Archive for the ‘Strategic Sourcing’ Category

Have you seen MONEYBALL the movie? What’s your e-procurement strategy?

Friday, January 20th, 2012

We have some friends in town this week. So, last night we decided to rent the movie MONEYBALL. According to wikipedia, The movie is based on the book Moneyball: The Art of Winning an Unfair Game (ISBN 0-393-05765-8)  by Michael Lewis, published in 2003, about the Oakland Athletics baseball team and its general manager Billy Beane.

First of all the game of business is unfair, so let’s just accept that as fact. There are winners and there are losers. As I have mentioned in prior posts I tend to look at the world in terms of our profession of procurement. In the aforementioned movie, two things stuck out like a sore thumb. The first was the inability of professionals that have been in a job for a long time to accept change. The second was the benefit realized by those that are willing to embrace change and often this is not the earliest of adopters. In the case of the book, the Oakland A’s won a lot of games by using a new philosophy of player acquisition through specific data points. The Boston Red Sox used the same formula to win a world series that had eluded them for almost a century a couple of years later. Does this still mean that bigger companies using the same philosophy will always win? Or, does it allow the smaller company to compete on a more even playing field

So what does this mean to the procurement professional? Relative to the first point it means being open to change and not thinking that you already know everything. An example might be that reverse auctions of today do not run the same way as the reverse auctions of yesteryear. These tools have been rethought by companies that are newer to the space and not restricted by legacy thinking. To the 2nd point, it is never too late to think through how you are doing things. An example might be thinking through whether or not it makes sense to run an RFI with every RFQ? How do the savings compare in this environment versus the historical way of doing things.

What’s your plan to do things differently?

We look forward to and appreciate your comments.

Retail Goes Mobile

Tuesday, January 17th, 2012

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

Recently we hosted a Request for Information for one of our customers for Mobile Technology for pharmacies.? This was such a good event because so many of companies aren?t even sure what is available to them with all of the technology advancements being made in the internet and with mobile devices.

Today we will be looking at all of retail and some of the new features your company should be considering with changes to your Mobile Technology strategy in 2012.

Just the Basics? ? For those companies that are just looking to start adding this technology to their customers there are a few standard features that should be included.?? The store locator feature is a standard offering that provides users a tool to instantly find the closest store to them, frequently providing maps and directions.? Another common feature is allowing the users to sign up for mass email coupons and discounts.? These are not focused to the user but rather the same email going to all customers that participate.? Having a link to the weekly advertisements in a smaller format is another standard mobile offering many retailers first give their customers.

Targeted Marketing ? Unlike the mass emails and weekly ads, targeted marketing can take a few different forms, each of which provides the user marketing and coupons that are targeted just to them.? Some mobile functionality allows a retailer to ?see? a customer?s registered phone when it enters the store and has the capability to provide them with immediate texts and alerts.? If a grocery store manager wants to run a short discount on meat to get it moved they can send out a text to the users in the store in order to focus the sale.? For other systems, based on the customer?s profile and/or buying patterns, texts and electronic coupons can be sent out to focus marketing messages on customers without flooding them with messaging that frequently leads to discontinued use of the system.

Pharmacy Features ? As stated above the recent RFI SafeSourcing ran recently was for Pharmacy Mobile technology which has its own set of unique features.? Prescription related features have been a hot new offering in this space as retailers are looking to give their customers the capabilities.? These include having texts sent to them that their prescription is filled and ready, or that it is about to be out.? Also included in this is the capability for patients to fill and re-fill prescriptions through a mobile app to local pharmacy.? Other frequently requested features are tips for healthy living and links to quick information about their medicines right from their phones.

For more information on finding suppliers and products to help with your companies 2012 mobile strategy, please contact a SafeSourcing Customer Service Representative.??

We look forward to your comments.

Why don?t the airlines want to publicly unbundle their ticket prices.

