In light of the new Peanut Butter Salmonella outbreak, this repost focuses on Traceability which also requires sensibility if you want a safe supply chain.

We will continue to focus on this current case as an example of what collaboration amongst supply and trading partners can accomplish.

When the FDA talks about traceability and refers to one back one forward, what are they referring to? Does it make our supply chain safer?
The definition of traceability according to Wikipedia refers to the completeness of the information about every step in a process chain. Traceability is the ability to verify the history, location, or application of an item by means of documented recorded identification.
When the FDA uses this term what they are referring to is the capability of bidirectional traceability or tracing products one step back one step forward. This means identifying the immediate supplier of the product and identifying the immediate recipient of the product, which is not the final retailer.

However the process also requires some level of common sense. I?m a man of faith, but blind faith really gets us no where when we are talking about food product traceability. GS1 has created a certification for traceability in cooperation with a number of organizations such as FMI, CIES and BASF.

So from a common sense perspective one would believe that all products we consume are safe, that all produce and grain products are traced back to the seed level. Unfortunately this is not the case.

Let?s just examine milk products or byproducts. In a recent blog this author discussed the fact that what is happening in China where 13,000 babies are still hospitalized and over 53,000 babies affected could happen here. Just today we hear that in fact Chinese candy in the United States contains melamine. What other products contain this or other carcinogens that should not be consumed and how can retailers control the introduction of such ingredients in the products they buy for resale.

As always we appreciate ad look forward to your comments.

The letter ?C? can be so important. This author has always believed and in fact has written that C- level management needs to be more involved in the procurement process. That is the conundrum.

According to Merriam-Webster a conundrum is a riddle whose answer is or involves a pun or 2 a: a question or problem having only a conjectural answer b: an intricate and difficult problem.

So what is the conundrum in retail procurement that creates so much consternation, with consternation according to wiktionary simply being amazement or horror that confounds the faculties?

Now to the detail. When a solutions company in the procurement space calls on a retailer and opens the meeting with ?we can increase your earnings by as much as 100% and do it in the current fiscal year?, why in the world would the answer from any associate and certainly the executive suite not be? ?Show me how.?

My company would accept this challenge with the following logic. The single-largest opportunity to improve net income is by addressing the largest line on the P&L which is the cost of goods and services. The good news is that every dollar reduction in COGS falls directly to the bottom line. The finance department may argue that there are supplier related switching and timing costs incurred in order to get to the true savings, but the majority of these savings end up on the bottom line.

Let?s do some simple math: a five billion dollar ($5B) supermarket company has an approximate cost of goods of $3.6B. Assuming a net income of one percent (1%) this retailer would have earnings of $50M. Let?s assume that they assigned fifteen percent (15%) of their total above the gross margin line spend to next generation e-procurement tools. This would be approximately $540M. Assuming a savings of 10% which is well below documented savings within the industry, savings would equal $54M which would equate to a net earnings improvement of $54M or greater than 100%.

Certainly there are timing issues involved in the above scenario that will determine when savings reach the P&L such as when the contract is signed, delivery begins and sell through of the contract occurs. That would certainly happen within twelve months of contract signature. This author does not believe this is an intricate or difficult problem and as such suffers great consternation that in this economy C- level executives do not accept the challenge to drive these types of improvements.

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

Oil prices on July 11th 2008, reached a new record of $147.27 a barrel, some companies were even considering melting down there containers rather than re-shipping them because of the fuel price involved.

This author discussed the thought of sourcing more products locally in my NAFTA and the High Price of Oil on by August 13th 2008 blog post due to the price of fuel making it impractical to source off shore at the time even when companies considered the low cost of international labor. I continue to believe that there are opportunities that many procurement professionals are not aware of within the North American Free Trade zone that can be explored. With that said, there are some common sense practices to sourcing off shore that your procurement knowledge workers should consider and e-procurement solution providers offer if you are using Software as a Service.

1. Verify the name and address of the supplier, the manufacturing address, phone number, fax number, website and email contact address.
2. Refuse to deal with any generic e-mail addresses. Only deal with specific company addresses.
3. Call the supplier at the provided phone number several times from different numbers such as your home and mobile phone numbers and inquire about the company and the contact person.
4. Ask for specific company and personal references in North America.
5. Inform the supplier that your team will be visiting their location for company tour. Pay close attention to their response to this request.
6. When procuring items from new off shore suppliers request a written electronic payment process.
7. After sample evaluation, also request a pre-shipment inspection for new suppliers. This ensures that the products meet minimum quality expectations before the order is accepted.

