Quality supplier selection is one of the most important areas of focus in order to insure quality and sustainability in e-procurement events.

Having a large database of available suppliers to drive sustainable results in e-procurement events such as reverse auctions is a critical success factor. Maybe even more critical is making sure that the suppliers once selected for participation in an event are of the highest quality, professional, responsive and have your best interests at heart. There are several areas in the early strategy stages of a reverse auction which if properly monitored can be leading key performance indicators as to future performance. These KPI?s are, the initial supplier response and supplier training schedule adherence. If suppliers are not interested enough during these early stages, that may be an indicator of future performance in other more critical areas such as on time delivery, back order management and documentation.

A simple process for measuring these KPI?s would be to measure the number of days between the project start date or initial supplier contact and the event start date, where the supplier has been sent an invitation but has not responded either positively or negatively. Maintaining an active status of response dates could be scored based on the number of days it takes invited suppliers to respond. Obviously the longer it takes to respond the lower KPI score the supplier would receive. Another possible KPI measurement or filter once the invitation has been accepted would be the number of days between the date accepted and the event start date, where the supplier has accepted an invitation but has not completed their training.

These are not intended to be punitive measures. In most cases suppliers will perform beyond your expectations. Sustainability and quality require measurements regardless of how simple.

We appreciate and look forward to your comments.

When product and food safety for your customers is at stake, can procurement professionals rely on a myriad of disparate organizations? Or should they follow Shakespeare?s Polonius and ?to thine own self be true.?

These celebrated words were spoken in William Shakespeare?s Hamlet by Polonius to his son Laertes as he prepared him for travel abroad. ?This above all: to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man.?

This was great advice during the sixteenth century, and is equally good advice today when it comes to anyone involved in product safety. This author discussed the issue of BPA in a recent post. The post was on October 20th and titled ?What is the status of bisphenol A in the United States?? In the post we mentioned and applauded the fact that Canada had recently declared this chemical toxic, and banned bottles containing it. In the U.S. the FDA had declared products with certain levels of BPA safe.

Recently in a USA TODAY article by Liz Szabo it was reported that the FDA ignored information about the danger posed by this chemical in plastic baby bottles. In fact, the excluded studies showed that BPA could pose harm to children at levels at least ten times lower than that the FDA says is safe. The article went on to site that the National Toxicology Program concluded that there is some concern that BPA alters development of the brain, prostrate, and behavior in children and fetuses.

Are you kidding me? This is where ?To thine own self be true.? comes in to play for procurement professionals. Are you doing enough to insure the safety of your customers, associates and stakeholders? Is it enough that trade organizations focus on safety? Or, is there more that as individuals we can all do.

This author believes there is. The first thing we can do is to make sure that the proper questions are being asked of our suppliers. This is more than asking manufacturers, suppliers, brokers and other for their certifications and affiliations. Begin by coming up with the list of questions you personally would like answers for from a supplier. By example, do the bottles you sell us contain BPA? That is a pretty straight forward question. You can follow on from there. A next step would be to review with your e-procurement provider what they have in place to hold suppliers accountable. How do they check for certifications? What certifications do they check for? What safety questions do they ask? How does their list compare with yours? Does a merged list from the both of you look better and allow you to sleep better at night?

Sometimes ?To thine own self be true.? Is the best protection of all?

We appreciate and look forward to your comments.

When product and food safety for your customers is at stake, can procurement professionals rely on a myriad of disparate organizations? Or should they follow Shakespeare’s Polonius and “to thine own self be true.”

These celebrated words were spoken in William Shakespeare’s Hamlet by Polonius to his son Laertes as he prepared him for travel abroad. “This above all: to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man.”

This was great advice during the sixteenth century, and is equally good advice today when it comes to anyone involved in product safety. This author discussed the issue of BPA in a recent post. The post was on October 20th and titled “What is the status of bisphenol A in the United States?” In the post we mentioned and applauded the fact that Canada had recently declared this chemical toxic, and banned bottles containing it. In the U.S. the FDA had declared products with certain levels of BPA safe.