Thursday, January 12th, 2012

When I read the paper, the internet, trade magazines, blogs, books or other sources of information, I subconsciously apply a careers worth of learning or everything I know in order to try and understand the issue. I guess it means trying to understand things through my philosophy. This also allows me to look at what our company does by the way others look at things and apply non procurement based logic to what we do.

When I was reading that airlines did not want to unbundle their ticket prices for consumers it simply indicated to me; that they?re hiding something. Prices have not always been bundled. As an example, original technology models were based predominantly on hardware prices. This was when companies sold huge mainframes. As technology evolved to microprocessors ever more quickly along a Moore?s law curve, hardware prices dropped through the floor. This evolution caused technology companies to find ways to stop their revenue erosion. As such companies began to focus on increasing the services portion of their contracts. One way to do this was through solution bundles. Solution bundles were a hard sell and made it more difficult for customers to understand what the total cost of a product or solution was. Today many of the historical major hardware company?s services revenue are higher than their hardware revenue.

From a procurement perspective, the way one attacks this is through a detailed specification that outlines all the components, commodities etc. that make up the product or service being bid on.

Let?s get back to the airline ticket. Why don?t the airlines want to unbundle their ticket pricing. It?s simple. It creates too many questions. Questions like why is airlines A?s airport costs higher than airline B?s? Why am I paying more for Bags at airline A versus airline B?? Shouldn?t federal security charges be same for airline A versus airline B? What are flight segment taxes?

So why don?t the airlines want to publicly unbundle their ticket prices. The simple answer is because it will cost them money. Just the same as the 2nd bag costs you and the food on the flight costs you and the pillow costs you and the movie costs you. Here?s to full cost disclosure.

We look forward to and appreciate your comments.

Why don’t the airlines want to publicly unbundle their ticket prices.

Thursday, January 12th, 2012

When I read the paper, the internet, trade magazines, blogs, books or other sources of information, I subconsciously apply a careers worth of learning or everything I know in order to try and understand the issue. I guess it means trying to understand things through my philosophy. This also allows me to look at what our company does by the way others look at things and apply non procurement based logic to what we do.

When I was reading that airlines did not want to unbundle their ticket prices for consumers it simply indicated to me; that they’re hiding something. Prices have not always been bundled. As an example, original technology models were based predominantly on hardware prices. This was when companies sold huge mainframes. As technology evolved to microprocessors ever more quickly along a Moore’s law curve, hardware prices dropped through the floor. This evolution caused technology companies to find ways to stop their revenue erosion. As such companies began to focus on increasing the services portion of their contracts. One way to do this was through solution bundles. Solution bundles were a hard sell and made it more difficult for customers to understand what the total cost of a product or solution was. Today many of the historical major hardware company’s services revenue are higher than their hardware revenue.

From a procurement perspective, the way one attacks this is through a detailed specification that outlines all the components, commodities etc. that make up the product or service being bid on.

Let’s get back to the airline ticket. Why don’t the airlines want to unbundle their ticket pricing. It’s simple. It creates too many questions. Questions like why is airlines A’s airport costs higher than airline B’s? Why am I paying more for Bags at airline A versus airline B?  Shouldn’t federal security charges be same for airline A versus airline B? What are flight segment taxes?

So why don’t the airlines want to publicly unbundle their ticket prices. The simple answer is because it will cost them money. Just the same as the 2nd bag costs you and the food on the flight costs you and the pillow costs you and the movie costs you. Here’s to full cost disclosure.

We look forward to and appreciate your comments.

Part II of II. How are you managing your procurement talent pool?

Tuesday, January 10th, 2012

TOP GRADING can help any company with one of its most important strategic business pillars which is Talent Management.

I have always looked at business as though it has three primary pillars on which it rests. They are the strategic plan, the operational plan and the talent management plan. Together they form the bedrock for a successful pursuit of companuies goals. Remove one and the company can fall out of balance and have all structure within the company negatively affected.

