This author would like to know why this is not the most important initiative of all retail companies. Why do we fight it so?

I can meet with a retailer and roll out charts that reflect savings from recent reverse auctions of retailers in a similar format and geography that are as recent as twenty four hours ago. As real as those results are, it is still difficult for the retailer to pull the trigger to give a new process a try. This is even true for full service events offered in the form of Software as a Service. We just seem to get in our own way sometimes because we have important things to do. I sometimes wonder if there was ever a retailer or a prospective retailer that was directed by their CEO to bring in all companies that have a new way of doing things, and none of the companies that have been doing the same old thing for years, what the result of those meetings might be if implemented.

Sometimes we just make things to difficult. In this case let?s assume that the CEO 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 other senior executive. This is further assigned to the Vice President of Purchasing who in turn assigns it to the director of supply purchases. The director convenes a meeting of the buyers or category managers responsible for a variety of supply categories. 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 and nothing has been done yet. But the dung is getting pretty strong.

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!

From start to finish, a reverse auction should take no more than two weeks to run. 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.

1. A robust supplier database with safety and environmental focus.
2. A robust event template library.
3. An intuitive or intelligent tool for building an event quickly.
4. An automated reporting tool to provide immediate event detail.

Stop the excuses. If you are really interested in improving your bottom line now while we are in the midst of an economic meltdown, you are less than two weeks away from immediate results. But you can not be a camel herder.

We appreciate and look forward to your comments.

This author had a rather lengthy conversation with a CPO “Chief Procurement Officer ” today who asked my advice regarding what I thought was important in running high quality e-procurement events. I pointed him to one of my previous posts and thought it might be useful to repost for other first time visitors.

E-Procurement events have been around since the late 1990?s and are commonly referred to as reverse auctions or events. 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.

I look forward to you comments.

Ron

Among many reasons to sourcing more of your retail products locally could be that it is good for the environment.

Many of you may be aware of the often used quote ?Think Globally, Act Locally? which was reportedly coined by David Brower, founder of FOE or Friends of the Earth. Others have attributed it to Rene Dubos an advisor to the United Nations Conference of the Human Environment. Regardless of who said it, there are varieties of reasons to reconsider sourcing more of your products locally…

Environmental sustainability is becoming more and more important in the executive suite of major U.S. Corporations. Many have launched specific Corporate Social Responsibility programs as an innovative approach to reducing their carbon footprint and that of their trading partners. Sourcing more products locally can be a major contributor to these programs.

Less than six months ago when oil prices hit their apex, many companies began to consider sourcing more locally due to the increase in transportation costs. Some companies went as far as having their containers recycled and melted down because the cost of shipping them back to the Far East was just too expensive. What many do not realize is that carbon dioxide emissions from shipping are double those of aviation and increasing at an alarming rate which will have a serious impact on global warming according to research by the industry and European academics.
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One international company?s study indicated that their carbon footprint came from four main areas. The second largest area was ocean freight at 23 percent. Additionally researchers at the Institute for Physics and Atmosphere in Wessling, Germany reveal that annual emissions from shipping range between 600 and 800m tonnes of carbon dioxide, or up to 5% of the global total. This is nearly double Britain’s total emissions and more than all African countries combined.

To be sure, most countries have signed and ratified the Kyoto Protocol which establishes legally binding commitments for the reduction of six greenhouse gases such as carbon dioxide, hydro fluorocarbons and others and are working with international companies to insure reductions. However, beyond the benefit of better pricing, the emissions issues associated with ocean freight shipping should provide additional incentive to North American based retailers to look within the NAFTA trade area for product alternatives to those sourced from areas that require ocean bound freight.

We look forward to and appreciate your comments.

Among many reasons to sourcing more of your retail products locally could be that it is good for the environment.

Many of you may be aware of the often used quote “Think Globally, Act Locally” which was reportedly coined by David Brower, founder of FOE or Friends of the Earth. Others have attributed it to Rene Dubos an advisor to the United Nations Conference of the Human Environment. Regardless of who said it, there are varieties of reasons to reconsider sourcing more of your products locally…

Environmental sustainability is becoming more and more important in the executive suite of major U.S. Corporations. Many have launched specific Corporate Social Responsibility programs as an innovative approach to reducing their carbon footprint and that of their trading partners. Sourcing more products locally can be a major contributor to these programs.

