Archive for the ‘Sourcing Strategy’ Category

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Comparative advantage suggests we should be looking to Brazil for our future sourcing needs?

Tuesday, October 11th, 2011

Comparative advantage is a theory that advances that in a free marketplace, each entity or country such as the EU or NAFTA or trading countries will ultimately specialize in activities where it has comparative advantage. Examples of such might be technology, natural resources,   local workers skill sets, agricultural advantages, transportation benefits etc. In an  article published this past March at Bloomberg Businessweek titled BG (BG Group Plc, (the UK’s third- largest natural-gas producer), to Export From Brazil as Nation Becomes Key Oil Source, it would sure seem as though Brazil has the natural resources piece down.

Many people are not aware that Brazil is the world’s seventh largest economy. When you think about the relatively untapped natural resources in this country, their impact as an economic power will only continue to grow.

Now let’s just hope that we don’t create and unnecessary trade agreements that eliminate the comparative advantages that we both have and could build upon.

We look forward to and appreciate your comments.

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With the economy moving the public to lower cost products is it time to review your private label strategy?

Monday, October 10th, 2011

Last week the Wall Street Journal published an article by Ann Zimmerman  titled Frontier of Frugality about how the economy is forcing consumers to consider lower priced stores and goods to save money.  With the landscape of retail changing to adapt to this trend many companies are changing their product mix to include more value and private label products.

In today’s blog we will be looking into some new areas of private label sourcing you might not have thought about previously.

Services – One of the areas that companies do not always think of for private label sourcing are services.  Many of these services deal directly with the design and marketing of the private label products themselves helping to develop campaigns for the retailer.  There are other services, however, such as Kosher services and product development services that can also be sourced.

Product Ingredients – In some cases the retailer manufactures or is considering manufacturing their own private label products and the raw materials needed for those products need to be sourced.  Flavorings, chemicals, fragrances, pharmaceutical ingredients and organic ingredients are just some of the items that can be sourced.

Supplies and Equipment – When it comes to private label products there are also unrelated equipment and supplies that are needed in order for the inventory to get to the consumer.  Advertising vehicles, pallets, shelving, signage, coolers and freezers, and doors and curtain systems are just a few of the many types of connected purchases which are necessary in order for private label products to be sold.

Not For Resale – This area of private label spend is growing larger every day as more retailers are beginning to offer food and/or beverages in their stores.  Towels, cups, bags, trays, paper products, and stretch wrap are all additional areas of private label products which can be sourced on a regular basis.

Whatever your private label Sourcing need is, the economy is quickly demanding that companies begin to pay more attention to the mix of products they source for their customers.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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The Holiday Season is right around the corner

Tuesday, October 4th, 2011

Christmas will be here before we know it.  While most of us as consumers wonder where the year has gone, retailers are feverishly planning in preparation for their busiest season.  In the retail industry, the short period from October to December can represent more than half of the year’s sales—which means that planning and implementation are crucial for success.

Retailers don’t panic; procurement services can assist you in your holiday preparations.  For novelty products that are traditionally sold such as gift cards, perfumes, and gift basket items, why not purchase products for the rest of the year?  This can help you have the inventory on hand and allow you to lock in a price—that can surely increase as the holidays ensue.  Planning to maintain appropriate inventory levels especially for Black Friday and beyond can help decrease your costs by not being subjected to inflated prices due to seasonality.

Don’t let the season sneak up on you, plan ahead to ensure you have the most successful Holiday.

For more information on SafeSourcing and how we can assist with this process, please contact a Customer Service Representative for more information.

We look forward to and appreciate your comments.

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When developing your terms and conditions don’t forget the potential for BARTERING!

Thursday, September 29th, 2011

According to Wikipedia: Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when the currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.

There are a number of companies that primary business model is to use bartering in part as their engagement model. Although the model is slightly different at each organization, the general theme is that a company can trade excess inventory for just about any category and receive credits that can be used in part to buy or acquire other products and services that they need for their business. An example might be to consolidate and eliminate backroom stock in retailer’s stores in exchange for credits and use those credits to buy supplies that are regularly used such as paper or plastic bags etc. This process can also have a positive impact on shrink as well as preserving cash.

A unique use of this process that I recently read about in the Arkansas Democrat Gazette discussed a company agreeing to pay for building renovations if they had their current contract extended. The article by Debra Hale-Shelton titled UCA trustees call off audit of vendor bid. The legality of this transaction is in question, but it is in fact a form of Barter.

If you are going to consider barter as a payment or terms option, make sure you understand its use and that it is an above board part of negotiation that is well defined in your terms and conditions.

We appreciate and look forward to your comments.