Recently in a USA TODAY article by Liz Szabo it was reported that the FDA ignored information about the danger posed by this chemical in plastic baby bottles. In fact, the excluded studies showed that BPA could pose harm to children at levels at least ten times lower than that the FDA says is safe. The article went on to site that the National Toxicology Program concluded that there is some concern that BPA alters development of the brain, prostrate, and behavior in children and fetuses.

Are you kidding me? This is where “To thine own self be true.” comes in to play for procurement professionals. Are you doing enough to insure the safety of your customers, associates and stakeholders? Is it enough that trade organizations focus on safety? Or, is there more that as individuals we can all do.

This author believes there is. The first thing we can do is to make sure that the proper questions are being asked of our suppliers. This is more than asking manufacturers, suppliers, brokers and other for their certifications and affiliations. Begin by coming up with the list of questions you personally would like answers for from a supplier. By example, do the bottles you sell us contain BPA? That is a pretty straight forward question. You can follow on from there. A next step would be to review with your e-procurement provider what they have in place to hold suppliers accountable. How do they check for certifications? What certifications do they check for? What safety questions do they ask? How does their list compare with yours? Does a merged list from the both of you look better and allow you to sleep better at night?

Sometimes “To thine own self be true.” Is the best protection of all?

We appreciate and look forward to your comments.

When we launched SafeSourcing Inc, beyond quality e-procurement tools, product safety and a social consciousness relative to the environment were and continue to be two important key stones to building this company.

In this case, we may be specifically discussing Chinese suppliers as it relates to Wal-Mart, but this is not new information for the world?s largest retailer by revenue. Last year they held suppliers accountable to level one certification of the Global Food Safety Initiative or GFSI by July of 2009.

According to the Wall Street Journal on October 22nd, during its global supply chain summit held in Beijing, Wal-Mart would indicate that it is also focusing on environmental and labor laws in its Chinese locations in addition to their safety focus.

It is well known that Wal-Mart is one of the most technologically advanced companies in retail if not the world. So when Wal-Mart makes claims as to what it will do, suppliers generally line up to comply. The issue this creates for other retailers is that without the tracking technology a Wal-Mart has they can not keep up with what suppliers have done or plan to do to support the many emerging standards. And more importantly, retailers do not have a readily available view of alternative sources of supply where they might take their business if these important conditions are not met by their present suppliers.

Wal-Mart is also expected to require it?s suppliers to provide the name and location of every factory they use to make their products. As a by product, this is a great step to support 10 + 2 and one forward one back traceability for products that leave China particularly for North America.

An alternative for North American based retailers is the supplier databases that are offered for their use by supply chain; spend management and other e-procurement companies with whom they already do business. At SafeSourcing, our North American Supplier Database includes over 240,000 retail suppliers that are held accountable to twenty eight safety and environmental certifications such as Keep America Beautiful, SQF, Eco-Logo and GFSI. These tools should be made available via cloud computing or in the form of software as a service (saas) on a subscription basis for both individual searches and periodic use. If your provider can not demonstrate these tools, it might be time to look elsewhere.

We look forward to an appreciate your comments

The impact of the results discussed during Part I of this blog post on Monday November 1st suggests the following.

What the results discussed during yesterdays blog post indicate is that World Class Companies are adapting their procurement practices in accordance to lowering their cost of goods while simultaneously adjusting other costs resulting in savings directly to the bottom line. We are not advocating a lesser workforce to aid in the bottom line savings, however we are suggesting that more and more responsible professionals within procurement organizations need to acknowledge that change is a coming and they need to adapt to e-procurement tools such as Requests for Information or RFI’s, reverse auctions and user friendly reporting tools.