Less than six months ago when oil prices hit their apex, many companies began to consider sourcing more locally due to the increase in transportation costs. Some companies went as far as having their containers recycled and melted down because the cost of shipping them back to the Far East was just too expensive. What many do not realize is that carbon dioxide emissions from shipping are double those of aviation and increasing at an alarming rate which will have a serious impact on global warming according to research by the industry and European academics.
.
One international company’s study indicated that their carbon footprint came from four main areas. The second largest area was ocean freight at 23 percent. Additionally researchers at the Institute for Physics and Atmosphere in Wessling, Germany reveal that annual emissions from shipping range between 600 and 800m tonnes of carbon dioxide, or up to 5% of the global total. This is nearly double Britain’s total emissions and more than all African countries combined.

To be sure, most countries have signed and ratified the Kyoto Protocol which establishes legally binding commitments for the reduction of six greenhouse gases such as carbon dioxide, hydro fluorocarbons and others and are working with international companies to insure reductions. However, beyond the benefit of better pricing, the emissions issues associated with ocean freight shipping should provide additional incentive to North American based retailers to look within the NAFTA trade area for product alternatives to those sourced from areas that require ocean bound freight.

We look forward to and appreciate your comments.

Last week our three part blog series ?The sourcing of quality safe retail products at the best market price is the most difficult job in retail? begged the question; what are the next steps and where can we get more education?

Below are nine steps to safer and moe eco-friendly procurement.

1. Be pro-active in driving not for resale and for resale product safety within your company, and also supporting eco-standards in the procurement process.
2. Pay it forward with all of your trading partners by sharing what you are doing, and asking what they do to support yours or similar initiatives.
3. Educate your employees and trading partners about common safety standards and guidelines such as the SQF Certificate www.sqfi.com and the Global Food Safety Initiative www.ciesnet.com.
4. Educate your employees and trading partners about common eco-standards such as Green- Energy National Standard www.green-e.org or EcoLogo www.ecologo.org.
5. Point associates and trading partners to free educational websites such as www.safesourcing.com to use their free SafeSourcing Wiki or the Sourcebook professional social network for procurement professionals.
6. Only use trading partners that follow your lead.
7. Train your team to understand and use all available tools that insure supply chain safety such the free daily safety in sourcing blog at www.safesourcing.com or the low cost SafeSourceIt Supplier Database and Reverse Auction Tools.
8. Impose a system of measures and controls to monitor performance against clearly defined goals.
9. Start at the top and engage all levels of your company.

We appreciate and look forward to your comments.

In yesterdays post we concluded our discussion as to whether consumers have anything to worry about relative to safe products? Today in Part III let?s finish up with the retailers view.

A Retailers Perspective

Many retailers have rallied around support for safety in the supply chain. Many also have clear corporate guidelines and are socially conscious as regards to eco- standards that affect us all. However, common sense would dictate that we recognize that just ?checking-off the box? doesn?t move us in the direction of the next level of safety or global renewal. We can monitor the ?check-off? every day, but a check mark in a box does not mean that the practice was actually completed at the appropriate level of proficiency, if at all. Unfortunately, during 2007 retail companies had to spend nearly $30B to support various compliance measures not to mention moneys focused on eco-standards.

Even as retail companies try harder and harder to support more regulations, we continue to see safety alerts and product recalls from the FDA, the USDA, as well as other agencies that put retailers and their customers at unnecessary risk. New product introductions and new unchecked sources of supply from both companies and countries for which we may or may not have clean accurate data continue to make this a daunting task in an era of fewer employees required do more and more work.

Imagine the impact on retailer?s bottom line if that $30B was not needed to support these initiatives, or if it was easier to find good clean sources of supply that had the same level of concern for safety standards and focus on corporate social responsibility regarding eco- standards as our retailers do. The impact on U.S. retail alone would be staggering, an improvement in retail profit of 21.7% based on U.S. retail sales of $4T during 2007. The same results would require an unheard of sales increase of nearly $900M. Imagine the impact on jobs and the economy in general.

What Retailers Can Do

So, what can retailers do? How can they elevate their focus and make the job easier resulting in greater safety, more focus on their green initiatives and still reduce their cost of goods and improve profitability?

