Archive for the ‘Procurement Outsourcing’ Category

Where is the best place for retailers to spend their effort to improve profitability?

Friday, October 27th, 2023


Today’s post is an oldie but goody by Ronald D. Southard, CEO at SafeSourcing

The answer to this posts byline is of course all three!

Obviously, all retail companies would like to focus on all three areas and there are even sub sections of these top line areas that we could spell out as needing attention. The challenge is where to deploy already taxed resources?

It does not require an accountant to figure this out. If we assume that COGS or cost of goods and services is about 75% of top line revenue that would result in a simple gross margin of 25%. Based on a number of industries reports we are also safe using a shrink number of 3% of top line revenue.

This author is aware that there are a a few companies with shrink below 1% and cost of goods below 75% which means there are also companies with gross margin better than 25%. The obvious question is are these companies that solution providers want to target for profit improvement sales? Probably not.

So, let’s look at an example of shrink improvement with data analysis tools and process improvement tools versus cost compression with SaaS e-procurement tools. Let’s assume we have a company that does top line sales of $1B. Using a shrink number of 3% shrink would be $30M annually. If you were able to reduce shrink by a third in one year, profit improvement would be $10M. If this were a supermarket company with a 1% bottom line or $10M, improvement could be as much as 100%.

Now let’s take a look at reduction in cost. If we assume the same company has COGS of 75% or $750M and that we were only going to address 20% of that number or $150 and only reduce those costs by 20% which is slightly above industry averages the net profit improvement would be $30M or 300% improvement in year over year net profit. If we were only able to achieve 10% savings which is well below industry averages, net profit would improve by 150%.

I’ll leave the gross margin example for you to figure out. In the above case it is clear that attacking COGS has an impact on the bottom line of up to 3 to 1 versus addressing shrink with your already taxed resources.

If you are interested in an immediate impact to your bottom line, please contact a SafeSourcing Customer Services associate today.

We look forward to and appreciate your comments.

HEY! Leadership Teams!

Tuesday, July 16th, 2019


Todays post is from Ron Southard CEO at SafeSourcing Inc.

Let’s also assume that you want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time, like the next budget period; and want a sustainable process moving forward. Are you comfortable with your teams answer?

A number of issues you might consider are whether you have the requisite headcount, specifications, strategy, research skills as well as knowledge of new sources of supply to accomplish these lofty goals yourself.

Once you have settled on the fact that your existing team cannot achieve the above goal, the next question should be; what type of event services can an e-procurement solutions provider offer to help us if we can’t this ourselves?

By now, let’s assume you have come to the conclusion that there is no way possible for your team to do this alone. You now need to find a reputable eProcurement solutions provider. A quality e-procurement solutions provider should be able to ramp up to your task immediately. They should possess skills that are the foundation of their past success. These are very specific skills that enable them to run large volumes of e-procurement events in a full service mode with little guidance from you that have historically driven impressive savings on products and services over a long period of time. They should be able to provide reference to where they have done this in the past and how they were able to augment other company’s staff with little interference of their day to day work. Remember, knowledge transfer; passion, skill and required headcount to carry out these practices on a day by day basis are what drive results.

This process is provided by people behind the scenes with a very specific skill sets. If you really want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time, like your next budget period. And, you already know that you cannot do this by yourself, reach out to a Safesourcing customer services account manager to see how quickly we can be of assistance.

We look forward to and appreciate your comments.

The Lost Lunches…Where are they now?

Thursday, February 26th, 2015


This post is by Alyson Usserman, Project Manager at SafeSourcing.

Have you lost your lunch break at work? Here’s the problem with eating at your desk.

Typically in the beginning of the year people make New Year’s resolutions. This year yours should be to stop eating lunch at your desk. Below I examine the issues that this habit may cause.

The Problems:

   1. You are sedentary all day, every day, when you maintain a desk job. Without moving, your body can become sluggish and bog down your thoughts.
   2. You miss out on socializing beyond your coworkers.
   3. You may not even be able to eat your lunch, because people keep interrupting you.

This habit can potentially affect everyone that works full time. However, the issue that one may run into is that your overall health and mental awareness.

Make sure you get out and move your body, even if you just go to run an errand.

This issue is becoming such an issue that the Oxford English Dictionary added, “al desko” in 2014, which means to eat at your desk.
Let SafeSourcing help you reclaim your lost lunch by allowing us to become an extension of your team to ease the work load. Please contact a SafeSourcing Project Manager and let us help manage your workload.

We look forward to your comments.

Spoiler Alert!

Thursday, April 10th, 2014

Today?s post is by Margaret Stewart, Executive Assistant at SafeSourcing.

