Archive for the ‘Supply Chain Procurement’ Category

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Retailers; can you compete with these top ten retailers in your market?

Tuesday, July 20th, 2010

Every one of the companies listed below use e-procurement tools to lower their cost of goods and services. They probably don?t even need to based solely on their sales volumes, but the do anyway and as a result get even better pricing.

1.?Wal-Mart
2.?Kroger
3.?Target
4.?Walgreen
5.?Home Depot
6.?Costco
7.?CVS
8.?Lowe?s
9.?Sears
10.?Best Buy

The reality is that you can?t compete with them on price alone. What you can do is improve your own margins and earnings so that you can stay in business and focus on what you do well. The ten retailers listed above cover every type of format and every type of product offered in retail from fashion to fuel.

So what can you do? First, try conducting a spend analysis of your detailed profit and loss statement and compare it to the industry leaders and other retailers in your market area. Look for anomalies where you may in fact have an advantage based on product mix and then try to figure out how to exploit it. Second, use e-procurement tools for existing and new products and services sourcing. Third, use contract management software to make sure that the savings you generate make it to your P&L.

Ask your e-procurement solutions provider how they can help. If you don?t get a good answers call SafeSourcing at 1-866-623-9006 or visit our website www.safesourcing.com and click on Contact Us.

We look forward to and appreciate your comments.

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We still need to question CHINA.

Tuesday, July 13th, 2010

There was a point in time that sourcing products from China insured a low cost for your product. Then the price of oil went through the roof and melting down containers returned more than trying ship product in them. Even with oil down somewhat from that time, costs are increasing in China as plant safety and quality and worker safety and quality improves. However, there are still probably bargains to be had, but caution should be your guiding word.

A great example of this is a recent find by Chinese officials of tons of milk products tainted with Melamine. If this sounds familiar, it should. This was an issue in 2008 on which this author posted. The scandal actually killed 6 babies and made hundreds of thousands sick at the time. China actually executed two individuals for producing or selling toxic milk. So here we are in 2010 and the problem has still not been totally corrected and we are talking about products that are only sold in China. It would seem that a country would be more concerned about the quality and safety of products made by the Chinese for the Chinese consumer.

As such, companies need to complete the due diligence necessary to insure that the products you are planning to source include detailed raw materials descriptions, formulas and certifications that are mandated globally to insure product quality, safety and environmental impact standards.

Ask your solutions provider what their vetting procedures are for including suppliers in their database?

We look forward to and appreciate your comments.

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Retail COGS, Gross Margin and Net Operating Income. So what else is included in retail P&L

Thursday, July 1st, 2010

This is the final in a three part series.

At a very high level and retail summary P&L might look something like the example below. Each retail industry sub vertical will look a little different. The percentages in each category absolutely will… If you can understand the underlying pressure points then and only then will your e-procurement discovery drive the results that a CEO or CFO are interested in.

Gross Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Net Operating Income
Gross Operating Expenses
Officer Compensation (CEO, CFO Etc.)
All other Salaries and wages
Maintenance (Cost of Repairs)
Bad debt write off
Facility Expenses (Rents)
Taxes
Interest
Amortization
Depreciation
Advertising Expense
Benefits
Misc expenses
Retirement Plans
Total Operating Expenses

We look forward to and appreciate your comments.

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In order to manage your retail supply chain, you first need to know what it is or isn’t.

Friday, June 25th, 2010

Managing a retail supply chain depending on how involved you want to become in the process includes your products and how they get to you, your consumer and the service you provide for the product post sale. This also includes all data about the product in a procure to pay process such as purchase order information, contract information and delivery coordination and status along the way. All of the above requires management of the related financial data such as payment terms and schedules and other financial data. A good place to start is to break this information down into manageable pieces and see how many people are involved in the process internally and externally and how they collaborate with each other if at all. To the extent that you can not connect the lines may include.

As a retailer, you are an obvious part of the consumers supply chain and in some cases also a supplier to other retailers. The network depends on the product but can include yourself,  raw material providers, manufacturers, wholesalers, distributors, third party logistic companies or 3PL’s, and other types of transportation companies. Managing the collaboration of your supply chain is what will ultimately differentiate you from your competition. It’s up to you.

As your procurement solution provider how they might tie all of these disparate organizations together for you.

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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This is Part III of an III part post series titled “Technology Drives E.Procurement Acceptance” focuses on Reasons to Use E-Procurement.

Monday, May 24th, 2010

 Part III Reasons to Use E-Procurement

Sometimes an explanation can be lost in translation so we have developed the following 20 reasons why utilizing the technology-based e-procurement process can provide significant benefits to you and your company. These are certainly not all of the benefits that can be derived from the use of the e-procurement process, but it is a good starting point.

While this list is not ranked in order of importance, many might argue that not much is more important than the #1 item which is improved earnings.

• Improve net earnings
• Enhance safety
• Reinforce corporate social responsibility
• Find new sources of supply
• Streamline the procurement process
• Elevate supplier accountability to meet your standards
• Improve quality
• Reduce costs in a volatile market
• Ensure a competitive environment
• Buy at market pricing
• Maintain a reliable history for comparison
• Educate suppliers as to how you wish to procure products
• Eliminates questions through effective supplier training
• Maintain consistent product specifications
• Improve negotiation
• Improve carbon footprint
• Simplify your “award of business” process
• Free up time for other tasks
• Process works for all product categories
• Provide a detailed audit trail

E-procurement offers many benefits for a broad range of companies in a variety of industries, assuming that the process selected is a high quality system with an extensive supplier database. We must also assume that the e-procurement process is implemented properly with the purchasing company and that the experienced e-procurement system provider works in concert with the buyer in order to realize optimal cost savings.