A great tool for managing your talent or human capital within all areas of the company including procurement is TOP GRADING.? According to TheGinacGroup this term is being used more frequently in the HR world and refers to identifying the top 10% of performers in the interview practice. The methodology ?relies on unusually detailed, chronological interviews; conclusions are gleaned from patterns which have emerged across layers of competencies as interviewers probe every success, failure, relationship, and major decision in a person?s career.

One of the best educational sources for this process is the book Topgrading by Bradford D. Smart PhD. Published by Prentice Hall Inc. in 1999. This text does a great job of describing what A Player?s, B Players and C Players are, how to manage them through your organization and where the ceiling is for each type of player. Please understand that all companies need all three types of players. All groups of players require management through their group because all resources will not achieve their ultimate potential within a particular player category.

The process of screening for players requires specific detailed level questions relative to a candidate?s education, career, integrity and more. A candidates IQ may also enter into the recruiting process as it may be an indicator of the ability to rapidly absorb complex data sets and apply them to complex tasks while making the same clear to all interested and involved constituents.

If you?d like to know how you can apply top grading practices to your procurement talent pool please contact SafeSourcing.

We look forward to and appreciate your comments.

Part I of II. How are you managing your procurement talent pool?

Monday, January 9th, 2012

If you don’t, and all you have is C players, all you will ever have is C players! Well at least as long as you are in your current position which won’t be for long if that is the case.

I was reading our local newspaper this morning as I do every morning and just happened to look at the job postings in a nice tool called Career Builder  which is an insert. I though I might browse around and find a supply chain job listing or a procurement related listing or something related to the most important function within most companies (and, most if not all companies don’t realize it). That job would be procurement. Actually there are quite a few jobs in this category, but suffice none jumped of the page during my quick browse.

Once I realized that this would not be easy and know that I have several customers looking to fill procurement positions for which I have provided some guidelines, I thought about how companies go about managing that talent once they find them. Or better yet how company’s can make sure they were the right kind of talent in the first place. A resume or CV or work related reference does not provide that information. Neither does an industry related degree. These are all excellent indicators but from a purely scientific approach they do not insure that you are hiring talent that can advance within your specific talent pool.

I am very fond of one particular type of talent management called TOP GRADING. If you check back tomorrow we’ll discuss some of the secrets of that process that will help you find and manage talent in and out of your business in order to achieve a mix that will support you achieving your procurement business plan

We look forward to and appreciate your comments.

Ok procurement pros the New Year is in full swing now.

Friday, January 6th, 2012

The good news is that there is still time to save those resolutions that right now are probably destined to fail. So, what are the four most important things you can do in order to keep your procurement focused New Years resolutions or goals?

Well it is really pretty simple. The fact is and these numbers move around a bit but are generally within a few basis points regardless of the source. Here you go, 92% of all resolutions will not be kept at all and 45% will have already failed by the end of January.

However there is something you can do in the next five minutes in order to not become a part of these statistics.

I know you’ve heard some of this before, but it is etched in stone for this author. The first step is to write those resolutions down. Writing something down is a psycho, nuero, muscular activity that has an imprint effect on your brain. Typing something does not accomplish the same thing. So, if you have not written them down, do so now. The second step is to make your resolutions public, declare them publicly, and post them. This simple step creates ownership. The third step is to set a date for completion. A resolution or a goal without a completion date is just a dream. Finally take action and start making decisions that move you in the direction of your completions dates.

Here is a simple summary

1. Write them down
2. Make them public
3. Establish a completion date
4. Take action and make a decision.

Here’s wishing you the best one week into your NEW YEARS RESOLUTIONS!

We look forward to and appreciate your comments.

Survey Says…..

Tuesday, January 3rd, 2012

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

For many companies the journey to begin a project to source products or services begins with determining what they know about what they are about to purchase.  Many times when the product is one they have purchased previously, the task is simple and the details are readily available.  