With so many great shows out now, many of us have a TV series we love, be it Game of Thrones or The Walking Dead. Every now and then, things come up and we miss some episodes. When that happens, the last thing we want is to read something online that spoils the ending. Facebook, Twitter, Tumblr, and all of social media can be great at keeping people connected, but can sometimes give away the details.

?I can?t believe he died at the end!? This is not what you want to hear from fellow fans nor do you want to see a meme about in online, and often the ?spoiler alert? warning comes a bit too late. You will probably keep watching the show even after hearing a spoiler, but you won?t be surprised by the ending. There are, however, some spoilers that are good and make you want to know more.

What if you read about a company down the street who saved 20% off their indirect spend at the end of the year? You would love to hear that spoiler and probably would want to know more about it. To add to it, what if that same company did the same thing as you? You would likely be even more interested. After all, the more money saved means the more money available to go elsewhere.

There are a number of companies out there just like this. They may be saving money on their costs that a business down the street pays full price for. So, how does that company do it? One way is by finding the best prices on the things they have to buy. They likely talked to a procurement specialist and found ways they could get the exact items they already buy, but at a lower price.? This saved money leads to more available spend, which in turn leads to additional growth.

Finding the right procurement specialist is the first step towards lowering costs and being the company that saves money in the end. You may be surprised at how much you can save, then your company can be the ?spoiler? other companies hear about.

We, at SafeSourcing, enjoy bringing this blog to you five days a week and hope you find value in it. For more information about how SafeSourcing can help your company lower its spend and increase growth or on our ?Risk Free? trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

We look forward to your comments.

Are you continuing your education?

Thursday, October 24th, 2013

Today?s post is by Heather Powell, Project Manager at SafeSourcing Inc.

Did you think you were done with your education? Graduated with Associates, Bachelors, or even a Master?s Degree?

Did you find our dream job in your chosen field of study? Did you find a job outside of your chosen field of study? So long as you are working and are happy at what you are doing are the primary goals, right?

No matter where you work, what your job title and responsibilities are, your education never stops, even if you have a piece a paper that says you are done.??

Examples? A mailroom clerk can learn to organize in such a way that minimizes time to save the company hours in wasted pay, or learn to ship more efficiently saving thousands in shipping costs.

A maintenance person can learn various ways to cut costs or use eco-friendly products to help save money and the earth!

A project manager for an e-procurement company can attend a free webinar about Software and Technology Solutions for the Food Supply Chain to learn how new technology can save their customer hundreds of thousands of dollars in various ways to ship their goods from point A to point B.

A CEO reads several daily business journals, newspapers, and books to learn what the trends are in the business world or inspirational business and educational thoughts from the syndicated columnist Harvey Mackay. All to share with his employees and improve and grow his business.

You should never stop learning and being educated. It is what moves you forward in life. Do you want to learn how SafeSourcing can help you and your company save money, time, and become organized? Please contact a SafeSourcing customer service account manager or call 888-261-9070.

We look forward to and appreciate your comments.

Balance – An idea for the nation, an idea for your Procurement Department!

Tuesday, October 30th, 2012

Today’s post is by Debbie Wilcox, CPSM and Vice President of Sales and Marketing at SafeSourcing.

The Wall Street Journal recently revealed that a group of approximately 80 CEOs from top U. S. corporations have formed a non-partisan group to encourage our national leaders to come up with a plan. The group has raised $29 million dollars and has plans to put 30 people to work visiting key members of Congress in their home districts. They will host dinners that bring both Democrats and Republicans to the table along with budget experts and leading business executives. Ideas that will be discussed include a blended solution of raising taxes AND reducing expenses to help balance the budget. 

You can take a similar balanced approach to your sourcing and procurement requirements.  Maybe you’ve identified a number of projects with great savings potential but you just don’t have the personnel and bandwidth to get them completed. Or maybe you’ve heard of new vendors and new products for a project you have targeted but just don’t have time to do the research.

Working with a third party sourcing company to help you become more effective in your work is an option you should consider. At SafeSourcing, we help you analyze your spend and identify projects and areas for supplier consolidation. We’ll bring our list of international suppliers and our experience working with them, to bid on your projects to ensure you receive the best pricing available. We can complete the supplier research, identify comparable products and introduce service improvements.  In general, we complete the heavy lifting and present project results to you to make a decision. Yes, we will make our recommendation, but the supplier award decision is yours.

If your procurement department could use some help and balance, don’t act like Congress and hope that things will somehow miraculously change the longer you wait. Take charge of your procurement goals and even exceed your savings targets. You’ll be amazed at what you can achieve. We help our customers do it every day. We can do it for you too.

