Do expensive spend analysis tools achieve the primary objective of e-negotiation tools which is to reduce costs immediately.

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

Should suppliers be interested in participating in an e-negotiation process when contacted by a solution provider on behalf of a potential new client?

This authors company places a great deal of value in our Supplier Database which consists of over 300,000 suppliers located around the world in countries like Mexico, Canada, The United States, China Korea and Japan. It may in fact be our most important asset. We believe that well thought out next generation e-negotiation tools can provide significant benefits to both buyers and suppliers whether they are hosting or participating in e-negotiation events.

A few benefits that should drive supplier interest when being asked to participate in e-negotiation events hosted by SafeSourcing are:

1. Easy to use e-negotiation tools limited to a single page view where suppliers can be completely comfortable that their company?s best foot is being put forward to the soliciting company.

2. An increase in new business opportunities through engagements they would otherwise not be exposed to.

3. Clean accurate data relative to the soliciting company and an accurate listing of their event guidelines, specifications, terms, conditions and other information necessary to build an accurate and successful pricing strategy.

4. Best practice training in event participation and strategy development.

5. A clear focus as to what?s important beyond pricing in next generation e-negotiation data such as supplier safety certifications, traceability and environmental practices that can differentiate them from other participating suppliers.

6. Instantaneous reporting of results of the specific e-negotiation event a supplier participates in as well as a detailed supplier feedback questionnaire report.

7. Significant time savings that reduces costs associated with new business development.

8. Industry pricing trends extrapolated from their view of low quote information during the event if allowed by the soliciting company.

9. Use of these tools for their own price compression needs.

We appreciate and look forward to your comments.

Definitions of complexity are often tied to the concept of a set of parts or elements which have relationships among them differentiated from relationships with other elements outside the relational regime.

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as generic drugs in the retail space or raw materials used to manufacture components that require special handling, shipping and standards adherence.

This author would suggest that any event including multiple line items each with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity…

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support complex events, your supplier needs to have an understanding of the specific market place and practices and processes in place that allow these activities t bring complex events to market in the shortest period of time. Generally this should occur within less than two weeks from event notification to event completion.

In a two part post from October of last year, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who?s the customer and who?s the supplier

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.

We appreciate and look forward to your comments.

Well obviously in the procurement space internal collaboration would only seem to make common sense, but according to an Aberdeen Research Brief from April of 2008 titled Print and the (Collaborative) Revolution, that?s not always the case.

Collaboration with other internal departments is very critical for successful procurement strategies as it puts more spend available to suppliers resulting in potentially greater savings. Additionally, continuous process improvement strategies or sustainment initiatives may add additional savings that are commonly neglected in procurement ROI?s. According to Aberdeen, companies that collaborate save an average of 42% more than companies that do not.

Although this brief refers to the print category specifically, the process offered can easily be applied to all categories and for those companies that are creative, to the same categories at non competing companies. A huge opportunity in the retail space is for smaller companies to combine their purchase volumes in order to drive higher savings. This same process has been used for years buy wholesalers and collective buyers that buy in volume from manufacturers, store the products, and ship on demand to the retailers they support. The question this begs is; do these volume based savings always make it to the independent retailer?

An example might be in the area of supplies. The category might be plastic or paper bags or both. All companies use them, and often they are of different quality. A potential scenario might be that Company “A” a 10 store independent, and company ?B? a 5 store independent whose market areas do not overlap combine their purchases. This offers a larger volume to suppliers that may not have considered the geographic area of one or the other of these companies. Additional work may be done by your e-procurement provider to find suppliers that can source both paper and plastic bags. This may not have been considered in the past, and may offer another opportunity for increased savings based on the combined higher volumes.

Under certain market conditions it may not be possible for both companies to save significantly. In fact the benefit may end up being a better product for the same price, which can increase customer satisfaction and retention.

Make sure your e-procurement provider offers tools that allow for aggregating purchase and collaborating internally and externally. Also make sure they have an adequate source of supply and can search it by category to enable these types of events. You may find a few dollars in savings that were not available to you in the past.

We appreciate and look forward to your comments.

While traveling recently a passenger in the seat next to I asked what I was reading. We?ve all known for a while that our seat partners look over our shoulders to see who we are and what we do. I told him I was reading an Aberdeen business brief and who and what they do. I went on to explain that I owned my own company and that it was focused on e-procurement tools for the retail supply chain. He introduced himself as a private business owner with his two brothers and that he had experience biding in reverse auctions with Ariba and Free Markets.

