Archive for the ‘Reverse Auction’ Category

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What’s new in retail e-procurement?

Friday, July 16th, 2010

A small retailer said to me last week that he did a form of reverse auction on his own. I asked how he accomplished this. The answer did not shock me, but I did chuckle a little. I’m glad he was a friend because he asked why I was smiling. The answer was that he sent out an email to three suppliers that he knew and asked for a price on a specific product. He told them in the email to make sure their price was there best offer and then called each once received and pressured them down with the threat of the other offers. We won’t get into the number of calls he had to make, the time it took to create the specification, the number of emails sent back and forth or lack of knowledge as to any new or additional sources of supply. We also won’t discuss the underlying psychology of a reverse auction and the tools that encourage quality bidding. The basic premise was solid and helped to reinforce why an automated system would out perform his results every time as well as provide a detailed audit trail.

At least in the example above, my friend was trying in his mind. What continues to concern this author is that many retail companies from lower tier I companies through all of tier II companies are not using any type of e-negotiation solution. Most of these solutions are relatively low cost hosted or SaaS oriented tools and available to them covering the entire P2P (procure to pay) process. In addition many of them belong to wholesalers that may use these tools themselves but don’t pass on all of the benefits to their customer.

I will continue to focus on this issue in the hope that if one company reads, watches, prints and uses any of this information and then executes because of it any or all of the following benefits may befall them.

1. Profits can and should improve
2. Quality can and should improve
3. Product Safety can and should improve
4. Environmental impact can and should improve
5. Prices can be compressed
6. New sources of supply can be found
7. Risk can be mitigated
8. Evergreening of contracts can be held in check
9. Existing jobs can be protected
10. New jobs can be created.

If these were the only reasons to try and get out the message as to the stunning effect that today’s e-procurement tools can have on an organization it would be enough. But we all know there are many more good reasons beyond the ten listed above.

We look forward to and appreciate your comments.

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What?s new in retail e-procurement?

Friday, July 16th, 2010

A small retailer said to me last week that he did a form of reverse auction on his own. I asked how he accomplished this. The answer did not shock me, but I did chuckle a little. I?m glad he was a friend because he asked why I was smiling. The answer was that he sent out an email to three suppliers that he knew and asked for a price on a specific product. He told them in the email to make sure their price was there best offer and then called each once received and pressured them down with the threat of the other offers. We won?t get into the number of calls he had to make, the time it took to create the specification, the number of emails sent back and forth or lack of knowledge as to any new or additional sources of supply. We also won?t discuss the underlying psychology of a reverse auction and the tools that encourage quality bidding. The basic premise was solid and helped to reinforce why an automated system would out perform his results every time as well as provide a detailed audit trail.

At least in the example above, my friend was trying in his mind. What continues to concern this author is that many retail companies from lower tier I companies through all of tier II companies are not using any type of e-negotiation solution. Most of these solutions are relatively low cost hosted or SaaS oriented tools and available to them covering the entire P2P (procure to pay) process. In addition many of them belong to wholesalers that may use these tools themselves but don?t pass on all of the benefits to their customer.

I will continue to focus on this issue in the hope that if one company reads, watches, prints and uses any of this information and then executes because of it any or all of the following benefits may befall them.

1.?Profits can and should improve
2.?Quality can and should improve
3.?Product Safety can and should improve
4.?Environmental impact can and should improve
5.?Prices can be compressed
6.?New sources of supply can be found
7.?Risk can be mitigated
8.?Evergreening of contracts can be held in check
9.?Existing jobs can be protected
10.?New jobs can be created.

If these were the only reasons to try and get out the message as to the stunning effect that today?s e-procurement tools can have on an organization it would be enough. But we all know there are many more good reasons beyond the ten listed above.

We look forward to and appreciate your comments.

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Retailers we Dare you to Compare. We’ll run one event for you FOR FREE and if you don’t save a minimum of 15%.

Monday, June 21st, 2010

SafeSourcing has averaged over 30% savings for the entire time we have been in business across hundreds of millions in spend volume. This includes single event spends as small as $20K and as large event spends as large as hundreds of millions. You can rest assured that you can source all products and services with SafeSourcing regardless of how small or how large.
 
We believe there are very important reasons for these results. A few are as follows.

1. Our Event Template Library.
2. The SafeSourceIt™ Supplier Database with over 380,000 sources of supply.
3. Our customer services to assist buyers in building quality specifications quickly.
4. Event setup strategies that drive the best results.
5. Time to event.
6. Percentage of new suppliers per event.

So, here is the offer. Source any product or category regardless of the size of the spend and if you don’t save at least 15% THE EVENT IS FREE. Experience the difference for yourself in retail e-procurement leadership.