These steps may sound like basic blocking and tackling, but sometimes skipping the most simple steps in a new engagement process can cost the most down the road.

As always, we look forward to and appreciate your comments

Oil prices on July 11th 2008, reached a new record of $147.27 a barrel, some companies were even considering melting down there containers rather than re-shipping them because of the fuel price involved.

This author discussed the thought of sourcing more products locally in my NAFTA and the High Price of Oil on by August 13th 2008 blog post due to the price of fuel making it impractical to source off shore at the time even when companies considered the low cost of international labor. I continue to believe that there are opportunities that many procurement professionals are not aware of within the North American Free Trade zone that can be explored. With that said, there are some common sense practices to sourcing off shore that your procurement knowledge workers should consider and e-procurement solution providers offer if you are using Software as a Service.

1. Verify the name and address of the supplier, the manufacturing address, phone number, fax number, website and email contact address.
2. Refuse to deal with any generic e-mail addresses. Only deal with specific company addresses.
3. Call the supplier at the provided phone number several times from different numbers such as your home and mobile phone numbers and inquire about the company and the contact person.
4. Ask for specific company and personal references in North America.
5. Inform the supplier that your team will be visiting their location for company tour. Pay close attention to their response to this request.
6. When procuring items from new off shore suppliers request a written electronic payment process.
7. After sample evaluation, also request a pre-shipment inspection for new suppliers. This ensures that the products meet minimum quality expectations before the order is accepted.

These steps may sound like basic blocking and tackling, but sometimes skipping the most simple steps in a new engagement process can cost the most down the road.

As always, we look forward to and appreciate your comments

ASU Team wins grant to ensure food safety.

The above bi-line is credited to William Hermann of the Arizona Republic
January 13th edition. What?s interesting is that the grant comes from the U.S. Department of Homeland Security. The ASU team is headed by William Nganje. According to the article he and his colleagues are looking for ways to strengthen the security of the supply chain. According to Nganje, ?It?s critical that we are able to trace exactly where a threat has come from.? I think I?ve heard that argument before.

This author has written extensively as many of you know regarding food safety and the role that procurement solution providers can play in ensuring that our retail partners have a traceable resource beyond one forward one back.

Please take another look at the following posts for more inforamtion.

1. We agree with the consumers union: Mandate traceability of their fruits and vegetables to their source.
2. Do retailers have time to monitor their supplier?s safety performance?
3. Food Safety; Do Hippo?s eat tomatoes?

An excerpt from Do Hippo?s eat tomatoes? is below for your enjoyment

I know I?m still not eating any tomatoes, and I love tomatoes. Is it the farmers fault, the CDC?s fault, the FDA?s fault? That?s a hard question to answer. What is true is that we have to do a better job of providing safe quality foods to retailers to sell to their consumers. There needs to be some type of central repository of safe data that allows tracking of products to their source more quickly. Our families, friends, pets and even the hippos will thank us.

The SafesourceIt? Supplier database includes many of the traceability standards required to eliminate this problem.

As always we look forward to and appreciate you comments

ASU Team wins grant to ensure food safety.

The above bi-line is credited to William Hermann of the Arizona Republic
January 13th edition. What’s interesting is that the grant comes from the U.S. Department of Homeland Security. The ASU team is headed by William Nganje. According to the article he and his colleagues are looking for ways to strengthen the security of the supply chain. According to Nganje, “It’s critical that we are able to trace exactly where a threat has come from.” I think I’ve heard that argument before.

This author has written extensively as many of you know regarding food safety and the role that procurement solution providers can play in ensuring that our retail partners have a traceable resource beyond one forward one back.

Please take another look at the following posts for more inforamtion.

1. We agree with the consumers union: Mandate traceability of their fruits and vegetables to their source.
2. Do retailers have time to monitor their supplier’s safety performance?
3. Food Safety; Do Hippo’s eat tomatoes?