Contact a SafeSourcing representative to find out how we can design a program that meets your needs.

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.

Situational Analysis

Friday, July 6th, 2012

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

Over the past few years most companies have had to face a reduction of staff, either due to the economy or due to the large group of Baby Boomers exiting the workforce.  More important than the number of staff leaving is the level of expertise companies are losing in this process from employees with decades of experience.  

Combine this with the fact that how companies are being run and the technology they are using to run it is changing frequently, it creates an opportunity for consulting companies to perform assessments to help companies begin to make the changes they need to make to stay competitive.  In today’s blog we will look at a few of these areas that are increasing in their use by companies around the world.

Telecommunications – With technology changing so frequently, it makes it difficult to know whether you’re always getting the best solution for your company. Assessment companies can ensure you are getting the maximum telecom cost reduction—often with improved services or features.  Some services that are usually reviewed are cellular, local & long Distance, and telephone systems

Utilities –Energy industry deregulation has increased the competition among suppliers, with no barriers to changing suppliers. Consultants in this field continually monitor prices and industry forecasts.  Many times they can also provide a Group Purchasing Organization for high-volume discounts.

Waste Removal – In many industries consultants can not only assist with reducing waste removal costs, but can also create a revenue stream for recyclable waste.   Expense Consulting can manage solid waste, recyclable, paper shredding as just a few.

Packaging – Besides helping to negotiate prices on product packaging, containers, and packing materials consultants can help select and specify the most appropriate type of packaging for every need.  They can also help you realize savings through optimum purchase volumes and inventory control on corrugated, packaging materials, and retail packaging.

Printing –Internet printing companies can offer significant cost savings, and digital printing and with color-matching technology as good as it is, it has virtually eliminated the need for on-site proofing and pre-press reviews. The following are some of the categories with great savings potential:  Labels,  forms, marketing material, business cards, letterhead & envelopes.

For more information about how SafeSourcing can help connect you with the right company to assess your usage and proper needs in these areas, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

I could not believe the question, but it was asked in a category manager meeting.

Wednesday, March 28th, 2012

Google or Bing certainly might help here, but in the old days we needed to know this stuff. So let me give you an old fashioned answer.

Typically this author thinks of this process in the six steps that follow

?? 1.?When buying a product or a service a decision is required to do so.
?? 2.?Once the decision has been made, analysis of what you are currently? buying in what volumes for use in what locations that will continue to satisfy your needs to be completed.
?? 3.?Your purchase offer is submitted to a supplier or suppliers in order to collect pricing and other information such as the Terms and Conditions required in making your decision.
?? 4.?A contract is signed for the product or service that outlines the responsibilities of the involved parties as well as remedies if contract terms and conditions or volumes are not met.
?? 5.?A purchase order is issued with the appropriate approvals that match to the specifics as outlined in the contract in order to properly manage the contract.
?? 6.?Payment is generated based on the purchase order submitted against the contract.

Sometimes there is a steep where an LOI or letter of intent is issued between step 3 and step 4 in order to take advantage of contract terms earlier in the cycle.

So now what happens if you don?t have a contract management system or a purchase order management system? Generally it?s referred to as leakage. In about 12 months you will be very familiar with it.

Contact SafeSourcing and let?s see if we can help you out with our procure to pay solutions.

We look forward to and appreciate your comments.

Where does the retail spend data you need for procurement reside?

Wednesday, October 20th, 2010

The problem today is that there is so much retail?data available that?buyers and category managers?could easily suffer business paralysis by data analysis.

Below is just a partial list of systems and places where data resides that is meaningful if not critical to sourcing professionals. Most of you can probably add to this list pretty easily. The unfortunate issue that confronts? retail procurement professionals daily is that most of this data is not integrated in any way and even at very large companies,? to much critical data is sitting on local employee desktops or even worse in their heads. And that is not what we mean by a neural network.

1.?ERP systems
2.?Enterprise Data Warehouse systems
3.?Replenishment systems
4.?Financial reporting systems
5.?Demand Planning systems
6.?Purchase Order management systems
7.?Distribution and Logistics systems
8.?Merchandise management systems
9.?Retail Planning systems
10.?Local employee desktops
11.?Contract management systems

Number two from above the enterprise data warehouse is probably the most logical place to bring all of these data sources or elements together within one logical data model that drives the master data source integrated with a s business reporting and? busyness intelligence front end. Small companies may never make it to this level, but if they can find a business partner that offers these solutions in a SaaS format it will be much better than the current; Hey? Joe, how many of these did we order last year?

We look forward to and appreciate your comments.