Archive for the ‘Sourcing Strategy’ Category

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Retailers, how do you source and select your construction site partners?

Tuesday, June 22nd, 2010

A great place to start is an organization called the The Construction Safety Council which was founded in 1989. Ask you conduction partners if they are a member.

The CSC is a non-for-profit organization dedicated to the advancement of safety and health interests in the field of construction throughout the world. It was chartered by a board of directors composed mostly of large construction company owners and operators whose vision and leadership made the organization possible. Since its humble beginnings in 1989, the organization has quickly grown to become a world class professional construction consortium with associations that span the globe. With an emphasis on quality and customer service, all of the construction safety and health resources and loss reduction tools developed by the Construction Safety Council have been designed to maximize positive impact on your safety program.

The SafeSourceIt™ Global Supplier Database has hundreds of construction companies that are held accountable to these types of standards. Are you asking all the right questions or is your solution provider?

We look forward to and appreciate your comments

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There is a real conundrum in retail today. How do we stop CONTRACT leakage?

Wednesday, June 9th, 2010

A conundrum in it’s simples definition is a riddle or a question to an  intricate and difficult problem, so it’s know wonder with the above scenario that we have compliance and other related issues such as ever greening in  the retail industry that literally costs companies millions of dollars. The answer to the conundrum is that with little effort this problem can be avoided. And the way to avoid it is to use a contract management solution. Most retailers do not do so today.

We know that fortune one thousand companies many of which are retailers may have as many as 100,000 contracts. We also know that in the retail trade less than 15% of companies have contract management solutions. We also know that companies that do use contract management solutions have compliance ratings significantly higher than companies that do not. It is a well known fact that these solutions can reduce administrative overhead by up to 30%. Those savings although significant from an ROI perspective pale in comparison to the loses associated with evergreen or auto renewal contracts  that include price increase language when written notice is not received as called out in the contract. Just imagine a bulk fuel contract for millions of gallons with a single basis point escalator above a current Platts, OPIS or Gulf coast index if the contract evergreens. Ouch.

The good news is that a contract management solution like SafeContract™ can solve this problem and provide a near instantaneous ROI. SafeContract™ is offered in the form of Software as a Service or SaaS which makes it much more affordable than an in-house solution. The good news is that the data is yours and you only use what you need.

Don’t wait any longer to reduce your administrative costs, manage discounts and rebates, make your auditors happy with improved compliance and eliminate ever greening.

Contact SafeSourcing™ today.

We look forward to and appreciate your comments.

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Retail buyers are you checking your supplier’s standards to insure they support your Corporate Social Responsibility (CSR)?

Tuesday, June 8th, 2010

Contributions to the welfare of society can come in many forms such as supporting the arts, further education, giving to social welfare agencies, supporting community-building initiatives, reducing pollution, and the other charitable causes. Businesses that adopt socially responsible directives help to allow government agencies to minimize their involvement with the corporation

One way that retail companies can add to their social consciousness is to try and use Certified Reference Materials or (CRMs) which are the controls or standards used to check the quality and traceability of products. Requiring these standards prior to purchasing products indicates a lot about a company’s commitment to its stakeholders which includes their consumers. This will also mitigates risk should recalls occur as a result of harm.

By the way of an example, a reference standard for a unit of measurement is an artifact that embodies the quantity of interest in a way that ties its value to the reference base. At the highest level, a primary reference standard is assigned a value by direct comparison with the reference base.

A primary standard is usually under the jurisdiction of a national standards body such as ISO or The International Organization for Standardization which is an international standard -setting body composed of representatives from various national standards organizations. Relative to the example of a primary standard, you might refer to the Future ISO 26000 standard on social responsibility published as Draft International Standard which ties very nicely to this post.

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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How do you keep your contracts and suppliers green?

Friday, May 28th, 2010

The primary way of doing this is to insure that all of your contracts support (GPP) or green product procurement. This practice should apply to all contracts regardless as to whether they are for a product or a service.

Green Product Procurement places its focus on the items below as a condition of the contract or a condition of doing business with the host company. This process applies to both products and services that a company provides to or for your company, and may also apply to their own companies endeavors to support the environment in their daily business practices as well.

1.?Products made from recycled content
2.?Biobased products and services
3.?Environmentally prefererable
4.?Energy efficiency
5.?Water efficiency
6.?Use of renewable energy sources
7.?Use of alternative fuels or vehicles
8.?Products do not include? Ozone- depleting substances (ODS)
9.?Lacking in priority chemicals
10.?Use of Electronic Products Environmental Assessment Tool (EPEAT) for electronics.

Make sure your contract templates include environmental language that supports your companies programs and provide the safest products for your customers.

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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Very few retail companies have contract management software.

Tuesday, May 11th, 2010

So just what is Contract Management or Contract Lifecycle Management? Are they the same?

According to Wikipedia Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees.

Contract management can include negotiating terms and conditions and ensuring compliance with those terms and conditions. Beyond these base functions contract management can also include documenting and agreeing on any changes that may occur during the implementation or execution of a contract.

We can think of contract management as a summary of the process of with which companies use a systematic approach to manage contracts through the process of creating, executing and analyzing contracts for the purpose of maximizing the financial and operational performance of contracts so as to mitigate risk.

A frequent buzz word in the industry today is that of Contract Lifecycle Management Solutions. This really means the same thing from a systems perspective that should include automating much of the following.
1.?Authoring
2.?Negotiating
3.?Tracking
4.?Alerting
5.?Awareness management
6.?Baseline moderation
7.?Commitment moderations
8.?Communication moderation
9.?Contract visibility
10.?Document management
11.?Change management
12.?Issue alerts
13.?Service level agreement moderation
14.?Total Transaction compliance

Ask you solution provider how they can help you in this area and how to integrate CLM with your e-procurement suite.

We look forward to and appreciate your comments.

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SafeSourcing Blog begins its third year!

Monday, May 10th, 2010

When we placed our first post on May 8th of 2008 our goal was to make the blog a piece of an educational website (www.safesourcing.com) for procurement professionals where they could meet, discuss and research and find information on topics of importance to procurement professionals and knowledge workers. We also wanted to call attention to the sourcing of safe products and environmentally sound procurement practices.

The traffic our blog enjoys supports the fact that procurement professionals find our post to be a useful part of their procurement tool belt. Since inception our post has been visited by professionals from eighty nine (89) countries. We are regularly visited by other procurement solution providers and from the best blogs in our space.

Our goal going forward is to continue to focus on the retail vertical and pass on useful information as our learning continues so that others may benefit.

Please tell others about us if you find our information useful. We certainly thank you for and appreciate your patronage.

Comments Welcome.

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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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