An excerpt from Do Hippo’s eat tomatoes? is below for your enjoyment

I know I’m still not eating any tomatoes, and I love tomatoes. Is it the farmers fault, the CDC’s fault, the FDA’s fault? That’s a hard question to answer. What is true is that we have to do a better job of providing safe quality foods to retailers to sell to their consumers. There needs to be some type of central repository of safe data that allows tracking of products to their source more quickly. Our families, friends, pets and even the hippos will thank us.

The SafesourceIt™ Supplier database includes many of the traceability standards required to eliminate this problem.

As always we look forward to and appreciate you comments

It?s not the first time we?ve seen a Salmonella outbreak in North America and it won?t be the last. So just what is Salmonella and what if anything should consumers do to protect themselves?

There are about 2000 types of salmonella and about 40,000 cases are reported each year. Salmonella Typhimurium is the most common strain. The resulting illness may begin as little as six to as many as forty eight hours after ingestion of contaminated water or food with symptoms such as nausea and vomiting which is commonly followed by diarrhea. There are examples of the illness resulting in death, but these cases are normally restricted to the very young or old or people with other underlying medical conditions.

This author discussed the 2008 United States salmonellosis outbreak extensively which began during the spring of 2008 when hundreds of people throughout the U.S. became ill after consuming contaminated food which was believed to have come from fresh Jalapeno or Serrano peppers from Mexico and raw tomatoes.

There is no vaccine to prevent salmonellosis, but you can minimize your chances of contracting it by following these steps.

1. Thoroughly cook foods to destroy the bacteria.
2. Thoroughly wash fruits and vegetables before eating them.
3. Wash your hands before handling any food.
4. If you are diagnosed with salmonellosis, be sure that you or your doctor informs. the local public health officials.
5. Separate your meats produce and dry groceries while shopping and when storing.
6. Do not keep groceries in your car while you run other errands. Take them home and refrigerate them.
7. When defrosting frozen foods, follow directions completely.
8. Avoid raw or unpasteurized milk and other dairy products.

As I have discussed previously, more work is needed in developing databases of manufacturers, suppliers, brokers, growers and products that can be searched against a variety of entities or against a variety of attributes in order to trace goods to their original source of supply quickly when outbreaks of salmonella and other food borne illnesses occur.

The SafeSourcing supplier database with over 300,000 suppliers provides many of these attributes.

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

Last week we discussed five specific procurement goals or resolutions for the New Year and followed up by taking a deeper look at goals two through four. Today we are going to discuss goal number one. Focus more on existing customers. Cater to existing clients as new business becomes scarcer.

As a recap from our original post the five procurement goals or resolutions for the New Year are as follows.

1. Focus more on existing customers
a. Cater to existing clients as new business becomes scarcer.
2. Look at ways to use new technology to save money
a. New open source software applications mean you don?t have to shell out a ton of money for license fees.
3. Make training a priority
a. Talented workers want to be challenged. Keep them happy by helping them develop new skills
4. Take a close look at your supplier chain
a. You can find ways to save money by reevaluating what suppliers are charging.
5. Create a small business network.
a. Collaborating with other businesses is one way to save money

Today we take a look at possibly the most important goal for any company as it heads into a new year. Focus more on existing customers. From a casual perspective many may not believe this has a whole lot to do with procurement. In fact, it has everything to do with procurement. Programs such as frequent shopper programs have been in place for many years that help retailers collect detailed data about their customers. If the information is complete enough, it allows retailers to analyze what deciles of their customers are buying what products and create unique merchandising or continuity programs that are intended to drive greater wallet share from the top deciles or those customers that do the majority of their shopping with that specific retailer.

If these programs are executed properly, products that have an affinity with another product family can also increase revenue and margin contribution at the same time. An example may be paring a product such as tortilla chips with a particular brand of beer and merchandising them in a unique way that uses end caps and signage to create brand loyalty for two separate products and increasing sales at the same time. These types of programs can also have a specific impact on customer satisfaction. Studies have indicated that a one percent increase in customer satisfaction can have a corresponding two percent impact on top line sales.

So, are your procurement plans in line with your marketing and merchandising plans? Are you using your procurement tools to drive the best margins possible for the products that your customers want and offering products with an affinity that makes so much sense to your top customers that they select the package without event thinking about it. If not, it may be time to realign your resolutions for the New Year.

We look forward to and appreciate your comments.