After we discussed SafeSourcing?s offerings we came around to what made events successful for his company in the past as a supplier and what would encourage them to participate again even if they did not happen to be the low bidder. His take was that this was initially an educational process for their company and ultimately would become a way to do old things in a new way, but suggested the following. Openly communicate with the supplier and make sure they understand everything and are comfortable with it. Make sure they have no questions.

We have discussed before that having a significant source of new suppliers wanting to participate is a key to creating a sustainable process. It often surprises me that there are companies and suppliers that have never heard of this process or only have casual knowledge of it. So the initial supplier contact is an enormous opportunity for either success or failure and as such requires careful thought. At Safesourcing we have a specific practice for this area that is broken down into the following steps.

1. Initial Supplier Contact
2. Introduction
3. What to say once you reach the proper contact:
4. Who is SafeSourcing?
5. What is a Reverse Auction?
6. SafeSourcing?s Role in the Reverse Auction:
7. Benefits to the Supplier
8. Other Information

The detail behind this information needs to be presented professionally and concisely. A sample of some of the of the questions that will require explanation are:
1. Does the supplier understand that there is no cost to them to participate?
2. Do they understand they will be trained at know charge?
3. Do they understand event timing and requirements?
4. Does the supplier understand the terms being used and how they apply to a reverse auction event such as?

At the heart of it, it comes down to something we all know but don?t always practice which is open and honest communication. With out which negatively impacts the sustainability of processes that just make good sense.

We look forward to and appreciate your comments.

With the economy in shambles and retailers results terrible, now is the best time for retailers to use SaaS oriented e-negotiation tools to drive down costs immediately.

During the last several years, we have seen a revolution in technology for the supply chain?why is it important for retailers to address their spending more aggressively now while the economy is in shambles.

The answer may be so simple that it is getting over looked by the executive suite. An immediate and significant reduction in cost of goods can save jobs, reduce prices for consumers and shore up sagging bottom lines. These benefits can be measured immediately have a positive impact on results in the current quarter.

Regardless of the economy, Cost of Goods or COGS is really the last large area that retailers can focus on to drive significant cost out of their business immediately. I know that everyone in graduate school comes out thinking that the best place to cut costs is in personnel, but in this case they are wrong.

During the last two decades, initiatives around customers in the form of CRM programs, Efficient Consumer Response initiatives, and large scale data warehouses for decision support have been implemented. In the same time there has been no appreciable improvement the bottom line for many retailers. Today SaaS oriented low cost e-procurement solutions are available that can be implemented almost immediately at almost no cost to improve the effectiveness of buyers by offering them a broader universe of supplier choices over a shorter period of time, without the need to conduct detailed research, and as such makes their job easier.

We can also immediately calculate the dollar and percentage return on investment at the conclusion of an e-procurement event so the ROI in many cases is instantaneous and with historical saving of greater than 15% is many times 10X or greater. Since these are direct savings versus budget or approved capital expenditure, the dollars drop directly to the bottom line and can easily be converted to basis points of improvement that are factual. This author is not aware of any other application focus area that can make this claim.

We look forward to and appreciate your comments.

At what cost profit? Procurement professionals need to exercise great care when sourcing food products from China.

Last Saturday, china passed a tougher food law with much tougher penalties in hopes of avoiding problems in the future like the pet food problem we are all aware of in the United States, and the tainted milk problem in their own country that sickened greater than over 300,000 and killed at least six children.

These events had a significant damaging effect on China branded products world wide and have caused many companies to seek products from sources that are closer to home.
This author has posted on this subject many times during the last year.

Already, individuals within the Chinese distribution system have questioned whether the law goes far enough toward reform of the system. Chinese consumers are also questioning the amount of success the new law will have.

During the last year the Food and Drug Administration (FDA) opened offices in Beijing which we covered in a recent post, but without a similar organization in China which many had hoped would result from this legislation. This author believes it is questionable the impact the FDA can have without the same type of structure within China.

This author applauds any advancement in food safety taken by any country or organization. With that said, we must also be wary of the additional bureaucracy and the delays it may create.

Procurement professionals should continue to exercise great care when sourcing food products from China and work with your solution providers to insure that selected suppliers provide traceable data to insure rapid traceability when required.

We look forward to and appreciate your comments

According to the king of all wikis, Wikipedia; a wiki is a collection of web pages designed to enable anyone who accesses it to contribute or modify content, using a simplified markup language. Wikis are often used to create collaborative websites and to power community websites. For example, the collaborative encyclopedia Wikipedia is one of the best-known wikis. Wikis are used in businesses to provide affordable and effective intranets and for knowledge management. Ward Cunningham, developer of the first wiki, originally described it as “the simplest online database that could possibly work”.