In other cases, when new products are being purchased, or when many parts of the business are purchasing the same product but from different vendors or with different agreements, this beginning process can be much more difficult.  

Enter surveys…..Surveys are a useful tool to quickly and easily gain the additional information you need in order to begin a difficult sourcing effort.  Whether internal or external, today’s blog will focus on how you can use them to find the missing pieces of information you may need.

What are we doing? – When large companies have offices in more than one location, many times there are items which are purchased by the remote locations directly.  The obvious problem with this scenario is that the organization is not able to leverage the combined purchasing power it has.  In order to do this, however, how the company is currently doing things must be known.  Running a simple internal survey will allow the company to ask their locations or offices what they are purchasing, how much they are purchasing and for what price.  With this survey you should also determine who the company is working with and, if they are under contract, what the length and terms of that contract are. 

What should we be doing?  – The other useful aspect of internal surveys is to gather information from the offices on what the company “should” be doing.  Asking simple questions about what the location would like to do, or what isn’t working for their current agreement could provide valuable information about the type of vendor you want to look at as well as what types of products and/or services you should be moving with.

Poll your vendors – One area of information that can provide great detail but that some companies never tap into is their own vendors and partners.  Particularly in situations where many vendors are providing the same service you can often get a greater level of detail of what they are providing than you can through an internal search.  The hardest part for many companies is to get past the pride of, as a company, admitting that you don’t have the detail readily available.  Most vendors will not have a problem getting this information and as an added benefit you will get a chance to find out which vendors are willing to work with you during this process so that you can decide who will get the opportunity to win your business.

For more information on running surveys to gather information for your procurement team, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

“Staying the Course – Resolutions Part V of V”

Friday, December 30th, 2011

In the past four days, we have explored our New Year’s resolutions. We are now ready to reduce spend, prepare for new projects, engage in that green initiative and prevent contract evergreening. The most difficult step in any resolution is to see it through for the year to come. Today, I will provide additional tips that can keep your procurement strategies fresh and beneficial.

Event Selection:

The selection and timing of your procurement events is an important factor in overall procurement success. Take the time to categorize your events based on level of complexity as well as spend dollars and you will find that you are able to maintain a mix of simple and complex events that keep your organization balanced and prevent overload.

Index pricing and renegotiation:

You will likely find that your contracts contain index pricing language. This might include Min/Max clauses and might even include caps to prevent your pricing from varying too much in a given timeframe. Monitoring your price changes as they occur will protect you against unjustified price increases and increases that are above the maximum levels allowed. You might also find benefit from monitoring the indices involved to ensure that you receive any applicable price decreases that you deserve.

By working with your strategic sourcing partner to follow the resolution enhancing tips from this series, you will enjoy a 2012 filled with procurement advances and greatly reduced spend.

Have a Safe and Happy New Year!

We look forward to and appreciate your comments.

?Eliminate Evergreen Contracts ? Resolutions Part IV of V?

Thursday, December 29th, 2011

One of the biggest causes of excessive cost we find is evergreen contracts. I find this to be a fitting topic for a New Year discussion as, just like the New Year, these contracts also follow on the tails of a year. Evergreening is the practice in which a contract automatically renews if no actions are taken. Often this renewal is at a premium. For more on evergreening, click here to go to the SafeSourcing Wiki.

Evergreening can be prevented using a two part approach. First, you may implement a contract management system that will monitor your existing contracts and notify you of upcoming dates, such as contract expirations. These notifications will allow you to take the appropriate actions to prevent evergreening.

Once you have received your notification, you can take the existing documentation from the contract management system and work with your strategic sourcing partner to develop this into an RFI, RFP or RFQ based on the specific needs of that project. This chain reaction caused by your contract management system will have allowed you to prevent your evergreen contract from automatically renewing, led to further procurement savings and did so with enough time to benefit from this process without interrupting your current source of supply.

In tomorrow?s post, we will consider tips that will help you stay the course with your resolutions.

We look forward to and appreciate your comments.