Archive for the ‘Strategic Sourcing’ Category

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Do you want your sourcing to be more environmentally friendly in 2011?

Friday, December 24th, 2010

1. Be pro-active in driving not for resale and for resale product safety within your company, and also supporting eco-standards in the procurement process.
2. Pay it forward with all of your trading partners by sharing what you are doing, and asking what they do to support yours or similar initiatives.
3. Educate your employees and trading partners about common safety standards and guidelines such as the SQF Certificate www.sqfi.com  and the Global Food Safety Initiative www.ciesnet.com.
4. Educate your employees and trading partners about common eco-standards such as Green- Energy National Standard www.green-e.org or EcoLogo www.ecologo.org. 
5. Point associates and trading partners to free educational websites such as www.safesourcing.com to use their free SafeSourcing Wiki or the Sourcebook professional social network for procurement professionals.
6. Only use trading partners that follow your lead.
7. Train your team to understand and use all available tools that insure supply chain safety such the free daily safety in sourcing blog at www.safesourcing.com  or the low cost SafeSourceIt Supplier Database and Reverse Auction Tools.
8. Impose a system of measures and controls to monitor performance against clearly defined goals.
9. Start at the top and engage all levels of your company.

We  look forward to  and appreciate ayour comments.

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What is spend analysis?

Friday, December 3rd, 2010

Simply put, spend analysis is designed to provide companies detailed information about the entire companies purchasing data.

At the surface this seems to be pretty simple. In fact it is anything but. If we just look at the retail space, spend analysis relies on data from a number of disparate systems. Most retail organizations to this day do not have a single source of information or an enterprise data warehouse where data is available in one location for use by many applications. In mid tier retailers this is almost universal.

In fact in many retail organizations the following systems would require access in order to gain all spend data necessary for analysis by advanced real time analytics and workflow management systems.

1. Retail ERPS Systems
2. Retail Planning Systems
3. Merchandise Management Systems
4. Supply Chain Management and Execution Systems
5. Store Operation Systems
6. Corporate Administration systems

Certainly, if access to this data is available benefits such as instant access to information and better decision making are certain benefits that can be derived from these types of solutions.

The question for most however is how much time is required to conduct this integration. Would retailers be required to create another data repository and is a data mart of this sort really required to drive savings to the bottom line the shortest amount of time?

For many organizations, there are e-negotiation solution providers that offer these same analytics in the form of a professional service that is embedded in their event pricing. This may result in a more expeditious time to market and savings that can impact the organizations bottom line in the present reporting period.

All solutions do not fit all industries and there are generally alternatives worth exploring that may fit your needs more closely at a more economical price point.

We appreciate and look forward to your comments

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Here is some more on BPA and S.510 Food Safety.

Wednesday, December 1st, 2010

With all of this ongoing activity, why don’t we  hear more about the Global Food Safety Initiative (GFSI) and Safe Quality Food (SQF) and other already defined initiatives?
 
The SQF program is owned and administered by FMI the Food Marketing Institute www.fmi.org at the request of its retail members. An FMI Advisory Board provides overall policy advice, guidance and direction to the SQF Institute
 
 SQF simply put means Safe Quality Food and is an initiative that has been under development for over ten years. This certificate program is a fully integrated food safety and quality management protocol designed specifically for the food industry. By achieving SQF certification, suppliers provide an external verification of their commitment to producing safe, quality food.

There are two certifications available from the SQF Institute. The first is the SQF 1000 Code which is designed specifically for primary producers. The second the SQF 2000 Code is more focused on the food manufacturing and distribution segments of the industry.
The intention of SQF is to utilize one industry program that meets the requirements and at the same time provides efficiencies for suppliers. SQF and the SQF 1000 and 2000 codes are recognized by the Global Food Safety Initiative GFSI as conforming to the highest of international standards.

SQF has been implemented by over 5000 companies operating around the world including Asia-Pacific, the Middle East, United States, Europe and South America.

To learn more about this important initiative, please visit www.sqfi.com.

We look forward to your comments and questions.

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What steps are required to launch a successful e-negotiation program?