First, they need to understand that it is the effective execution of actual best practices through the use of best in class tools and proven processes that will yield them the integrity and ?measurable? results that are demanded by their consumers, corporate boards? and governance bodies.

Secondarily, there needs to be true collaboration without the incremental costs normally associated with implementing new processes. Collaboration really extends beyond traditional work relationships to incorporate a broader scope or objective. Collaboration demands a focus on success beyond ?self?. The implantation of a collaborative culture is difficult because it calls for an apolitical, non-self-serving, but still driven business model. Most often we see this in very small work groups, or between one or two people who truly want success for the other as much as they want success for themselves.

Retailers Summary

Retailers want there customers not to have to worry about safety. They encourage their suppliers to be proactive in becoming aware of what they are doing to support safety and environmental standards and to hold their raw material providers accountable to the same standards. Retailers are also committed to using the most current tools and processes to allay their customers concerns.

We look forward to your comments

In yesterdays post we closed with the question. Should consumers have anything to worry about and if so what risk does this pose for retailers? Let?s finish up with the consumers view. We?ll discuss the retailer?s risks and concerrns in Part III tomorrow.

Over a previously monitored six-month period during 2007 ? 2008, hardly a day went by that some notification or safety alert did not appear in the local or national news. Unfortunately as in most news reporting, these reports are often after the fact. Some examples are:

? Outbreaks prompt scrutiny of food labeling
? FDA fees eyed to boost safety
? Meat plant concerns raised for years
? One million baby seats recalled
? China making progress on safety
? Some pet foods Still not on shelves
? Altered Heparin linked to deaths
? Honduran melons linked to salmonella
? Families of U.S. victims sue Chiquita
? Lawsuit follows lead recalls. toymakers, sellers sued in California
? Report: FDA so under funded consumers are put at risk
? Mattel recalls more toys for lead

Okay, let?s sum it up: animal cruelty, illness, increased costs, death and litigation. This is scary stuff. Who has the time to monitor this on a daily basis? We have far more important things to do in our day to day lives such as working, raising our families and enjoying our growing lack off free time. What we don?t have time for, is to worry about the products we buy and the impact they may have on our loved ones, friends, pets or in larger sense the impact of how they are manufactured on our planet. Even worse, is the fact that as our world grows figuratively smaller based on modern technological advances, our global supply chain continues to grow larger, making it even more difficult for the largest of companies to hold their suppliers accountable as to the original source of products or the components and ingredients that make up their finished goods.

The answer is obviously to add more compliance demands on the retail community. In the food sector, an amendment to the Federal Food, Drug and Cosmetic Act became effective in 2006 called the Food Allergen Labeling and Consumer Protection Act. This act requires food manufacturers to identify in plain, common language the presence of any of the eight major food allergens (soy, shellfish, milk, eggs, peanut, tree nut, wheat, and fish).

Consumer Summary

Consumers do not want to worry about how safe the products they purchase are. Consumers do not wan to pay higher prices or increased taxes to support increases in regulatory compliance. Consumers do not want to invest their precious time in unnecessary litigation. Consumers want retailers and suppliers to collaborate with the most current tools available to insure their safety and that of the environment.

Tomorrow a retailer?s view.

As always we look forward to your input.

Do consumers have the right to expect products, services and other finished goods they purchase from their retailers to be safe and eco friendly?

If so, what level of safety should they expect? Does safety extend beyond the personal safety of their families, pets and loved ones to the ecological impact the manufacturing of these products has on our planet? Who should bear the expense of this increased safety; suppliers, retailers, or consumers? Are there more effective ways in the form of better processes and more modern easy to use tools to reduce costs and increase safety and eco awareness?

A Consumer?s Perspective:

Many baby boomers remember listening to the nightly news as children and young adults and hearing the local anchor person ask the following question. ?It?s 10 P.M. do you know where your children are??

In those days, it was fair question. Prior to the development of pagers, cell phones, personal digital assistants and now smart phones, the question challenged parents to be accountable for their children and insure that they were safe. Today, a simple text message or phone call provides some level of security to parents, albeit not the level of safety one might like. But, do we know how the safe the products are we consume? Toy recalls, pet food recalls, tainted drugs, food born illness outbreaks, melamine and BPA issues. The list goes on and on.

