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

This week we have been looking at how the concepts that influence how people purchase for themselves personally can be applied to the procurement world to help overcome hurdles and to better understand how to approach their own difficult procurement projects.

In today’s blog we will conclude by looking at how we as consumers love to save but hate the work that sometimes goes with it.

The Joy and Pain of Coupons

In our house I painfully watch as my wife spends what seems like hours clipping coupons each Sunday before going shopping.  It is something I do not know if I could do, but when she shows me the receipt showing $20-$50 in coupon savings I am very pleased.  All of that said, and in spite of knowing the potential savings I could, get I still don’t know if I would take the time to clip those coupons and I know I am not alone.

In so many ways, this reflects the attitude of procurement departments everywhere when you mention strategic sourcing processes and tools as something they should be doing.  They all agree with the potential savings numbers but are often not willing or able to spend the time to do the right things to get them.

Just like the scenario above where my family gets savings because my wife takes the time for us, procurement departments have that same option in 3rd party strategic sourcing companies that will take the load off of them to research, communicate, prepare, collect, analyze and report the savings for them.  By partnering with an eProcurement vendor, companies can have the opportunity to get great savings without having to invest the hours it takes to get those savings with their own team.

We hope you have enjoyed this series and for more information about how we can assist with sourcing projects for your company, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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

We have been looking at how the concepts that influence how people purchase for themselves personally can be applied to the procurement world to help overcome hurdles and to better understand how to approach their own difficult procurement projects.
In today’s blog we will be looking at how we as consumers are constantly looking for more from the products we buy and the companies we buy them from and how that same practice should be employed when reviewing your company’s suppliers.

Expecting More

In the world of advertising and marketing there are professionals whose job it is to keep us informed of all the ways the services and products we are currently buying are deficient in every way to the services and products they are selling.  As jaded television watching and magazine reading consumers we have learned to filter out what is real and what is fluff, so we know when we see something we want and will demand that new offering from our current company or we will decide on whether to switch products or providers.

Obviously the effects of switching that quickly and often in the business world can be disastrous and as procurement professionals we don’t have the same adverting messages constantly in our face to pick apart our current partnerships and supplier choices.  That does not mean, however, that there is not something to take away from this mentality of learning what is new and expecting more. 

Part of any good sourcing strategy will be to examine (typically in the form of a Request For Information) what is available on the market that is new.  This does not even mean you have to consider changing vendors, but it does give you the option of seeing how your choice of forklifts compares to the latest and greatest on the market or what teleconferencing services are now willing to provide customers that sign a 2-year contract that is more than what you are getting today.

As the old saying goes, “You don’t know what you don’t know,” and you can’t make the best decisions for your company unless you “know it.”

Tomorrow we will conclude this series by looking at how getting help can increase your savings.

For more information about how we can assist with sourcing projects for your company, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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

We have been looking at how the concepts that influence how people purchase for themselves personally can be applied to the procurement world to help overcome hurdles and to better understand how to approach their own difficult procurement projects.

In today’s blog we will be looking at how looking only at low price can be seen by many retailers/suppliers as the wrong way to obtain what you are looking for.

Only about the lowest price

Anyone who regularly shops and cooks at home will tell you that when it comes to buying meat it is more than just about price.  Sure the average person can buy a 5 lb bag of frozen chicken breasts that is much cheaper than the 2 lbs of fresh free-range chicken breasts but many will tell you that the difference flavor and texture makes up for it.  Some people will still buy the frozen because it is cheaper, some will go for the taste and freshness in spite of the cost and most everyone else will fall in the middle.

This concept holds true again with big sourcing projects.  There are some customers who want nothing more than the “cheap frozen chicken” and so they go for the lowest price option only.  Unfortunately this has created a bad image for strategic sourcing tools as being low cost only tools that never factor in any thing else in the buying decision. 

The best strategic sourcing practices will show, however, that almost all projects fall somewhere in the middle where a customer needs to understand everything that sits between “frozen chicken” and “Just prepared today fresh chicken” and then analyze the cost, quality, service level, and reputation of each option.  This is how a company finds the best overall value for their company.

Tomorrow we will cover how understanding how other similar products and services are better can help us get more out of what we buy.

For more information about how we can assist with sourcing projects for your company, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

I was reading the news paper this morning. The business section of our local paper always carries a section by Harvey Mackay. I have been reading Harvey’s column for years and have also read his books. The first one I read years ago was “Swim with the Sharks without Being Eaten Alive” . In the book Harvey discusses his Mackay 66, which is what his article was about today.  You can download a copy of the Mackay 66 for free on his website www.harveymackay.com.

Specifically Harvey’s list is focused on what you know about your customer. Most sales people could not fill this list out and answer all 66 questions for any customer they call on. The idea behind this list is that the more you know about your customer, the more the customer becomes personal to you. The reward should be obvious. If you don’t get it, you might need to stop reading and go fill out your list.

I have always managed my business relationships in this way and it works for projects too. Associates I have worked with over the years can all tell you about Ron’s A-Z sessions. The philosophy is that you keep asking and then answering questions and objections until there are no more.