Monday, November 29th, 2010

As you might imagine, each of the steps I offer below can easily be expanded to include a great deal of detail. However, since the question came from a senior executive who was really looking for an elevator ride type of answer I offer the following as a simple guideline.

1. Select customer & provider project leads
2. Conduct detailed category discoveries
3. Rank categories and findings by category
4. Develop a and prioritize a category strategy
5. Select lead category items
6. Conduct supplier discovery & research
7. Select suppliers
8. Train suppliers
9. Conduct online e-negotiation
10. Deliver online e-negotiation reports
11. Analyze e-negotiation results
12. Request samples if necessary
13. Award Business
14. Sign contract and begin delivery
15. Report ROI.

We know these steps return results quickly.

We look forward to and appreciate your comments.

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Are Reverse Auctions Strategic? YES THEY ARE!!!!!!!

Thursday, November 4th, 2010

What is strategic is entirely up to the person using the tool, whether or not they have used it before and if it returns the results they require as part of their strategic plan. So can a reverse auction be strategic. Of course it can. The overlying strategy might in fact be to simply get costs under control as quickly as possible. I shudder to think that this would be a company?s entire strategy, but in these times of economic survival it may well be. I can envision the following. The economy is kicking a companies ass and the CEO calls a? staff meeting and says we have a new strategy and for the time being everything else will take a back seat in order to get our costs down. Come back in a week and tell you how you are going to do this immediately.

Now for the English lesson.

The word strategy is a noun that has several definitions. According to Wiktionary, 2 of those are.

1.?A plan of action intended to accomplish a specific goal
2.?The art of using similar techniques in politics or business

The word strategic is an adjective which we know is a word that modifies a noun and can also me modified by an adverb. So think of strategic as meaning of and pertaining to strategy and can be used comparatively as in something that is more strategic or less strategic.

So can a reverse auction or auctions be strategic. Of course they can and one example would be if your strategy was to simply reduce costs immediately. They can also be more strategic as part of a going forward strategy as well as provide other strategic benefits such as cleaning up your specifications and reporting as well as providing new sources of supply.

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, October 4th, 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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Before you comment about strategic sourcing!

Wednesday, September 29th, 2010

Recently Sourcing Innovation has carried a series of posts, comments and rebuttals as to whether strategic sourcing is alive or dead. This author also posted on the subject in a two part series titled Join the argument. Strategic Sourcing alive or dead? Part I of II on September 17th. And Join the argument. Strategic Sourcing alive or dead? Part II of II on September 20th.

As I read through much of the content in these posts I came to the conclusion that most solution providers comment are not seeing the forest for the trees. Officially strategic sourcing has been around as a sourcing term for 25 years. Unofficially it has been around as a process as long has man has been able to hunt and gather. Almost all searches on strategy will at some point refer to some from of military definition. That may unfortunately be a commentary on mankind. We can certainly agree however that from a military perspective we don’t need to look any further than Germany’s failure in the Ukraine during WWII to understand that not following ones own strategy can have disastrous effects.

Strategy is about understanding your subject area and all of the influence points associated with it. The question is; can we have a strategy without tools? The answer is yes. The key for solution providers is to develop and refine their tools so that they are easily usable by practitioners in order to carry out their strategy, goals and tactics which by their nature follow larger and more complex plans.

Let’s take a simple look at how we might be complicating things. From this authors perspective a strategic plan is made up of the following high level elements.

1. Strategy: Strategy is science or art and sometimes more of the later of combining and employing the means by which procurement can plan and direct supply chain improvement measured by level of operational efficiency and improvement.
2. Goals or Objectives: Goals or objectives fall directly from the strategy to drive a desired state or desired outcome of  persons or of  systems as set by the strategy
3. Tactics: Tactics are the conceptual action that drive goal fulfillment and are used by the procurement organization to achieve  specific goals or objectives

So simply it is not up to us to determine if strategic sourcing is dead or alive, it is up to the subject company that builds a strategic plan to makes sure they have a strategic procurement element of their plan that uses the best tools available to analyze and measure their results. And who are we to say that is not strategic.

We look forward to and appreciate your comments.

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The economists say the recession has been over for more than a year.

Tuesday, September 28th, 2010

Finding new sources of supply has always been an issue. It may even be more important if your current suppliers can not provide what you need because they were forced to down size during recent economic woes.