One of the most frustrating daily activities for most e-procurement professionals is winning a new opportunity via the direction of a compaies CEO or CFO and then getting nothing but push back from buyers within the organization when tools such as reverse auctions are mandated. Now we realize that the pushback can mean many different things?.does the responsible buyer not have product specifications, does he or she not know more than one or two vendors that can provide the product or service to his or her company? or is he or she simply resistant to change and unwilling to change the way he or she has procured the goods or services for the last 25 years?

The benefits to running reverse auctions are many and far outweigh continuing to do the same things the same way and expect different results. These benefits include but are not limited to the following:

? Maximize your visibility to additional suppliers

? Make better informed decisions

? Reduce sourcing time

? Lower cost of goods

? Streamline internal processes

? Excellent medium for aggregating

? Increased pricing visibility in the marketplace

? The retail industry is actively using this tool and improving
Competitive position

Make no mistake, this blog post is not a way of pointing a finger at any particular organization, however there is a common trend that when an e-procurement program is adapted within an organization it is very predictable that resistance to change will emerge and remain until someone is strong armed by senior management and the results prove that support for this process is best for the company. E-procurement tools such as reverse auctions are a different way to gather pricing in a quicker fashion, from more vendors, with your specifications and timelines with results typically 18 to 20 percent less in cost of goods which drops directly to your bottom line.

Change is uncomfortable but inevitable and requires acceptance in order for companies to stay competitive and retain the market share that one so diligently worked for in the past!

We appreciate and look forward to your comments.

The impact of the results discussed during Part I of this blog post on Monday November 1st suggests the following.

What the results discussed during yesterdays blog post indicate is that World Class Companies are adapting their procurement practices in accordance to lowering their cost of goods while simultaneously adjusting other costs resulting in savings directly to the bottom line. We are not advocating a lesser workforce to aid in the bottom line savings, however we are suggesting that more and more responsible professionals within procurement organizations need to acknowledge that change is a coming and they need to adapt to e-procurement tools such as Requests for Information or RFI’s, reverse auctions and user friendly reporting tools.

One of the most frustrating daily activities for most e-procurement professionals is winning a new opportunity via the direction of a compaies CEO or CFO and then getting nothing but push back from buyers within the organization when tools such as reverse auctions are mandated. Now we realize that the pushback can mean many different things….does the responsible buyer not have product specifications, does he or she not know more than one or two vendors that can provide the product or service to his or her company… or is he or she simply resistant to change and unwilling to change the way he or she has procured the goods or services for the last 25 years?

The benefits to running reverse auctions are many and far outweigh continuing to do the same things the same way and expect different results. These benefits include but are not limited to the following:

– Maximize your visibility to additional suppliers

– Make better informed decisions

– Reduce sourcing time

– Lower cost of goods

– Streamline internal processes

– Excellent medium for aggregating

– Increased pricing visibility in the marketplace

– The retail industry is actively using this tool and improving
Competitive position

Make no mistake, this blog post is not a way of pointing a finger at any particular organization, however there is a common trend that when an e-procurement program is adapted within an organization it is very predictable that resistance to change will emerge and remain until someone is strong armed by senior management and the results prove that support for this process is best for the company. E-procurement tools such as reverse auctions are a different way to gather pricing in a quicker fashion, from more vendors, with your specifications and timelines with results typically 18 to 20 percent less in cost of goods which drops directly to your bottom line.

Change is uncomfortable but inevitable and requires acceptance in order for companies to stay competitive and retain the market share that one so diligently worked for in the past!

We appreciate and look forward to your comments.

As most everyone is well aware, the days ahead are filled with lots of rhetoric regarding ?change? politically in both Washington as well as in our local elections.

I asked Alex Borbely SafeSourcing Inc. Vice President of Sales and Services to collaborate with me on a blog post as to his thoughts on the use of e-procurement tools in retail and what may be impacting their use in the retail market. Alex chose to speak about change; which became a great collaborative subject for this blog post.

Regardless of the elections outcome, I would bet that ?Change? is something that we?ll all become more accustomed as the economic times require all of us to realign ourselves with reality. Reality can mean a variety of things to all of us, smaller homes, less traveling around town in our cars, and even less extravagant dinners on Saturday nights!