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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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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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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How does a price index play into e-procurement practices?

Thursday, March 18th, 2010

From a simplistic perspective an index is a system used to make finding information easier. There are any numbers of indexes or indices available to help procurement knowledge workers insure they are sourcing products at the best possible pricing. The key word here is price as what we will be discussing are specifically price indices.

According to Wikipedia a price index (plural: ?price indices? or ?price indexes?) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to measure the economy’s price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.

Normally an index reflects the current and historical price of a variety of commodities ranging from metals to grain. A common index used in sourcing petroleum products is OPIS or the Oil Price Information Service which you can learn more about by visiting www.opisnet.com.? However in order to drive the best possible fuel pricing there are other dependencies such as whether you are doing spot buys or bulk purchases and these strategies will determine what specific index you would want to review as well as it?s relation to other product information sources such as Platts or the Gulf Coast spot assessments.? This will put you in a better position to determine how to bid the product and also earn a discount relative to the lowest common denominator.

All other commodities have similar sourcing issues dependant on what the highest cost item is in their product makeup. An example here might be the cost of grain in the feeding of cattle or poultry.

Ask you solution provider to explain these tools to you and to recommend how you might use them toward the best outcome.

We look forward to and appreciate your comments

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Hey Retailers, what is your 2010 business strategy and how does e-procurement enter into it?

Wednesday, March 10th, 2010

The business of e-negotiation and in particular reverse auctions has many benefits for retailers that support their business strategies.

According to Wikipedia, a business model is a framework for creating economic, social, and/or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

Often times during this author?s discussion with retailers the question comes up as to the benefits of the reverse auction business model or that of other e-procurement events such as Requests for Information or RFI?S.

I have never spoken to a retail executive that does not have as a significant pillar of their business strategy to increase profitability even if it takes reducing losses in the early stages of a turn around. Reverse auctions if run properly can reduce the cost of goods category, the expense category and hired services that impact both areas. They can also continue to reduce the same year after year and the savings are predictable.

This author will make the assumption that there is common? agreement that price compression in today?s world is critical and that the reduction in cost of goods and services is the largest area of opportunity on a retail P&L. As such, there are a number of reasons that the reverse auction business model works well within organizations that should drive the strategic growth in utilization of this business model within retail.

A few and certainly not all are listed below in no particular order…

1.?A larger number of suppliers: Because of an increased number of suppliers bidding for a retailers business, getting a relatively low price is a given. The suppliers benefit because of the potential reduction is selling costs and easy access to new sources of business which encourages them to lower their pricing.
2.?Location, Location, Location: In this case, location no longer matters. A supplier can participate from wherever they happen to be located. This opens up new potential markets for the supplier and new sources of supply for retailers.
3.?It?s like a game: Participating suppliers wait to see if their price is the lowest much the same way a gambler would wait to see the turn of the next card when playing blackjack or poker. This is a social interaction and dynamic that builds on itself and can drive a larger number of bids and extensions while ultimately leading to lower pricing.
4.?Early success drives a virtual circle for retailers and suppliers: The more a retailer uses the tool and the more success suppliers have with securing new business resulting from this process, the more the process will drive retailers to host new events and suppliers to participate in them again and again. Independent departmental successes can spread quickly within a retail company such that other departments not using the process do not want to be left out of potential savings opportunities and notoriety.

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

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Creative green oriented education for procurement professionals to support your CSR goals.

Monday, March 1st, 2010

Using creativity to support your educational programs can be as easy as visiting good websites that provide thought leadership as to creative courseware that can be used for schools and other organizations. At first some may seem a little basic for corporate America but as you drill into the detail the ideas and themes can be easily applied to general education overviews for your teams. Two interesting websites are.

1.?www.edutopia.org
2.?www.gogreeninitiative.org

Both of the above websites offer class oriented or field trip oriented initiatives that can be easily modified for adult audiences in order to provide interesting learning segments that support your companies CSR initiatives and programs.

At www.edutopia.org?? they have a really neat database that can be searched by going to the following site extension www.eduatopia.org/go-green .? You can filter a variety of searches by grade level such as classes for grades 9-12th. Don?t worry to much about the content level, because most kids at this age know more about living a green life than we do. As such, these curriculums can be easily modified to provide interesting learning segments for all associates.

At www.gogreeninitiative.org? there are lots of interesting factoids that can? be explored and expanded upon such as; ?For every ton of paper that is recycled, the following is saved: 7,000 gallons of water; 380 gallons of oil; and enough electricity to power an average house for six months.?? How many off you new that? How many of your store managers know that? When you do a trash hauling e-procurement event is recycling taken into account?

Being creative just takes a little time and research and helps to foster a learning organization and a learning organization is a growing organization.

We look forward to and appreciate your comments.

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