Archive for the ‘Procurement Purchasing’ Category

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This is Part II of an III part post series titled ?Technology Drives E.Procurement Acceptance? focuses on Getting Started!

Friday, May 21st, 2010

Getting Started

First and foremost in getting the e-procurement process right is to select a solution provider or partner that knows what they are doing and is willing to work closely with you during the early part of the process. The e-procurement plan for each company will be somewhat different in order to meet the specific needs of the company. There is however a general order to things that will provide the best opportunity for success.

To realize the most benefit from your e-procurement process, you will need to:
? Develop your strategy
? Complete a detailed discovery
? Learn to understand how to set up your procurement events, even if handled by your provider.
? Use a provider with a high quality process and an extensive database for sourcing suppliers
? Clearly communicate how events will be run or executed to all involved parties ? Review the process for sustainability and adjust as necessary
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As mentioned earlier, it is incumbent upon your e-procurement solutions provider to be able to assist you in completing these tasks in a reasonable period of time. You should be checking the background of the team and the leadership that will be assisting you to ensure their understanding of your industry such as operations, technology, procurement, warehouse management, logistics, transportation, loss prevention, store management and other functional areas of your business that will be sourcing products and services. It is all about detail because knowledgeable attention to detail will improve quality, reduce costs and ensure the success of your company?s new e-procurement process.

Please join us for part III of this post series on Monday titled Reasons to Use E-Procurement.

To download the entire article please use the following ?link.

We look forward to and appreciate your comments.

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What is the retail procurement lifecycle of a product or service?

Thursday, May 13th, 2010

This author generally begins discussing this subject with our customers and prospects during the discovery phase of our engagements. It helps to get us all on the same page and as such we get a lot of different definitions. Quite frankly we get almost as many as the number of people we discuss the subject with. Surprisingly the process which is quite simple as a definition is not any different from when I first learned it over 40 years ago in the U.S. Air Force other than its automation provided by modern procurement tools.

Typically procurement consists of seven (7) steps. Where the confusion generally enters is that each step can have a process of its own or be interrelated with another step in the process. An example would be the contract lifecycle that easily fits within the negotiation cycle and the renewal cycle. Another might be that information gathering which is the generally accepted first step in the process can apply to multiple issues such as information gathering for the related product or services such as specifications as well as the information gathering of prospective supplier data.

As such, the simple steps to the procurement lifecycle that most individuals generally agree upon are as follows.

1.?Information gathering
2.?Supplier contact
3.?Background review
4.?Negotiation
5.?Fulfillment
6.?Consumption
7.?Renewal

Most times keeping this simple model in mind will allow? retail procurement professionals to answer the question where are we in the process when a project gets stalled or off track.

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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Why is e-negotiation not the most important initiative of all retail companies?

Monday, May 3rd, 2010

I have been in many meetings numbers of retail companies where charts that reflect savings from recent e-negotiation events of other retailers with similar formats are reviewed. As real as these results are, it is still difficult for most retailers to pull the trigger in order to give a new process a try. We just seem to get in our own way because we always have more important things to do.

We just have the ability to make things to difficult for ourselves.? Relative to e-negotiation, let?s assume that the CEO directs that he or she would like the cost of goods reduced. The project is then assigned to the Senior Vice President of Supply Chain or Chief Logistics Officer or Chief Procurement Officer or other senior executive. This is further assigned to the Vice President of Purchasing who in turn assigns it to the director of supply purchases. The director convenes a meeting of the buyers or category managers responsible for a variety of supply categories. In degrees of separation this is about 5 or 6 degrees from the person initiating the project. And now the excuses (delays) begin.

1.?We can?t damage our relationship with our incumbent suppliers.
2.?We get the best price in the industry right now.
3.?These guys don?t know what they are talking about.
4.?Don?t we have a tool that does this in our ERP system?
5.?We?ll sacrifice quality.
6.?We don?t have time for this.
7.?I?ll get back to you.
8.?Let?s create a cross functional team.
9.?I?m not going to be first.

