Of course I?m talking about COST SAVINGS opportunities through the use of e-negotiation tools. Why do companies fight this so?

I have met with many retailers and rolled out examples that reflect savings driven by recent e-negotiations by other retailers with a similar format and located in the same geography. Many of these examples are less than twenty four hours old. As real as these results are, it is still difficult for the retailer to pull the trigger and give a new process a try. This is even true for hosted full service events, where there is little for the retailer to do. We just seem to get in our own way sometimes because we have too many other important things to do.

In this case let?s assume that the companies CEO is in the meeting and directs that he or she would like the cost of goods reduced ASAP. The project is then assigned to the Senior Vice President of Supply Chain or Chief Logistics Officer or Chief Procurement Officer or some other senior executive. This is then further assigned to the Vice President of Procurement who in turn assigns it to some director. The director convenes meetings of the buyers or category managers responsible for a variety of category spend. Now the excuses begin.

1. We can?t damage our relationship with our suppliers.
2. We get the best price in the industry right now.
3. These guys don?t know what they are talking about.
4. Don?t we have a tool that does this in our ERP system?
5. We?ll sacrifice quality.

I could go on an on with more excuses or objections, but I think most of you get my drift. Everyone has one. Have you ever heard the quote that ?A camel is a horse created by committee?? Well, here we are in the stable again.

If we go back to the CEO and explain what the situation is, one is likely to get a reply that says as the Nike commercial does; JUST DO IT! Unfortunately that needs to be followed by; DO IT KNOW! And, I?ll be watching.

From start to finish, the e-negotiation process should take no more than two weeks to complete. This includes the entire process including and RFI if necessary from the day a retailer says go to the award of business. With that said, there are several requirements necessary to accomplish this. These eliminate the worry and mitigate the risk. They are also easy if you choose the right provider.

1. A robust supplier database.
2. A robust event specification library.
3. An intuitive set of tools for configuring the R?s.
4. Automated reporting tools that provide immediate result details.

Stop the excuses. If you are really interested in improving your bottom line now, you are less than two weeks away from immediate results. As they say at NIKE. Just do it!

We appreciate and look forward to your comments.

If you have not been following recent blog posts at Sourcing Innovation.com, you should have been. In this case the posts relative to the number of corporate Chiefs, the doctor is right on.

In the Doctors recent post CUCKOO, he calls attention to the endless and in many cases meaningless introduction of new ?C? level positions in today?s business world. When this author first began my career, what was typical of most corporations was the Chief Executive Office, the Chief Financial Officer and the Chief Information Officer. That was about it. These positions in most cases also held seats on the board or directors which added a sense of aura to the title and also signified to the rest of the business world the level of importance placed on this position by the Board. Further elegance might be added to the title of CEO when in some cases the job also carries the title of Chairman of the Board.

Historically, if you did not carry one of the above titles, but reported to one, your title might be that of vice president, senior vice president and sometimes executive vice president. This indicated that your role was one of significance and reported to a board level position.

So, why do we need all of these other titles and layers of management? This author is not quite sure. To me it means the buck stops in to many places instead of as the old saying goes, ?The Buck Stops Here?.

According to Wikipedia a chief executive officer (CEO) or chief executive is one of the highest-ranking corporate officers (executive) or administrators in charge of total management. So obviously the buck stops here. Woops, let?s look a little further.

According to Wikipedia there is also a chief operating officer or chief operations officer (COO) which is a corporate officer responsible for managing the day-to-day activities of the corporation and for operations management. So, why no CEO? Maybe we should add the title of President to the COO job. If the CEO is not really running the company on a daily basis and is really responsible for the strategy and direction of the company, why not name the CEO the Chief Strategy Officer. Woops, there we go again, another title.

If you?re not confused by now, please offer some comments because most associates, shareholders and other stakeholders are. I?m sorry I never got to the Chef part of this post, but Executive Chef, Sous Chef, Chef de Cuisine and other titles are just part of the same problem.

We certainly look forward to and appreciate your comments.

If you have not been following recent blog posts at Sourcing Innovation.com, you should have been. In this case the posts relative to the number of corporate Chiefs, the doctor is right on.

In the Doctors recent post CUCKOO, he calls attention to the endless and in many cases meaningless introduction of new “C” level positions in today’s business world. When this author first began my career, what was typical of most corporations was the Chief Executive Office, the Chief Financial Officer and the Chief Information Officer. That was about it. These positions in most cases also held seats on the board or directors which added a sense of aura to the title and also signified to the rest of the business world the level of importance placed on this position by the Board. Further elegance might be added to the title of CEO when in some cases the job also carries the title of Chairman of the Board.