The question consumers are asking retailers more often these days is how safe is our supply chain? Consumers are interested as to what level their retailer understands where their products come from? The Public Health Security and Bioterrorism Preparedness Act of 2002 was fully enacted in 2004. It requires processors, distributors, importers and other reseller groups in the United States to maintain records that identify the immediate sources that they receive food from and the recipients they send it to.

Should consumers have anything to worry about and if so what risk does this pose for retailers?

Visit us tomorrow for some answers.

We appreciate and look forward to your comments.

A key design goal of the SafeSourcing website was to provide an educational format for procurement professionals. A source of reliable information and links to quality source data. To that end today?s blog post is intended to discuss the risks associated with the human consumption of BPA.

?Bisphenol A? is a toxic plastics chemical that has inherent risks associated with the human consumption of the product. The following is taken from an excellent organization the Environmental Working Group or EWG?s website.

The mission of the Environmental Working Group (EWG) is to use the power of public information
To protect public health and the environment. EWG is a 501(c) (3) non-profit organization, founded in 1993 by Ken Cook and Richard Wiles.

Our testing of canned foods found that BPA leaches from the liner into the food itself. Sensitive groups such as kids and pregnant women should limit canned food consumption. Beverages appear to contain less BPA residues, while canned pasta and soups contain the highest levels. Rinsing canned fruit or vegetables with water prior to heating and serving could lessen BPA ingestion.

BPA is found in polycarbonate plastic food containers often marked on the bottom with the letters “PC” recycling label #7. Not all #7 labeled products are polycarbonate but this is a reasonable guideline for a category of plastics to avoid. Polycarbonate plastics are rigid and transparent and used for sippy cups, baby bottles, food storage, and water bottles. Some polycarbonate water bottles are marketed as ‘non-leaching’ for minimizing plastic taste or odor, however there is still a possibility that trace amounts of BPA will migrate from these containers, particularly if used to heat liquids.

Risk levels associated with the consumption of BPA can be viewed at the EWG website.

This author recommends that when buying any of the products listed above that procurement professionals ask their suppliers the specific question; do the containers for these products contain BPA? If so, do you have the same product for the same price in container that does not contain BPA?

We look forward to your comments.

Today?s post is a repost of a blog from October 20th as background information as we begin a 2 day discussion of BPA in North America.

What is the status of bisphenol A in the United States? Should procurement professionals be cautious?

Canada declares this chemical toxic, bans bottles with it.

According to Canada Gazette, Canada declared a chemical widely used in food packaging a toxic substance this past Saturday and will now move to ban plastic baby bottles containing bisphenol A. According to Canadian Environmental Minister John Baird many Canadians have expressed their concerns to me about the risks of bisphenol A in baby bottles.

According to Wikipedia Bisphenol A, commonly abbreviated as BPA, is an organic compound with two phenol functional groups. It is a difunctional building block of several important polymers and polymer additives. With an annual production of 2?3 million tonnes, it is an important monomer in the production of polycarbonate.

Suspected of being hazardous to humans since the 1930s, concerns about the use of bisphenol A in consumer products grabbed headlines in 2008 when several governments issued reports questioning its safety, and some retailers pulled products made from it off their shelves.
So what you might ask is the United States doing about this compound?

During the week of April 14, 2008, upon the request of the Commissioner of Food and Drugs, FDA formed an agency-wide BPA (Bisphenol A) task force to facilitate cross-agency review of current research and new information on BPA for all FDA regulated products. As a result of this review, the task force will make recommendations to the Commissioner regarding next steps.

This author believes that the Canadian government has it right on this product, and that the United States government should follow with the same action. It is also my recommendation that procurement professionals include detailed questioning of their suppliers to determine whether or not products they supply contain this compound and do not purchase them or stock them.
Products that can contain bisphenol include but are not be limited to the following.

1. Common metal coatings liners of food cans.
2. Baby bottles the hard plastic ones.
3. Water coolers and bottles
4. Tableware and food storage containers
5. Medical devices
6. Consumer items such as sunglasses CDs and DVDs
7. Automobile parts
8. Sports equipment

We look forward to and welcome your comments.