If we go back to the CEO and explain what the situation is, one is likely to get a reply that says to the team JUST DO IT! Unfortunately that needs to be followed by; DO IT NOW!

From start to finish, an e-negotiation event such as a reverse auction should take no more than two weeks to run. This includes the entire process including an RFI if required from the day a retailer says go to the actual award of business. There are several requirements necessary to accomplish this that will eliminate the worry and mitigate the risk.

1.?A robust supplier database with safety and environmental focus.
2.?A robust event template library.
3.?An intuitive or intelligent tool for building an event quickly.
4.?An automated reporting tool to provide immediate event detail for review.

If you are really interested in improving your bottom line now, you are less than two weeks away from immediate measureable results.

We appreciate and look forward to your comments.

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There are a number of places from which procurement professionals can collect or solicit your RFI data.

Thursday, April 8th, 2010

According to Wikipedia and others a Request for Information (RFI) is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes.

A Request for Information (RFI) is primarily used to gather information to help companies make a decision on what steps to take next. RFI?s are therefore most often the first stage in the procurement process particularly with new sources of supply. They are used in combination with: Requests for Quote (RFQ), Requests for Tender (RFT), and Requests for Proposal (RFP). In addition to gathering basic information, an RFI is often used as a solicitation sent to a broad base of potential suppliers for the purpose of preparing a supplier?s thought process in preparing for a Request for Proposal (RFP), Request for Tender (RFT) in the government sector, or a Request for Proposal (RFP).

Much of the data required for an RFI is generally available and can be found on company websites, U.S. Security and Exchange Commission (SEC) filings for publicly traded companies in their Edgar system, industry guides from companies like Trade Dimensions, or from sources like Dun and Bradstreet.

The challenge for most companies is that they do not have the necessary resources to complete this research. Therefore providers of supplier data should be able to make this data available in templates that companies can begin with. Simple data should always be available in any database as to Company Name, Annual Sales, Product category expertise, contact information, e-procurement experience and product specifications. This data should be easily exportable to a variety of formats such as MSFT Excel.

A simple request of your e-procurement supplier should get you well on your way to completed RFI?s that lead to quality RFP?s and RFQ?s without spending a lot of your valuable time on basic research. If they do not, we?d be glad to hear from you.

We ?look forward to and appreciate?your comments

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Retailers need to think it through before trying a do it yourself program when it comes to e-negotiation or e-procurement

Wednesday, April 7th, 2010

This author has met with many large companies that are using e-sourcing suites or tools provided by some of the largest names in the industry. After we have reviewed what we do and how we do it and then compare what they are accomplishing the following question always comes up. Why are you generating significantly higher savings than we are?

The answer is pretty simple in most cases. You have bought a software suite or tools and rather than using them as designed you have just incorporated your old practices into new tools. In addition, further training or access to your supplier?s data in the form of sources of supply etc. was not included in your initial cost.

A full service solution provider should be able to create, execute and support all auction activity including but not limited to the following.

1.?Assistance in selecting Auction categories
2.?Market insight
3.?Determine the timing of category auction
4.?Identification of potential quality suppliers in addition to existing
5.?Building on-line auctions
6.?Supplier contacts and training
7.?Execution of live bids
8.?Trouble shooting during live bids
9.?Compiling and communicating reports within 24 hours
10.?Award and Non-Award notifications to Suppliers
11.?Providing ongoing customer support
12.?Monitoring Supplier performance
13.?Feedback from Retailers/Suppliers
14.?Analyze the quality of each auction

The above deliverables if not executed in a self service program will result in less than maximum results and potentially failure of your program.

We look forward to and appreciate your comments.

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Good sourcing practices are good whether they are green or not.

Monday, January 18th, 2010

A Practical Guide to Green Sourcing was written by? John Christensen, Christopher Park, Earl Sun, Max Goralnick, and Jayanth Iyengar? of? Supply Chain Management Review and published on? November 1st 2008. It is absolutely loaded with great information a lot of which should be just common sense..