So how does this work with procurement? Again, it should be obvious. The fact is it apparently is not based on my experience with most companies. Ask the average category manager or buyer what they can tell you about the product or service they are sourcing and they unfortunately can not tell you much.

It’s pretty simple to conduct an A-Z session. One simply starts by asking questions, answering them and continuing until you don’t have anymore questions. Yes you may have to spend some time researching the questions?

Example: Here’s a list to get you started. Each question should beg another question. When you run out of questions, you should have what you need to source the product or service.

1. What product or service are we buying?
2. How much do we need?
3. When do we need it?
4. How much did we buy during the last order cycle?
5. Do we have a specification?
6. Has the product or service changed at all since last purchased?
7. Is there a contract in place?
8. Where is the contract?
9. Do I have a copy of an invoice?
10. Who are our internal or external customers?
11. Who are our suppliers?
12. Are there additional suppliers?

You should be able to easily add another 25 questions to this list.

Here’s a hint, most procurement professionals are not subject matter experts on everything they have to source. The exercise above can be completed in less than an hour. Couple that with the research tools available to all of us today and suppliers websites and you might be the subject matter expert your customer needs.

Remember when you create value, customers will reward you and others will find you. If you would like to learn more about this post, contact a SafeSourcing associate.

We look forward to and appreciate your comments.

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

Computer refreshes within an organization are common.  They typically require 3 different elements that require sourcing with a possible fourth if training requires inclusion as well.  In today’s post we are going to focus on the options for sourcing the three most common elements (Hardware, Software, and Installation Services) with the understanding that training could be easily added in the future.

Option 1 – Request For Quote all items

In this option the customer already has a detailed specification for everything they need and where it should go.  Option one involves taking all aspects of the refresh out to the vendor community for pricing as one event and in the process we would offer a competitive forum for them to adjust their pricing instantly. 

The advantages to this approach would be giving companies that can handle each piece, the opportunity to bid in such a way that they can offer additional discounts for getting all of the project spend, but this can also break the vendor focus up in a way that does not lend itself to getting the best savings on each product group. 

Option 2 – Request For Quote 3 separate events

This approach breaks out hardware, software and installation/configuration services into separate events for price gathering and compression.   The advantage to this approach is that it allows the focus to remain on the “like” items in each event and typically will drive the best savings.  Vendor participation tends to be higher because the focus is smaller and can include many more vendors who just handle that group of products/services.

The disadvantage would be that fitting the results back together takes a little more time and sometimes discounts for awarding the business to one company can fall out in the process, although they can still be asked for when a contract is negotiated.

Option 3 – Request For Proposal

This approach would treat the entire refresh as one large project.  You can provide the details to vendors who could handle the entire project and request details about who they are, their qualifications and any other additional services or value add items they wish to include.  Pricing would be a part of this process with a second price compression focused on those areas you want to try and get better pricing on if it makes sense.  

This approach gives all vendors the information they need to handle the project and the potential to have one company run everything.  You would have all of the information you need to decide on a potential short list of vendors you could interview and you will have the details necessary to compress items/services that will provide the best savings.  A side benefit will be that you generally get a lot more value add services with this approach.  The downside to this approach is that it generally excludes vendors who could not handle all three aspects of the refresh which can sometimes reduce the level of competitive responses.

For more information about how you can begin to take a look at upcoming computer refreshes, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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

We have reviewed Vendor Introduced Needs that create new sourcing projects in a company and the steps you can take to begin getting the data and information the business needs to make the right sourcing decisions.  We finish the series today by reviewing Market Introduced Needs.

Market Introduced Need – Many times the  local or global market or both introduce needs before you even have a chance to decide that a need even sexists.  Fuel price increases, rising paper and postage expense, Federal laws, regulations, trade laws, import and export evolution and other items are all happen or are happening in  markets around the world  that create needs where none existed before.

Obviously the effect that rising  fuel prices have on almost every aspect of sourcing have been widely written about by many authors and bloggers but what about the increases in paper and postage that are happening that demand companies to move toward digital statements, communications, invoices, etc.?  What about new regulations that require additional testing of your fleet emissions, your refrigeration/air conditioning units, or your disposal of waste?  These create sourcing projects which are generally high profile and high urgency and include data that your sourcing professionals have little or no experience with.

For many of these market introduced needs  project begin with a thorough understanding of why the changes have occurred in the first place and what they truly mean in relation as to how you conduct business.  Many times companies jump to get a new service based on evolving laws and regulations that don’t even apply to their business model.  A 3rd party eProcurement partner should be able to help you evaluate your specific needs.

Once your need  are determined it will be important to find  a sourcing provider that can deliver the best value for your business including  a best case strategy with various implementation scenarios over time that ultimately get you to best practices at the best cost and value.  While price is examined, many times the fit a vendor has with your organization will be equally important because as mentioned above these projects tend to be high profile and having the cheapest company perform the product or service in an inadequate manner can cost the company millions down the road.  Your eProcurement partner should be able to provide analysis in this area as well.

For more information about how you can begin to take a look at your companies new projects more effectively, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.