I have heard everything from we don’t do things this way at our company to we’ve already attacked most of the low hanging fruit and our buyers are telling us there are no additional savings to be had from these categories.

I’m not trying to suggest that retail is adverse to driving change, or in fact being early adopters of technology. After all, retail was the original user of the cash register which evolved to electronic point of sale systems, sophisticated scanning systems and ultimately today’s self checkout systems. Retail has been a leader in the use of all types of technology driving advanced products such as electronic shelf labels and other RF technology. So why does there seem to be a reluctance to driving more spend with e-procurement tools.

I believe the answer lies in the tools themselves. E-procurement tools such as reverse auctions have a rich history of board room proof of concepts attended by CEO’s and CFO’s with astounding savings sometimes as high as 30% to 40%. This to the delight of the presenting vendor when the attending executive says we should be doing all of our buying this way.

As a result the retail company assigns resources and moves ahead with passion and vigor. Slowly however they seem to lose steam and both the number of events and the savings either stabilize or drop off.

The following issues lead to low utilization but are certainly not the only issues resulting in lack of transition to more spend being assigned.

1. Proper Executive sponsorship with resulting corporate policy changes are not in place and reviewed for compliance regularly.
2. Proper discovery of every category with all buyers is not conducted
3. Stores, offices and distribution centers are not walked and reviewed as part of the discovery process.
4. Products within categories are not weighted, calendarized and prioritized.
5. Tools are not easy enough to use so that retailers can host there own events after they run successfully the first time.
6. Vendors direct retailers to not run events that may have limited financial success.
7. Proper discussion is not held to review strategy like the use of and RFI versus an RFQ or how to use both successfully within the same category.
8. Pricing for an event that drove large savings the first time is the same the second and third time the event is run.
9. Due to the complexity of the tools, options for self service and assisted service are not available without staff increases if at all.
10. Databases with adequate sources of supply are not readily available to bring new suppliers and their resulting energy to events over an extended period.
11. An overall business plan is not developed with savings targets, percent of spend, reward systems and other milestones necessary to drive corporate wide utilization.

We look forward to  and appreciate your comments.

procurement process.

1.  On the second day of Christmas our e-procurement service provider gave to us, more suppliers to source our goods from.
2.  On the third day of Christmas our e-procurement service provider gave to us, pricing that works for smallest categories.
3. On the fourth day of Christmas our e-procurement service provider gave to us, consistent and customized product specifications.
4. On the fifth day of Christmas our e-procurement service supplier gave to us, more time for other priorities.
5. On the sixth day of Christmas our e-procurement service provider gave to us, improved quality in our products.
6. On the seventh day of Christmas our e-procurement service supplier gave to us, better supplier education.
7. On the eighth day of Christmas our e-procurement service provider gave to us, a simple award of business process.
8. On the ninth day of Christmas our e-procurement service provider gave to us, support for a better carbon footprint.
9. On the tenth day of Christmas our e-procurement service supplier gave to us, total category e-procurement.
10. On the eleventh day of Christmas our e-procurement service provider gave to us, safer products for our customers and planet.
11. On the twelfth day of Christmas our e-procurement service provider gave to us, a sustainable e-procurement process and improved corporate net earnings.

Now, ask yourself if all of these goals are accomplished on your company’s behalf by your present e-procurement service provider.

We look forward to and appreciate your comments. Happy Holidays.

What does it mean to go Green? I was rereading an Aberdeen white paper Building a Green Supply Chain from last year and believe they may in a concise format have the best glossary of definitions as to the meaning of and impact on what it means to be Green. Their short but effective green glossary defines the following terms.

1. Corporate Social Responsibility (CSR) posits that companies have a responsibility to be social and environmental stewards and that having a positive impact on society and the planet is as important as profit.
2. Green refers to practices, processes and products that have a minimal impact on the health of the ecosystem. The emphasis is on non hazardous recyclable, reusable, and energy efficient products and processes.
3. Sustainability ensures the ability to meet present needs and profits, today, without compromising the ability to meet them tomorrow.
4. Triple Bottom Line (TBL) determines that business has positive impacts on the three P’s: people, profit and planet and is a standard framework for CSR agendas.

It might be interesting to ask your CEO if he or she agree with these definitions. Many probably do. The next question would be are you as a company measuring any of them and their impact on your companies performance. The answers would be a good indicator of  your company’s commitment to being Green and not just caught up in green wash and web slogans.

We look forward to and appreciate you comments.

I was reading today?s edition of USA TODAY and read the front page article titled Along Highways, signs of serial killings by Blake Morrison. The data was shocking to someone that travels a lot and also has family members that do so to make their living. Over the road travel is how most of our goods are shipped and is also a necessary part of how most suppliers representatives travel to call on our retailers and our retailers work with their stores.?

As such I am posting tips by AAA titled Avoid being a victim.

AAA offers these tips for motorists concerned about their safety at rest areas and truck stops:

??Avoid being the only person at a rest area.
??Park in well-lit spaces near the facilities.
??If you see someone suspicious, wait until the person has left or drive to another location.
??Keep your keys in your hands as you walk to your car. That way, you can quickly enter and lock your car.
??If you’re approached by someone seeking help or information while you’re in your car, keep the doors locked and crack your window to talk with them. Offer to call help for them, but do not get out of your car.
??If someone confronts or grabs you, react loudly and fight back. Make a scene.