A quote from the article really says it all and is a theme you should already be familiar with if you read my posts regularly. It is as follows. ?Green sourcing can help in two important ways. It can help companies improve their financial results, allowing them meet their cost reduction goals while also boosting revenues. It can also contribute to a better public image and reputation with the company’s stakeholders.? In essence this one quote supports triple bottom line accountability or TBL. However if you replaced the word green at the beginning of the quote with the following it still works

1.?Efficient
2.?Well thought out
3.?Strategic
4.?A refocus on your
5.?Reviewing your

I?m sure you can add another dozen to this list easily. I hope you will read the entire article. It may be your company?s first step towards a more successful 2010.

We look forward to and appreciate your comments.

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Have you developed lean procurement practices?

Tuesday, November 3rd, 2009

The term “lean” as it applies to our subject was coined to describe Toyota’s business during the late 1980s by a research team headed by Jim Womack, Ph.D., at MIT’s International Motor Vehicle Program. According to lean.org; the idea behind lean organizations is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.

In Lean Thinking, by Jim Womack and Dan Jones, the authors suggest that companies or organizations think about three fundamental business issues.

1. Purpose: What customer problems will the enterprise solve to achieve its own purpose of prospering?

2. Process: How will the organization assess each major value stream to make sure each step is valuable, capable, available, adequate, flexible, and that all the steps are linked by flow, pull, and leveling?

3. People: How can the organization insure that every important process has someone responsible for continually evaluating that value stream in terms of business purpose and lean process? How can everyone touching the value stream be actively engaged in operating it correctly and continually improving it?

So, how does this apply to the procurement process? A typical misconception is that lean is suited only for the manufacturing process. This is not true. Lean applies in any and all businesses for any and all processes. Some areas you might consider relative to a lean procurement process would certainly include but not be limited to the following.

1. How many internal resources are dedicated and at what cost to procuring products and services for resale or internal use?
2. How much time do these resources spend to review and renew contracts?
3. How many new sources of supply are vetted regularly to insure you are receiving the best possible product at the best possible price?
4. How long have you been doing businesses with existing suppliers in every category?
5. What are your Procurement Key Performance Indicators and how often do you review them?
6. Do your Procurement KPI?s link directly with your corporate KPI?s?

Ultimately a lean organization understands both internal and external customer value and focuses its key processes to continuously improve both. Your solutions provider should have tools to help you evaluate your current process and suggestions as to how to reduce cost and infrastructure to support a lean procurement organization.

We look forward to and appreciate your comments.

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SafeSourcing Website experiences significant traffic growth.

Thursday, October 22nd, 2009

During the last ninety day period the SafeSourcing website www.safesourcing.com has experienced significant growth globally. According to a number of rating services including Alexa and Google Analytics our website has had visitors from thirty seven (37) countries. Our reach which is a percentage measure of global internet users has grown 130%. Our traffic rank has increased 168% and our page views have increased 150%.

This growth places us amongst the top websites in the procurement space. Spend Matters and Sourcing Innovation continue to be the ranking leaders in our space. Both are required daily reading for this author.

We are very proud of our growth as it indicates that SafeSourcing is providing valuable content to regular visitors as well as registered members. We are also enjoying a good mix of both returning and new users. In reviewing these data the entire website is being explored on a regular basis including the following areas.

1. Sourcebook our professional social network for procurement professionals.
2. The SafeSourcing Wiki
3. The SafeSourcing daily Blog
4. SafeSourcing environment and safety alerts
5. SafeSourcing specifications template library
6. The SafeSourceIt? Supplier Database
7. The SafeSourcing Query tool
8. SafeSourcing Product Information Sheets
9. SafeSourcing White Papers
10. SafeSourcing Press Releases.

Thank you to those of you that have allowed us to achieve this growth.

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

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