In yesterday?s blog post, we looked at the procurement resolution or goal of taking a close look at your supplier chain, where you can find ways to save money by reevaluating what suppliers are charging. Today we are going to discuss goal number three. Make training a priority because talented workers want to be challenged. Keep them happy by helping them develop new skills.

This author began his career as a teacher. In fact, a history teacher. One of my favorite quotes comes from Aristotle who lived from 384 BC to 322 BC and nearly 2500 years later this quote it is still appropriate. ?Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit.?

The challenge with the above quote for all leaders of procurement knowledge workers is to provide an ongoing educational environment as part of the daily routine so that what was discussed during yesterdays post where we see coworkers every day that just like to come to work, do what they perceive to be their job and then head home. One reason this happens is because there is no challenge or fun it what they are doing. Repetitive tasks become boring. Training and education can provide the spark necessary to open a world of creativity that will benefit the entire company going forward.

The following are some creative ways to create a procurement departmental educational program without spending a lot of time or money.

1. Nominate a weekly rotating team educational leader
a. Responsible for a one hour weekly department training update
2. Assign the task of locating great education content on the web
a. Websites
i. Application Providers
ii. Trade Magazines
iii. Trade Organizations
iv. White Papers
b. Blogs
i. Spend Matters
ii. Sourcing Innovation
iii. SafeSourcing
c. Wiki?s
i. Wikipedia
ii. SafeSourcing Wiki
d. Collaborative Professional social communities
3. Select a different procurement subject for each weeks leader
a. The weekly team leader presents the weekly content gained from the above free locations in a one hour team meeting
4. Hold a monthly open web test for the entire department
a. The test can be taken at their own desk with use of their PC
b. Award prizes for a team test average of above 80%
i. Team Lunch
ii. Leave an hour early on Friday
iii. Be creative

If education is perceived to be fun and the entire team is involved in developing and participating in the program, the quality of the team will improve as will team communication and moral. It is however important not to rank individual team members or publish individual scores. This is not a competition. This exercise is about the team.

We look forward to and appreciate your comments

In yesterday?s blog post, we looked at the procurement resolution or goal of creating a small business network and collaborating creatively with them as one way to save money.
Today we are going to discuss goal number four. Take a close look at your supplier chain, where you can find ways to save money by reevaluating what suppliers are charging

Comfort is a wonderful thing. This author loves nothing more than being comfortable in a variety of situations. There is however a variety of places where to much comfort can also create complacency. We all see coworkers every day that just like to come to work, do what they perceive to be their job and then head home. Nothing extra is ever done, and few ideas come from these folks that are just comfortable with what they are doing. They do a good job at it, but that?s it.

Let?s apply this ?I?m to busy? type of complacency to knowledge workers in the supply chain. If we are being honest with ourselves; we see this situation all the time.

Example: A buyer has a list of products or a category manager has a category that they are responsible for. There are only so many hours in the day and they have a job to do in order to get product to a distribution center, warehouse, store or some other location on time. They have done business with the same suppliers for a number of years. In fact the person in the job before them did business with these same suppliers and the person before that. So, let?s not rock the boat. It takes to much time to look for new sources of supply and after all one can only manage so many relationships. Finally the buyer is comfortable with product quality and pricing has not gone up to much over time. Let?s not even discuss that new product introductions are much easier with a supplier you already know.

With the help of your procurement provider, this situation is easily rectified. With that said, you have to be open to change. That is normally led from the top of the organization. The following is a partial list of what you can do to eliminate complacency and support the fact that you knowledge workers don?t have a lot of free time.

1. Provide your e-procurement company with a list of your suppliers by category.
2. Provide your e-procurement provider with a complete list of products carried by each supplier.
3. As your e-procurement provider to produce a list of new sources of supply located within a fifty mile radius of each distribution center or warehouse
4. Ask your e-procurement provider to provide data on each supplier?s including incumbent?s safety certifications such as GFSI and ISO.
5. Ask your e-procurement provider to provide supplier background information such as years in business and user references.
6. Select categories or products to source from your incumbents catalog and cross reference with new suppliers offerings.

The additional steps to this process can be provided by SafeSourcing as a part of our best practices deliverables which are included in our event pricing. The SafeSourceIt? Supplier database includes over 300,000 global sources of supply that can be sorted by a variety of filters such as country, county, postal code or mileage from a particular location, plus many more.

We look forward to and appreciate your comments