“Wiki” is a reduplication of “wiki”, a Hawaiian word for “fast”. It has been suggested that “wiki” means “What I Know Is”.

So, what is a SafeSourcing Wiki? Since SafeSourcing is a company dedicated to retail e-procurement that is safety in the supply chain and to environmental consciousness, it makes sense that the SafeSourcing Wiki would be a specialized wiki ( in this case retail e-procurement) that concentrates at a minimum on any or all of the following.

1. Retail procurement terms and links.
2. Safety standards and definitions and links.
3. Environmental certifications and definitions and links.
4. Educational content for procurement and supply chain professionals.
5. Procurement templates for commonly sourced products and services.

The nice thing about wikis is that the definitions are not static. Authorized users can add to definitions or add definitions and terms as well as rate the site. In this way a body of work can grow from the contribution of all users and help to provide a reliable source of data for professionals in a specialized field.

Please feel free to visit the safesourcing wiki regularly and offer your comments, terms, definitions and suggestions. This section of the SafeSourcing website is free tool, and it is for your use as a procurement and supply chain professional, the most difficult job in retail.

We appreciate and look forward to your comments

According to the king of all wikis, Wikipedia; a wiki is a collection of web pages designed to enable anyone who accesses it to contribute or modify content, using a simplified markup language. Wikis are often used to create collaborative websites and to power community websites. For example, the collaborative encyclopedia Wikipedia is one of the best-known wikis. Wikis are used in businesses to provide affordable and effective intranets and for knowledge management. Ward Cunningham, developer of the first wiki, originally described it as “the simplest online database that could possibly work”.

“Wiki? is a reduplication of “wiki”, a Hawaiian word for “fast”. It has been suggested that “wiki” means “What I Know Is”.

So, what is a SafeSourcing Wiki? Since SafeSourcing is a company dedicated to retail e-procurement that is safety in the supply chain and to environmental consciousness, it makes sense that the SafeSourcing Wiki would be a specialized wiki ( in this case retail e-procurement) that concentrates at a minimum on any or all of the following.

1. Retail procurement terms and links.
2. Safety standards and definitions and links.
3. Environmental certifications and definitions and links.
4. Educational content for procurement and supply chain professionals.
5. Procurement templates for commonly sourced products and services.

The nice thing about wikis is that the definitions are not static. Authorized users can add to definitions or add definitions and terms as well as rate the site. In this way a body of work can grow from the contribution of all users and help to provide a reliable source of data for professionals in a specialized field.

Please feel free to visit the safesourcing wiki regularly and offer your comments, terms, definitions and suggestions. This section of the SafeSourcing website is free tool, and it is for your use as a procurement and supply chain professional, the most difficult job in retail.

We appreciate and look forward to your comments

This author often writes about the lack of adequate controls relative to keeping our food supply chain as safe as it possibly can be. Product safety however is a much broader topic.

I was meeting with a customer in the health care industry recently and he asked me if I could check the SafeSourceIt? Supplier Database for the number of suppliers that could provide bids on catheters. From his desk, it only took me about 20 seconds to identify forty three such suppliers.

At this point we had a conversation about certifications and other standards that he might want suppliers to adhere to. We discussed a variety of ISO standards, and then I asked if there were any environmental concerns or questions he might like to hold suppliers accountable to. He said what do you mean? My response was, what does the University that you are a part of do or support relative to the environment. Are there specific programs or initiatives? We talked about this for a while and came to the conclusion that with everything else being equal that he would use this area as a tie breaker in selecting a supplier if they supported the same or similar programs processes or certifications. We then went back to the database and looked at certifications and environmental support that some of these suppliers had in place.

Ok, you want to know why this is important and how it relates to product safety and food borne illness. We know from recent posts how the actions of individuals at the highest levels of companies can have a negative impact on product quality in the food space. The same issues impact non food products. Authorities are looking for a CEO whose company prepared heparin and saline syringes without insuring they were sterile. These products are believed to have sickened hundreds and killed up to five individuals. Do you believe that if these companies were asked questions relative to their safety and environmental standards that they would have stood the test of comparing themselves to well run companies? Probably not. That is why Triple Bottom Line is becoming so important when analyzing successful companies to partner with going forward.

Among many others, we have peanut products, medical devices, toys, ballpark turf etc. all recently causing illnesses or death. All should require diligence in ensuring that safety and other standards are adhered to. Ask your solutions provider how they accomplish this?

We look forward to and appreciate your comments