Historically, if you did not carry one of the above titles, but reported to one, your title might be that of vice president, senior vice president and sometimes executive vice president. This indicated that your role was one of significance and reported to a board level position.

So, why do we need all of these other titles and layers of management? This author is not quite sure. To me it means the buck stops in to many places instead of as the old saying goes, “The Buck Stops Here”.

According to Wikipedia a chief executive officer (CEO) or chief executive is one of the highest-ranking corporate officers (executive) or administrators in charge of total management. So obviously the buck stops here. Woops, let’s look a little further.

According to Wikipedia there is also a chief operating officer or chief operations officer (COO) which is a corporate officer responsible for managing the day-to-day activities of the corporation and for operations management. So, why no CEO? Maybe we should add the title of President to the COO job. If the CEO is not really running the company on a daily basis and is really responsible for the strategy and direction of the company, why not name the CEO the Chief Strategy Officer. Woops, there we go again, another title.

If you’re not confused by now, please offer some comments because most associates, shareholders and other stakeholders are. I’m sorry I never got to the Chef part of this post, but Executive Chef, Sous Chef, Chef de Cuisine and other titles are just part of the same problem.

We certainly look forward to and appreciate your comments.

Throughout history, battles and wars have been won and lost based upon the strength of ones supply chain. How strong is yours?

It could be said that much of today?s thought relative to supply chain management is rooted in the history of human expansion. In fact there are many examples of how expansion which many times happened or was planned in conjunction with the conquest of others was either successful or failed based on the ability to keep supplies flowing to the expansionists or armies associated with them. If you are a growing retailer with your own expansion plans some careful thought as to your supply chain and the necessary contingencies may be your most important activity

According to Wikipedia in military science, maintaining one’s supply lines while disrupting those of the enemy is a crucial?some would say the most crucial?element of military strategy, since an armed force without resources and transportation is defenseless.

Obviously this takes us back to our opening question; are you winning the supply chain battle? What would you do today if one or more of your current suppliers were to go out of business or enter bankruptcy (a real possibility)? Have you made plans as to how your company would replace the goods or services provided by these suppliers?

A recent example that may come to mind happened during the recent H1N1 (swine flu) outbreak first detected in the United States during April of 2009? Drug store chains during that time of panic became the first stop for much of the population in search surgical masks or other anti bacterial supplies. Many retailers ran out of stock and many suppliers were unable to meet the increased demand. Most retailers were not sure where else to turn for additional supply based on the increased demand. The trickle down effect of this could have gone on an on well beyond the impact of surgical masks or anti bacterial product shortages.

The obvious follow on question is which back orders would suppliers fill first and where would your consumers go to get them. The answer is probably not at your stores. The obvious reason is because hospitals, governments and large retail companies like Wal-Mart buy more of these products than you do.

Is winning the supply chain battle important? You bet it is! Do you have the right tools in place? This author believes the answer is absolutely not.

Ask your solution providers how they would help you in a situation like this.

We appreciate and look forward to your comments.

Massachusetts has become the latest state to issue a public health advisory on BPA. Both Connecticut and Minnesota have laws on the books that take affect in 2011. At this rate we might catch up with Canada which banned baby bottles with BPA in 2008 sometime mid century.

This author has posted on the subject of BPA a number of times. BPA is used as a liner in some food and beverage cans to prevent spoilage. It is used in a variety of other consumer products to enhance the structural integrity of plastic containers. Alternatives to plastic containers that have BPA as a component are available, and some are made by the same companies that produce products containing BPA. So, I must ask this again. Why is the United Sates taking so long to ban the use of this product?

The Massachusetts Department of Public Health (DPH) is issuing a public health advisory for consumers concerning bisphenol A (BPA). BPA is present in baby products, including baby bottles and some infant formula. A number of studies in laboratory animals have raised concerns about potential health effects during fetal development and among nursing or formula-fed children who may be exposed to BPA. These effects include but are not limited to: changes in the infant?s developing nervous system, such as thyroid function and brain growth; changes in behavioral development, such as hyperactivity; and changes in the normal development of the prostate gland.

Please share your opinion if you care to.

Is having access to new sources of supply from off shore markets through e-negotiation tools important to your company?