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What you should know about sourcing Cloud Computing Alternatives

Monday, September 19th, 2011

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

One of today’s industry buzzword / concepts is that of “cloud computing”.  Cloud computing is a generic labeling that has been applied to just about any hosted service that is accessed via the internet. It is one of the most rapidly growing technology areas in all business sectors today savings promises associated with a reduction in computer hardware  needs andn the related manpower associated with the same versus a company doing everything internally.

Today we are going to be focusing on three main categories of cloud computing that are available and the types of services that can be procured for your company in each one.

Software-as-a-Service (SaaS) – The most common category of cloud computing is the Software-as-a-Service model.  In this category are software packages that are physically hosted by another vendor in their environment, on their hardware, and supported by their resources.  The obvious advantage of this approach is having full-time support of an application that is maintained and upgraded by a staff you do not have to employ.  These models are usually priced on an as used basis making the ROI much easier to measure.  Examples of this model would be Retail Loss Prevention, POS and Pricebook applications such as those offered by companies like Retail Anywhere.

Platform-as-a-Service(PaaS) – For those who are a bit more advanced and have some internal development resources  in their IT department, the Platform-as-a-Service model provides them the capability to design, test and deploy their own software applications in an environment over the internet.  With database, design studio and web engine license fees being so expensive in order to stay current , this provides a way for companies to develop and stay current with their tools without bearing the exorbitant fees required to do it internally.  Currently the Google Application engine is one example of successful offering using this model.

Infrastructure-as-a-Service(IaaS) – The final category of cloud computing is Infrastructure-as-a-service delivering all of the hardware, network components, memory, hard drive space and processing power for a business and as such, effectively becoming the major component of an organization’s IT infrastructure.  The advantage of this approach is the capability to quickly and easily scale the model to fit a company’s needs without the major investment in the equipment and software.  This model can be as simple as providing data centers for your company or as complex as being responsible for almost everything an IT department represents in a company.  Amazon Web Services is one of the larger and more well-known offerings in this space.

With an ever increasing competitive landscape for many businesses where the call for reducing expenses is constant, these types of services will continue to gain increased favor while providing great value to those companies that can determine the best ways to leverage their collective or individual power. 

For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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What is Sustainable Procurement and Why You Should Care About It?

Wednesday, September 14th, 2011

In general, procurement refers to two different factors, price and quality.  For a company these factors are obviously important to the bottom line, but there are other factors that should apply for the bigger global picture.  Sustainable Procurement has a wider agenda by looking at a company’s “triple bottom line” which includes the impact the company has on the environment, the economy, and the social implications.  This indicates that a supplier will be evaluated on many more levels than just the product they are selling.

Environmental concerns are the dominant issue for sustainable procurement since humanity is currently putting such excessive demands on the available resources the environment offers.  A company that focuses on purchasing their goods and services from environmentally friendly companies is considered a “green procurement” company.

Economic concerns are another area that companies can focus on for a more sustainable procurement process.  In many situations a company that engages in sustainable procurement has the opportunity to offer assistance for smaller and/or ethnic minority-owned businesses.  By focusing on economic concerns a company may be more likely to purchase fair trade certified products which allows extra investments to be channeled towards developing countries.

Sustainable procurement can also be addressed through social policy and responsibilities.  In the United States, most companies are already conscious of the social responsibilities that influence the global supply chain.  The social implications include whether or not a company promotes equality and diversity among its work force. 

The overall goal for sustainable procurement is to ensure that goods and services purchased for a company are designed, manufactured, delivered, and used in an environmentally and socially responsible manner.  Why is this so important for you?  The answer is simple;  the more environmentally and socially responsible each of us is individually, and within our company or organization, the better off we will all be in the long haul.  In a global marketplace where people are becoming more and more concerned with the legacy their company can build and leave, it is becoming increasingly important that we leave positive footprints to be filled by future generations.

For more information on SafeSourcing and how your company can become more of a Sustainable Procurement partner, please contact a Customer Service representative.

We look forward to and appreciate your comments.

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When did sustainability become synonymous with the environment?

Thursday, August 18th, 2011

In this case sustainability has less to do with the environment and more to do with process, discipline and execution. Which can also impact green programs focused on  a company’s carbon footprint

According to Wikipedia a simple definition of sustainability, in general terms, is the ability to maintain balance of a certain process or state in any system. It is now most frequently used in connection with biological and human systems. In an ecological context, sustainability can be defined as the ability of an ecosystem to maintain ecological processes, functions, biodiversity and productivity into the future.

Sustainability has become a complex term that can be applied to almost every system on earth.

From a corporate perspective many investors look at sustainability as a framework for disciplined and responsible management, a key success factor in achieving economic gains.  Relative to e-negotiation this means being able to run the same process (events) over and over again quarter after quarter and year after year as the standard way in which  a company endeavors to improve quality, workflow and compress prices. To the extent that this process supports companies social initiatives relative to the environment and humanity new terminologies such as the term triple bottom line are emerging in discussions at the board level.