Numerous technology advancements have streamlined the e-procurement process and made it more user-friendly and less expensive. A company today can expect to reap significant benefits from e-procurement, including: saving money on purchases, reducing the time involved in the purchasing process, tracking current and archival activities and results, eliminating waste and improving the overall efficiency of the supply chain.

 Take advantage of the technology advancements and don’t overlook the benefits of implementing an e-procurement process to strengthen your company’s bottom line.

To download copies of this entire article please use the following link.

We look forward to and appreciate your comments.

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This is Part III of an III part post series titled ?Technology Drives E.Procurement Acceptance? focuses on Reasons to Use E-Procurement.

Monday, May 24th, 2010

?Part III Reasons to Use E-Procurement

Sometimes an explanation can be lost in translation so we have developed the following 20 reasons why utilizing the technology-based e-procurement process can provide significant benefits to you and your company. These are certainly not all of the benefits that can be derived from the use of the e-procurement process, but it is a good starting point.

While this list is not ranked in order of importance, many might argue that not much is more important than the #1 item which is improved earnings.

? Improve net earnings
? Enhance safety
? Reinforce corporate social responsibility
? Find new sources of supply
? Streamline the procurement process
? Elevate supplier accountability to meet your standards
? Improve quality
? Reduce costs in a volatile market
? Ensure a competitive environment
? Buy at market pricing
? Maintain a reliable history for comparison
? Educate suppliers as to how you wish to procure products
? Eliminates questions through effective supplier training
? Maintain consistent product specifications
? Improve negotiation
? Improve carbon footprint
? Simplify your ?award of business? process
? Free up time for other tasks
? Process works for all product categories
? Provide a detailed audit trail

E-procurement offers many benefits for a broad range of companies in a variety of industries, assuming that the process selected is a high quality system with an extensive supplier database. We must also assume that the e-procurement process is implemented properly with the purchasing company and that the experienced e-procurement system provider works in concert with the buyer in order to realize optimal cost savings.

Numerous technology advancements have streamlined the e-procurement process and made it more user-friendly and less expensive. A company today can expect to reap significant benefits from e-procurement, including: saving money on purchases, reducing the time involved in the purchasing process, tracking current and archival activities and results, eliminating waste and improving the overall efficiency of the supply chain.

?Take advantage of the technology advancements and don?t overlook the benefits of implementing an e-procurement process to strengthen your company?s bottom line.

To download copies of this entire article please use the following link.

We look forward to and appreciate your comments.

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Ron Southard CEO of Safesourcing is featured with Tim Hull CEO of TDH Marketing in April issue of Technology First. Part I of III

Thursday, May 20th, 2010

Technology First is an Ohio based industry-led, industry-driven trade association dedicated to proactively representing IT in their region and highlighting niche technology companies.

Part I.? E.Procurement Background .
Technology advancements are broadening the acceptance and utilization of e-procurement processes worldwide and making it available through internet access without the need for technology investment. The retail industry has been somewhat slow in considering e-procurement initiatives than have other industries. As a result, much of the lower tier one and tier two retail chains do not use the e-procurement resources that are readily available in the? marketplace today. Some companies would like to, but do not quite know how to get started. In several cases, even the big retail chains are sourcing a smaller percentage of their total spend than the levels being recorded in other industries.

E-procurement processes have been utilized in maintenance, repair and operations (MRO) applications in a variety of industries in addition to manufacturing materials supply. The purchase of office supplies, consumable items and numerous types of hired services from snow removal to landscaping and facilities maintenance can all realize great savings by using the e-procurement process which can range from a simple RFQ to a very detailed RFI. Although e-procurement is oftentimes perceived as merely the purchase of products and services over the Internet, e-procurement is much more than just a means for making purchases online. It is a well-managed, organized process that handles all interactions between the purchaser and the supplier. This process includes optimal management of communications, questions and answers, bids, previous pricing information, inventory utilization and reorder sequences, access to suppliers, historical cost savings, supplier transactions and much more. With built-in monitoring tools, a well managed e-procurement process provides numerous benefits, the most recognizable ones being improved cost control and maximized supplier performance.

With the technology based e-procurement services that are available today, there is no excuse for overlooking this opportunity to reduce supply costs and boost the bottom line. Getting started is easier than ever and more user-friendly, thanks to continuing technology advancements. With high speed bandwidth, reliable security solutions, enhanced software and integrated programs, the e-procurement process is proving itself on a daily basis in terms of performance and reliability.

Please join us tomorrow for Part II of this series titled Getting Started. To download the entire article please use the following link.

?We look forward to and appreciate your comments.

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Was the recent e.coli settlement a supply chain problem?

Friday, May 14th, 2010

We have posted many time on the need for a traceable supply chain and the need for better due diligence throughout the procurement process including plant, farm and other source inspections. Keeping this data in a format that is searchable in the supplier vetting process is paramount to mitigating risk to consumers, suppliers, manufacturers and other areas of the supply chain is just to great without it.

Cargill Inc. which is a great agribusiness announced yesterday that they were responsible for the life shattering injuries suffered by Stephanie Smith by eating a contaminated burger in 2007. The parties agreed to settle the law suite and the terms were not disclosed beyond that Cargill agreed to cover her care for the rest of her life.

The debate on food safety continues and as it does drives the need for compliance at all levels of the supply chain from the farm to the table and the capability of tracing finished goods from the consumer to the source in order to. Without these tools issues like this will continue to happen.

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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