Sourcing from China and other Pacific Rim companies can provide your company with unprecedented access to a new supply base. This may emerge as a critical step in maintaining and lowering your costs in a challenging global economy. But, and it is a big but. You have to be careful

There are number important questions that you must ask of your e-negotiation solutions provider that could include but are certainly not limited to the following. These questions will help to mitigate the risks that are commonly associated with the use of long distance global supply chains.
.
1. Does your provider have experienced customer service representatives who have procurement expertise in hosted e-negotiation events?
2. Does your provider have a well documented e-negotiation strategy?
3. Do the suppliers in your provider?s database have a clear understanding of the products and or services being purchased?
4. Are your provider?s tools flexible enough to support a variety e-negotiation event types.
5. Does your provider offer a robust specification library with hundreds of category templates for all types of reverse auctions?
6. Does your provider conduct ongoing supplier development including audits and local training
7. Does your provider offer safety certification through a vetted RFI compliance process?
8. Does your provider test suppliers for their environmental and product safety certification adherence?
9. Does your solutions provider offer a social environment that supports open communications for agents, buyers and suppliers to regularly collaborate with one another on complex supply chain issues?

The SafeSourcing SafeSourceIt? Global Supplier Database contains over 300,000 new sources of supply from countries like Japan, China and Korea.

As always, we look forward to and appreciate your comments.

The word SPEND is one simple example. It is a shortcut word. Why can’t we just say what we mean? Like; what is your budget for this purchase?

It may seem silly, but I can’t tell you how often when meeting with prospects to discuss e-procurement or e-negotiation solutions that the following question comes up. What do you mean by the term spend? Quite frankly, I always define the term in the first three slides of any presentation I conduct because if not, the question just keeps coming up. Other related questions also come up as you begin to build on the term with follow on or as I like to call them tag your it buzz words such as.

1. Spend Management
2. Spend Analysis
3. Aggregate Spend
4. Spend Visibility

If one were to look up the word spend in Wikipedia, you would quickly find out that they do not have a definition for the word spend. They do how ever have a definition for Spend management is the way in which companies control and optimize the money they spend. It involves cutting operating and other costs associated with doing business. These costs typically show up as “operating costs” or SG&A (Selling, General and Administrative) costs, but can also be found in other areas and in other members of the
Supply chain.

Similarly in Wikipedia, one can find Spend Analysis is the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of reducing procurement costs, improving efficiency and monitoring compliance. It can also be leveraged in other areas of business such as inventory management, budgeting and planning, and product development. Spend analysis can provide answers to such questions as:

We can also use Wikipedia to find Aggregate Spend which is the process to aggregate and monitor total amount spent by healthcare manufacturers on individual Healthcare Professionals and Organizations (HCP/O) through payments, gifts, honoraria, travel and other means.

We have still not been able to find a good defination for the word spend. For that we have to visit dictionary.com to find that the term spend means to pay out, disburse, or expend; dispose of (money, wealth, resources, etc.)

I won’t event get into trying to combine the term spend with the word visibility to come up with spend visibility. However if you are interested Wikipedia defines visibility as in meteorology, visibility is a measure of the distance at which an object or light can be clearly discerned.

Are you beginning to catch my drift? Maybe it might just be easier to ask a buyer what we want to know such as the following.

1. What category are you responsible for
2. What items are in the category
3. Do you have current pricing for each product
4. What is your total category budget?
5. Do you have a list of incumbent suppliers?
6. Do you have a written specification?
7. Are all products under contract
8. Do you have contract expiration dates?

This author bets you will get a better answer then you might if asking. What is your spend visibility for the category you are responsible for.

We look forward to and appreciate your comments.

The word SPEND is one simple example. It is a shortcut word. Why can?t we just say what we mean? Like; what is your budget for this purchase?

It may seem silly, but I can?t tell you how often when meeting with prospects to discuss e-procurement or e-negotiation solutions that the following question comes up. What do you mean by the term spend? Quite frankly, I always define the term in the first three slides of any presentation I conduct because if not, the question just keeps coming up. Other related questions also come up as you begin to build on the term with follow on or as I like to call them tag your it buzz words such as.

1. Spend Management
2. Spend Analysis
3. Aggregate Spend
4. Spend Visibility

If one were to look up the word spend in Wikipedia, you would quickly find out that they do not have a definition for the word spend. They do how ever have a definition for Spend management is the way in which companies control and optimize the money they spend. It involves cutting operating and other costs associated with doing business. These costs typically show up as “operating costs” or SG&A (Selling, General and Administrative) costs, but can also be found in other areas and in other members of the
Supply chain.