The Global Sourcing Council tells us that although sustainability has found its permanent place in corporate boardrooms, execution is still a challenging journey. Implementing sustainability in global sourcing operations becomes even more complex as it creates its own unique challenges.

Global service providers that subscribe to sustainable strategies will benefit by gaining competitive, green advantage with the global organizations.

Ask your e-negotiation service provider how they intend to implement a sustainable program for your company.

We look forward to and appreciate your comments.

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Many Mid Tier One and Tier Two retail companies can not afford advanced analytic software! The truth is they also can’t afford to not have it! So what to do?

Friday, August 12th, 2011

Let’s first try to understand what analytics actually is. According to Wikipedia’ a simple definition of analytics is “the science of analysis”. A practical definition, however, would be that analytics is the process of obtaining an optimal or realistic decision based on existing data. Business managers may choose to make decisions based on past experiences or rules of thumb, or there might be other qualitative aspects to decision making; but unless there are data involved in the process, it would not be considered analytics.

So why can’t many companies afford analytics? The answer is because they are complex. In my early days of selling data warehouses with one of the industry leaders, in fact the best in the space today the combination and analysis of data from disparate functional areas of a business were nearly impossible. As such if a company was advanced enough to have this type of information it most likely existed in islands that evolved into departmental data marts like category management systems. These data marts ultimately evolved to complex databases with relational data models that allowed access of data contained in these  disparate systems and then into on line analytical systems capable of managing massive amounts of data .

It’s probably no surprise that the early adopters of these technologies were the biggest of the big companies and governments. So when we get to analytics that support e-procurement systems or procurement systems in general, the systems that provide the analytics have to reside within a company’s corporately supported data model. If not, they initially at least have to have a procurement data model that supports data contained in ERP systems, Financial systems etc. Since the trend is not a backwards direction of recreating islands of information,  pilots of these systems that show significant benefits, will only end up as a corporate roll out through integration within the corporate framework and data model.

I could go on to explain the expense and time associated with these implementations, but there is a reason that these solutions are not readily implemented within lower tier one and tier two retailers. Number one is that many still do not have easily accessible corporate views of data. Number two is the cost; resources and time to implement them are difficult for these companies to justify.

As such there continues to be a need (niche) for providers that understand retail from an operational and financial perspective that know where to look, what to ask for and can assemble, analyze and report on data the old way to support the procurement data requirements of mid tier one and tier two retailers.

We look forward to and appreciate your comments.

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Great data discovery drives great results! So what’s required?

Thursday, August 11th, 2011

There are a number of valuable possible sources of information to consider. However don’t make the assumption that just because you have systems with a big sounding impressive name like an Enterprise Resource Planning system or ERP that the data they contain will be complete or clean. That depends entirely on the proper deployment and use of the system as well as its maintenance after the fact.

Here are some but not all areas of opportunity and pieces of information that you should look to. In fact the more of them you have access too the better prepared you will be for a great discovery session.

1) General Ledger
2) Detailed P&L
3) Purchase Orders
4) Contracts
5) Detailed Vendor Listing
6) Product List by Vendor
7) Invoices
8) Product cut sheets
9) Copies of orders
10) Brochures

There is also a strategy of how to use this information to your best advantage and no system will do it all for you.

We look forward to and appreciate your comments.

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Hey buyers! The economy is still terrible. Maybe now is the time to finally try reverse auctions.

Wednesday, August 10th, 2011

However, we continue to see a reasonable uptick in the use of e-negotiation tools in retail and this author believes that some of the following quotes from a retail CEO and his team  that watched their first  reverse auction last week may be the reason why.
1. “This was pretty simple to do”
2. “If we hired someone we could do these ourselves with you guys”
3. “This is fun”
4. “You mean the reports are already available”
5. “I love the sports concept”
6. “It was easy to follow the marquis and what was going on from one screen”
7. “The multiple color schemes were great”
8. “I can’t believe how fast you guys set this up”
9. “We saved that much money and only have to pay what we discussed”
10. “Can we do another one today”
11. “I may get a promotion out of this”
12. “I love that calculator at the end of the bid process”
13. “I like all of the supplier data that was accessible during the auction”
14. “Now I know how the big guys get the pricing they do”

Why not join others that have come a little late to the party. You can still benefit because today’s tools are easier to use, more interactive, maintain your attention during an auction, integrate gaming technology to keep it fun and are lower cost than their predecessors. If you happen to have already been doing this for years, why not find an easier way or do it less expensively.

If you would like to have fun, save money and do it quickly, please visit us at www.safesoucing.com.

We look forward to and appreciate your comments.

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