This author has posted on numerous occasions relative to the importance of a robust retail supply chain and how retail companies might manage their relationships with current and new sources of supply. A significant part of the process is to have alternative sources of supply that you can rely upon. During last years H1N1 flu outbreak, The SafeSourceIt™ supplier database was able to provide multiple sources of surgical mask suppliers to a customer that had not been able to find them elsewhere for resale in their stores. Although this particular issue was caused by panic buying, it is still a supply and demand problem. The question this begs is are your suppliers capable of supplying your needs as demand increases? Did they reduce staff during the downturn? Have they been able to ramp up since then? Have their suppliers? The message here is, don’t wait until a time of panic or increased prosperity to work and plan for spikes in the supply chain that may cause your customers pain.

The SafeSourceIt™ Retail Supplier Database contains over 380,000 vetted global suppliers that are certified in over 25 different areas.

We look forward to and appreciate your comments

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Retail buying organizations are you prepared to survive an audit?

Friday, September 24th, 2010

Although the audit process can be a good thing because it holds companies and individuals accountable, to often they are a result of something that is already broken and we are looking for a reason as to why. Or, someone to blame.

Audits can generally be broken down into the three classes that follow.

1. Significant Risk – This is non compliance that generally results in a major financial loss to the company
2. Moderate Risk – This is non compliance that generally results in a negative impact to the company
3. Minor Risk – This is a non compliant act that generally  results in a negative impact to an existing process within a company

From a procurement perspective this can include all items required during the bid and award process. Such as .

1. Purchase Orders tied to contract quotes
1. Delivery T&C’s
2. Definition of contract terms
4. Bidding process used
5. Vendor notification of award
6. Corporate standards adherence
7. Signature authority
8. Termination Clauses
9. Training adherence

The above list is potentially endless. The point is if you are buying products or services for your company, you need to be able to withstand a vigorous internal audit so that your auditors can withstand a vigorous external audit.

Is your procurement team prepared?

We look forward to and appreciate your comments.

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Join the argument. Strategic Sourcing alive or dead? Part II of II.

Monday, September 20th, 2010

In Part I of this blog we posited that in order for a strategic plan to be successful there are certain elements organizations need to know. I?ll just list a few as an example.

1.?Your own company.
2.?Your Industry. Example: Retail.
3.?Your vertical within your industry.
4.?Your competition. Be careful.
5.?Your category.
6.?Your product.

So let?s assume that you have an e-procurement supplier that indicates they have great strategic sourcing tools that can evaluate your data and help you strategically build your sourcing plan which as a result would support your company strategic plan.

Let?s assume a tier two supermarket chain wanted to evaluate their total grocery category. Let?s just look at bottled water which is a sub category of the total grocery category. The first requirement is that they provide access to their sales and cost data. This may be easier said than done in the lower tier one and tier two markets. What is also required here is access to industry data. Data may indicate that their bottled water sales are 2.5% of their total grocery category, but what is the industry standard for this category? Are they already above the average?? Has their category grown year over year? Have industry category sales?? If they have access to both sets of data they have a start but who is their competition?? Are they comparing themselves to other supermarkets and should they be?? What about C-Stores, Drug-Stores, Liquor Stores and Mass Merchants that are close to their stores and get a share of category sales. Are they aware of these competitors category mix such as number of brands offered or private label offerings? All of this information is required for every category in the total grocery category. If they don?t conduct this analysis how would they begin to know what category to address first? The obvious choice is the category that is most out of norm with the industry average. But will sourcing that category have the best impact on the P&L and earnings.

Once this analysis has been completed, their e-procurement solutions provider should also have data that can guide them as to what month is the best month to source specific categories and what commodity markets are doing currently that may also have an impact on finished products.

After all of this is completed and categories are evaluated, ranked and prioritized they should then look for other elements that are incorporated in their company?s strategic plans such as CSR initiatives that support safety and the environment.

So, is strategic sourcing dead? This author does not believe so. However it is a process involving a lot of work, a lot of data, a lot of analysis and more than just tools in order to result in a strategic sourcing plan that can be implemented, scored and adjusted properly over time.

We look forward to and appreciate your comments.

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