Do retail companies have an extended risk window from the sale of tainted foods? Please read on.

This author posed the above question just two days ago. Perhaps I should have expanded the subject beyond retail companies to all companies and all products.

Beyond the obvious social costs associated with responsibility and culpability in the sale and consumption of tainted foods and other products such as toys, the potential for huge litigation costs can put any company at risk for years after an incident actually happens. How traceable is your data?

In the Tuesday December 16th edition of USA TODAY it was reported that Mattel will pay $12M to 39 states to settle an investigation over Chinese-made lead tainted toys shipped to the USA during 2007. Mattel and its Fisher-Price unit recalled more than 21 million Chinese made toys last year.

As part of the agreement Mattel also agreed to lower the acceptable level of lead in toys shipped to the U.S. to 90 parts per million, down from 600 parts per million which is the federal standard until next year when it too will drop to 90 parts per million. I?m not sure I want any lead in my products please.

I wonder how many jobs could have been created with $12M in extra profit. According to IRS data 50% of the US makes below $32,000. If we use $32,000 as a base, $12M would create 375 jobs. The federal minimum wage is $6.55. For a forty hour week an extra $12M could provide enough money to generate 880 jobs. It does not solve our current economic condition, but baby steps certainly help.

In these tough economic times, there are certainly 800 people that would like a job. Are you comfortable that all of your products are as safe as they can be? Ask your spend management solution provider what they can do to help mitigate your future risk.

We look forward to and appreciate your comments.

What is your answer if a consumer asks you to explain what Certified Humane Raised and Handled means? What if the follow up is; do your products meet these standards?

The Safesourcing North American Supplier database includes more than 30 safety and environmental standards that suppliers are vetted against. The Certified Humane Raised and Handled® program is one of them.

The Certified Humane Raised and Handled® program is a certification and labeling program that is the only animal welfare label requiring the humane treatment of farm animals from birth through slaughter. The goal of the program is to improve the lives of farm animals by driving consumer demand for kinder and more responsible farm animal practices. When you see the Certified Humane Raised and Handled® label on a product you can be assured that the food products have come from facilities that meet precise, objective standards for farm animal treatment.

The Certified Humane Raised and Handled® label assures consumers:
? That the producer meets our standards and applies them to animals from birth through slaughter.
? Animals have ample space, shelter and gentle handling to limit stress.
? Ample fresh water and a healthy diet of quality feed, without added antibiotics or hormones.
? Cages, crates and tie stalls are among the forbidden practices, and animals must be free to do what comes naturally. For example, chickens are ale to flap their wings and dust bathe, and pigs have the space to move around and root.

We look forward to an appreciate your comments

What is your answer if a consumer asks you to explain what Certified Humane Raised and Handled means? What if the follow up is; do your products meet these standards?

The Safesourcing North American Supplier database includes more than 30 safety and environmental standards that suppliers are vetted against. The Certified Humane Raised and Handled® program is one of them.

The Certified Humane Raised and Handled® program is a certification and labeling program that is the only animal welfare label requiring the humane treatment of farm animals from birth through slaughter. The goal of the program is to improve the lives of farm animals by driving consumer demand for kinder and more responsible farm animal practices. When you see the Certified Humane Raised and Handled® label on a product you can be assured that the food products have come from facilities that meet precise, objective standards for farm animal treatment.

The Certified Humane Raised and Handled® label assures consumers:
• That the producer meets our standards and applies them to animals from birth through slaughter.
• Animals have ample space, shelter and gentle handling to limit stress.
• Ample fresh water and a healthy diet of quality feed, without added antibiotics or hormones.
• Cages, crates and tie stalls are among the forbidden practices, and animals must be free to do what comes naturally. For example, chickens are ale to flap their wings and dust bathe, and pigs have the space to move around and root.

We look forward to an appreciate your comments

When we think about safety and environmental standards in the supply chain, I honestly believe that retailers say quietly to themselves; how are we supposed to monitor all this stuff with everything else we have to deal with in procuring products?

This author has written on this subject before, and as a TQM ands Six Sigma advocate, believe in the statement that you can not manage something that you do not measure.

The issue becomes more complex when you consider that data is required from your organization relative to the historical performance of existing suppliers, data from the supplier as to their own assessment of their historical performance and finally external data that neither may have at their finger tips.

When we talk about safety, the question that retailers need to ask suppliers is pretty simple. What certifications do you carry relative to food safety such as Safe Quality Foods (SQF), Global Food Safety Initiative (GFSI), American Humane Certified and many more? Another area to question should be regarding USDA and FDA inspection history.