Similarly in Wikipedia, one can find Spend Analysis is the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of reducing procurement costs, improving efficiency and monitoring compliance. It can also be leveraged in other areas of business such as inventory management, budgeting and planning, and product development. Spend analysis can provide answers to such questions as:

We can also use Wikipedia to find Aggregate Spend which is the process to aggregate and monitor total amount spent by healthcare manufacturers on individual Healthcare Professionals and Organizations (HCP/O) through payments, gifts, honoraria, travel and other means.

We have still not been able to find a good defination for the word spend. For that we have to visit dictionary.com to find that the term spend means to pay out, disburse, or expend; dispose of (money, wealth, resources, etc.)

I won?t event get into trying to combine the term spend with the word visibility to come up with spend visibility. However if you are interested Wikipedia defines visibility as in meteorology, visibility is a measure of the distance at which an object or light can be clearly discerned.

Are you beginning to catch my drift? Maybe it might just be easier to ask a buyer what we want to know such as the following.

1. What category are you responsible for
2. What items are in the category
3. Do you have current pricing for each product
4. What is your total category budget?
5. Do you have a list of incumbent suppliers?
6. Do you have a written specification?
7. Are all products under contract
8. Do you have contract expiration dates?

This author bets you will get a better answer then you might if asking. What is your spend visibility for the category you are responsible for.

We look forward to and appreciate your comments.

Does this sound like something you have heard before or in fact heard year after year? “XYZ Company announces the following personnel cuts due to the soft economy, increased competitive pressure or a decline in sales.”

This author has spoken to this subject a number of times. Earlier today I was speaking to a friend that sits one level away from his CEO. During the discussion he said, “I am so tired of hearing companies announce headcount reduction as their strategy for improving company results. What ever happened to creativity? A lot of times, the best ideas work their way up through an organization and result in a high level executive getting credit for a lower level individuals creative thinking. In fact, it happens all of the time. Headcount reduction creates a long term negative impact on companies as they lose these creative thinkers to a headcount reduction strategy. I sometimes think there must be an MBA course titled; “How to announce head count reduction as your strategy for tough economic times or poor results 101”.

The reality is if we want to put a creative procurement spin on this COGS or Cost of Goods Sold has not dropped dramatically if at all in any retail segment during the last ten years. It is the largest line item on any Retailers P&L including payroll and benefits which are expense items. There are also a number of expense items that are not included in COGS that could be addressed and have a resulting impact on results almost immediately beyond payroll reduction.

In three recent posts Bankruptcy Sucks Part I, Part II and Part III, I discussed the financial impact of just assigning a reasonably small percentage of cost of goods to e-negotiation tools in order to compress pricing. And yes the fact is there may be switching related costs associated with this. What is more difficult, laying off 10% of your work force or switching suppliers?

Business is not same old same old. Successful enterprises require creative thinkers that evolve the business on an almost daily basis. If the first place you review during these economic times is your payroll or benefits costs as an opportunity to turn things around, there are better alternatives.

We look forward to and appreciate your comments.

Does this sound like something you have heard before or in fact heard year after year? ?XYZ Company announces the following personnel cuts due to the soft economy, increased competitive pressure or a decline in sales.?

This author has spoken to this subject a number of times. Earlier today I was speaking to a friend that sits one level away from his CEO. During the discussion he said, ?I am so tired of hearing companies announce headcount reduction as their strategy for improving company results. What ever happened to creativity? A lot of times, the best ideas work their way up through an organization and result in a high level executive getting credit for a lower level individuals creative thinking. In fact, it happens all of the time. Headcount reduction creates a long term negative impact on companies as they lose these creative thinkers to a headcount reduction strategy. I sometimes think there must be an MBA course titled; ?How to announce head count reduction as your strategy for tough economic times or poor results 101?.

The reality is if we want to put a creative procurement spin on this COGS or Cost of Goods Sold has not dropped dramatically if at all in any retail segment during the last ten years. It is the largest line item on any Retailers P&L including payroll and benefits which are expense items. There are also a number of expense items that are not included in COGS that could be addressed and have a resulting impact on results almost immediately beyond payroll reduction.

In three recent posts Bankruptcy Sucks Part I, Part II and Part III, I discussed the financial impact of just assigning a reasonably small percentage of cost of goods to e-negotiation tools in order to compress pricing. And yes the fact is there may be switching related costs associated with this. What is more difficult, laying off 10% of your work force or switching suppliers?

Business is not same old same old. Successful enterprises require creative thinkers that evolve the business on an almost daily basis. If the first place you review during these economic times is your payroll or benefits costs as an opportunity to turn things around, there are better alternatives.

We look forward to and appreciate your comments.