Be SAFE out there.

We look forward to and appreciate your comments.

These sessions can from time to time also run as forward auctions in order to reduce over stock conditions and reduce shrink. Regardless of the naming convention used there are certain rules which if followed will create higher quality events for the retailer and the supplier? This will result in creating better savings opportunities or cost avoidance in a tough market. The importance of focusing on a clear process will increase event participation. This focus on quality will be recognized by your existing trading partners and potential new sources of supply, and will keep them coming back in the future to compete fairly for your business.

1.Executive sponsorship is mandatory
???? a.?This is required at the CEO, CFO, CPO, CLO or head of the supply chain.
2.?Get the entire buying organization together for a kickoff session.
3.?Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4.?Discuss and agree on success criteria.
5.?Every event is not a homerun. Singles and doubles score runs.
6.?Create a fun environment.
7.?Consider prizes for the most creative use of an auction.
8.?Use scorecards by department with percent of savings.
9.?Discuss the meaning and importance of corporate aggregation.
10.?Hand out event templates to gather existing product specifications.
11.?Put a time requirement on data collection.
12.?Gather an accurate list of your present suppliers.
13.?Work with your sourcing company to identify a top 100 list of events.
14.?Calendar the events.
15.?Prioritize by dollar value, date and strategic value.
16.?Conduct department level discovery meetings of 30 minutes to an hour.
17.?Investigate existing contract language.
18.?Look for auto renewal (evergreen) language roadblocks.
19.?Determine alternate sources of supply with your sourcing company.
20.?Develop an event rules and instruction template and post with each event.

Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner that knows your business.

We look forward to and appreciate your comments.

Do non industry specific expensive spend analysis tools achieve the primary objective of retail e-negotiation which is to reduce costs immediately?

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

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 if they even have them would require access in order to gain all spend data necessary for analysis by advanced real time analytics and workflow management systems. Again most mid tier retailers will not have any of these systems in place making the collection of accurate data even more difficult.

1. Contract Management Systems
2. Retail ERPS Systems
3. Retail Planning Systems
4. Merchandise Management Systems
5. Supply Chain Management and Execution Systems
6. Store Operation Systems
7. Corporate Administration systems
8. Accounts Payable 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 in 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 e-procurement pay as you go 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

Sometimes I wonder what it takes to get through to people that as a procurement professional or knowledge worker, that their job is the most important job in retail. Or at least it could be.

This author has discussed on many occasions the various benefits to retailers of using e-Procurement tools. Not the least of which is that if a retailer were seriously to assign twenty percent of their above the gross margin line spend to these types of tools, they could increase their net earnings by up to 100%. In addition, much of the following would also happen.

1. They would continue to source high quality products.
2. They would continue to have great supplier relationships.
3. They would free up time to do other tasks.
4. They would improve their company?s net earnings by up to 100%.
5. They would support our fragile environment.
6. They would support global food and product safety initiatives.
7. They would have a larger audience of piers to converse with daily.
8. They would have a single source of information about their profession.
9. They would be instantly alerted to product recalls.
10. They would support a traceable supply chain.
11. They would have an endless source of new suppliers to review easily.
12. They would have product specifications at their finger tips.

Now you might wonder why many companies are not enjoying these benefits already. The following are the objections I hear all of the time after we have presented to a prospect that has not been exposed to e-procurement tools in the past.

1. I already get the best cost.
2. We?ve done business with this supplier for years.
3. I don?t have product specifications.
4. I don?t have time for this.
5. Switching costs will be too high.
6. I can?t insure the same quality.
7. We need to adhere to certain standards.

If you have an objection that is not listed above, or they pretty much fit your thinking, please review the dozen benefits above and weigh it against them.

As always, we look forward to and appreciate your comments

This blog has discussed a variety of e-procurement issues from quality category discovery to safety certification adherence over the last several months. Recently I was asked by a medium sized retailer where they might begin or how to get started in becoming more eco-friendly in their e-procurement practices.

There are certainly a lot of potential answers to this question that might include beginning by defining what their company means by being more eco-friendly or what specifically they are hoping to accomplish with this initiative.

There are several environmental focus areas that can be easily integrated into a company?s buying decisions without to much difficulty. In fact much of the data can be provided by suppliers as part of a simple RFI process and supported in a detailed product specification. The following list is intended to offer some guidance or points of reference in developing a plan.

1. Evaluate the environmental performance of incumbent suppliers
2. Support eco-labeling on products,
3. Develop a list of corporate environmental requirements you support
4. Develop a list of environmental regulatory requirements you are required to support
5. Publish this inforamtion with all pre event supplier instructions
6. Require service and systems providers to provide an analysis of the environmental impact of their delivery model
7. Ask suppliers to provide pricing on an environmentally focused equivalent or alternative to the current product specification within pricing guidelines
8. Jointly raise the awareness of environmental issues that affect procurement by providing relevant information and training to internal staff and suppliers
9. Review your state, province and regional environmental policies as they apply to your business
10. Publish the goals of your environmental program in the reception area and in each buyer or category manager?s office space in clear view.

There are certainly other areas not included in this list, but these are a good starting point.

We look forward to and appreciate your comments