Although Green Initiatives fall into the social consciousness area of a company, there are a variety of questions that can be asked in this area as well such as Green Seal, Eco-logo and Green Star certifications and participations.

It may be easier for retailers to rely on their e-procurement providers for this data if the provider has it included in their supplier database. Pre-populated e-procurement templates can act as a form of scorecard for existing suppliers and potential news sources of supply. This is actually a type of automated RFI process which can save retailers a lot of work and time when trying to find additional sources of supply or when trying to drive cost down with existing suppliers. These data may also help to protect retailers from harmful litigation when products end up not being as safe as promised.

Can your e-procurement provider provide these types of data on demand as a normal byproduct of your standard e-procurement process at no additional cost?

We look forward to and appreciate your comments.

When we think about safety and environmental standards in the supply chain, I honestly believe that retailers say quietly to themselves; how are we supposed to monitor all this stuff with everything else we have to deal with in procuring products?

This author has written on this subject before, and as a TQM ands Six Sigma advocate, believe in the statement that you can not manage something that you do not measure.

The issue becomes more complex when you consider that data is required from your organization relative to the historical performance of existing suppliers, data from the supplier as to their own assessment of their historical performance and finally external data that neither may have at their finger tips.

When we talk about safety, the question that retailers need to ask suppliers is pretty simple. What certifications do you carry relative to food safety such as Safe Quality Foods (SQF), Global Food Safety Initiative (GFSI), American Humane Certified and many more? Another area to question should be regarding USDA and FDA inspection history.

Although Green Initiatives fall into the social consciousness area of a company, there are a variety of questions that can be asked in this area as well such as Green Seal, Eco-logo and Green Star certifications and participations.

It may be easier for retailers to rely on their e-procurement providers for this data if the provider has it included in their supplier database. Pre-populated e-procurement templates can act as a form of scorecard for existing suppliers and potential news sources of supply. This is actually a type of automated RFI process which can save retailers a lot of work and time when trying to find additional sources of supply or when trying to drive cost down with existing suppliers. These data may also help to protect retailers from harmful litigation when products end up not being as safe as promised.

Can your e-procurement provider provide these types of data on demand as a normal byproduct of your standard e-procurement process at no additional cost?

We look forward to and appreciate your comments.

Beyond the obvious social costs associated with responsibility and culpability in the sale and consumption of tainted foods, the potential for huge litigation costs can put any company at risk for years after an incident actually happens. How traceable is your data?

In a recent issue in the The Arizona Republic there was a short article included in the week in review section titled Girl?s tainted-food death brings $13M settlement. This unfortunate incident actually occurred eight years ago at a Sizzler restaurant. The settlement was with the company?s meat supplier and others according to court records. Evidently, Brianna Kriefall did not even eat meat. She actually ate watermelon that had touched the tainted meat and passed away a week later. Additionally, one hundred and forty (140) other people became ill from the outbreak in two sizzler locations.

Today there continues to be an ongoing lawsuit where the national Sizzler chain and an insurance company are suing Excel Corporation a meat producer that is a subsidiary of Cargill Inc.

Beyond the settlement listed, additional costs such as the actual legal and related expenses associated with this case may never be known, but with retail industry net profit averaging about 3.4% you can bet the impact on earnings to be significant for some company.

In 2008 there have been more food borne illness scares worldwide than most of us can remember. Occurrences of salmonella caused illness, listeriosis, e.coli caused illness and illness associated with additives that don?t belong in consumable products like melamine have all occurred. And for those not in the consumables businesses there are other issues such as lead in toys. Who to fault is a longer discussion, but we can be sure of one thing. The first place a consumer will look is to the retailer that sold them the tainted product.

It is important to know where your products come from with a clear trail to the original source of supply, and what your suppliers are doing in the way of certifications such as GFSI and SQF to insure the quality of the food chain for retailers and their consumers. SafeSourcing is working to provide that information. If we do not have inforamtion readily available, suppliers go through a specific vetting of more than thirty (30) specific safety and environmental certifications to insure a greater level of traceability while also indicating a level of diligence on the part of a retailer that may mitigate some legal exposure.

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

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. It also creates great education as to where there may be opportunities to collaborate externally. More on that later.

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.

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

According to Wikipedia, a business model is a framework for creating economic, social, and/or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

Often times during this author?s discussion with retailers the question comes up as to the benefits of the reverse auction business model or that of other e-procurement events such as Requests for Information or RFI?S.

