind the unique benefits of distributors and manufacturers
iii.?Discuss award the business strategies
iv.?Review alternate scenarios
v.?Review impact on non awarded suppliers
vi.?Determine which suppliers will be invited back
vii.?Determine what new suppliers from your database search will be invited next year

If you only have the same list you originally used to conduct your historical events, don?t expect savings the 2nd and 3rd time around if market conditions are similar. Or, you could call Safesourcing.

We look forward to and appreciate your comments.

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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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