This author will make the assumption that there is common agreement that price compression in today?s world is critical and that the reduction in cost of goods and services is the largest area of opportunity on a retail P&L. As such, there are a number of reasons that the reverse auction business model works well within organizations that should drive the strategic growth in utilization of this business model within retail.

A few and certainly not all are listed below in no particular order…

1. A larger number of buyers. Because of an increased number of suppliers bidding for a retailers business, getting a relatively low price is a given. The suppliers benefit because of the potential reduction is selling costs and easy access to new sources of business which encourages them to lower their pricing.
2. Location, Location, Location. In this case, location no longer matters. A supplier can participate from wherever they happen to be located. This opens up new potential markets for the supplier and new sources of supply for retailers.
3. It?s like a game: Participating suppliers wait to see if their price is the lowest much the same way a gambler would wait to see the turn of the next card when playing blackjack or poker. This is a social interaction and dynamic that builds on itself and can drive a larger number of bids and extensions while ultimately leading to lower pricing.
4. Early success drives a virtual circle for retailers and suppliers: The more a retailer uses the tool and the more success suppliers have with securing new business resulting from this process, the more the process will drive retailers to host new events and suppliers to participate in them again and again. Independent departmental successes can spread quickly within a retail company such that other departments not using the process do not want to be left out of potential savings opportunities and notoriety.

As always, we look forward to your comments.

As the price of oil and related fossil fuel costs continue to erode, companies will go right back to sourcing more and more products from off shore instead of looking locally for similar goods. Is this necessary or good for the carbon footprint we leave?

Greenhouse gases increased by 1.4% during 2007 in the United States according to the Energy Department. This is a direct result of people using more coal, oil and natural gas during the year because of a colder winter and more electricity during a warmer summer. During 2007 the United States created eight billion tons of greenhouse gases. Carbon dioxide accounted for eighty three percent (83%) of the total according to the Energy Information Administration or EIA.

The question this begs is how much greenhouse gas were we responsible for globally that might be reduced by local sourcing. If a container ship is registered in another country we obviously do not count the emissions from the burning of fossil fuels associated with the ocean freight headed for our shores. I?m also not sure we count all of the overland freight emissions from fleets in other parts of the world delivering goods to stores owned an operated by retailers with headquarters located in the North America.

Many companies claim that greenhouse gases caused by ocean freight are one of their top contributing categories to their overall carbon footprint. It only makes sense that if retailers sourced fewer products from offshore, which in turn would decrease the amount of ocean freight required to move these products that our overall contribution of greenhouse gases would come down.

In order to support local sourcing, North American retail companies need to have a source that can tell them where suppliers within the trade zone are located by category and product. It is also important that the supplier community be able to register at such a site in order to be easily accessible to regional retailers.

A tool of this nature already which can tell retailers where there are 928 general merchandise suppliers located in Mexico, 1,585 Grocery Suppliers located in Canada, and 1,940 Pharmaceutical suppliers located in the United States. Please visit the SafeSourcing Query Tool to learn more.

We appreciate and look forward to your comments.

According to a variety of sources, the role of e- procurement continues to become more and more strategic each year. Driving cost of goods and services control is one of the most important above the line initiatives a company can undertake. Given the dramatic financial impact driven by these types of tools and the potential positive impact on earnings these initiatives should have the visisibility and oversight of senior executives.

Experience indicates that in order to successfully implement an enterprise wide e-procurement initiative, executive management must provide sponsorship and visibly promote these projects within their organizations. Executive sponsorship is required by the Chief Executive Officer, Chief Financial Officer, Chief Procurement Officer or Chief Logistics Officer. The potential impact to earnings regardless of Industry vertical are so significant with a properly deployed e-procurement program that officer level executives require visibility based on the impact to stockholders and stakeholders alike.

In fact Sarbanes-Oxley section 404 requires the following of all companies.

1. Demonstrate reasonable & consistent governance & compliance monitoring.

2. Assure proper use of tools that have been placed into practice.

3. Employ proper reporting & management oversight. Implementing e-procurement tools has the potential to offer significant earnings changes.

Once executive management has sponsored these initiatives, some form of accountability must be implemented to ensure maximum participation in order fully realize organization wide savings opportunities. A company’s successful transition to e-procurement requires a transition from a cumbersome paper RFX processes to one that focuses on using the speed and efficiency of an electronic forum. Successful change management professionals focused on sustainability realize that this shift must be a combination of the use of not only the latest software advances, but also reengineering of internal processes in order to drive sustainable results.

We appreciate and look forward to your comments