The concept of ?change? also applies to what we all do in our daily work lives as we realign ourselves as to how to procure goods and services whether for resale or not for resale. Procurement today can mean many different things depending on who we are speaking with at the time.

One of my favorite Blog posts for e-procurement is Spend Matters where Jason Busch recently wrote ?According to a recent press release on the subject of a Hackett Research Alert , Hackett’s research shows that world-class organizations, “now spend 22% less than typical companies on procurement operations (.64% of spend for world-class companies versus .82% for typical companies), and operate with 37% fewer staff (48.4 per billion US$ of spend for world-class companies versus 76.4 for typical companies). World class companies also generate 129% higher spend cost savings, including reduction and avoidance while also delivering greater stakeholder satisfaction and support for initiatives in sustainability, innovation, working capital improvement, and other areas. At a typical Global 1,000 company (with annual revenue of $22 billion and annual sourceable procurement spending of $8.9 billion) would have more than $16 million in incremental annual savings on procurement operations, and over $263 million in additional annual spend cost savings.” What does this mean to the retail market? Please visit Part II of this blog post tomorrow .

As always we appreciate and look forward to your comments.

As most everyone is well aware, the days ahead are filled with lots of rhetoric regarding “change” politically in both Washington as well as in our local elections.

I asked Alex Borbely SafeSourcing Inc. Vice President of Sales and Services to collaborate with me on a blog post as to his thoughts on the use of e-procurement tools in retail and what may be impacting their use in the retail market. Alex chose to speak about change; which became a great collaborative subject for this blog post.

Regardless of the elections outcome, I would bet that “Change” is something that we’ll all become more accustomed as the economic times require all of us to realign ourselves with reality. Reality can mean a variety of things to all of us, smaller homes, less traveling around town in our cars, and even less extravagant dinners on Saturday nights!

The concept of “change” also applies to what we all do in our daily work lives as we realign ourselves as to how to procure goods and services whether for resale or not for resale. Procurement today can mean many different things depending on who we are speaking with at the time.

One of my favorite Blog posts for e-procurement is Spend Matters where Jason Busch recently wrote “According to a recent press release on the subject of a Hackett Research Alert , Hackett’s research shows that world-class organizations, “now spend 22% less than typical companies on procurement operations (.64% of spend for world-class companies versus .82% for typical companies), and operate with 37% fewer staff (48.4 per billion US$ of spend for world-class companies versus 76.4 for typical companies). World class companies also generate 129% higher spend cost savings, including reduction and avoidance while also delivering greater stakeholder satisfaction and support for initiatives in sustainability, innovation, working capital improvement, and other areas. At a typical Global 1,000 company (with annual revenue of $22 billion and annual sourceable procurement spending of $8.9 billion) would have more than $16 million in incremental annual savings on procurement operations, and over $263 million in additional annual spend cost savings.” What does this mean to the retail market? Please visit Part II of this blog post tomorrow .

As always we appreciate and look forward to your comments.

Do we really have adequate collaboration between rules based organizations such as the FDA, EPA, USDA, Consumers Union and the like?

This author spends many hours weekly if not daily researching supply chain issues that impact consumer safety, corporate earnings, the environment, productivity and other emerging conditions. One tool I use regularly is Google. In a recent search, I entered 10 + 2. The response I received was Search for documents containing the terms 10+2. Answer, 10 + 2 = 12, more about calculator. Obviously from a supply chain perspective this is not what I was looking for.

I only mention this to point out that in order to get to the answers one is looking for within a reasonable amount of time; one must have some idea where to look and what questions to ask. When we talk about product traceability within the supply chain, we have a similar issue. We do not ask the right questions or know where to go for the best answers in the shortest amount of time even if we have the right questions.

When addressing food born illness issues, the FDA advocates one forward one back traceability. Under current rules adopted under the Bioterrorism act of 2002 it is required that produce processors and distributors keep track of where food goes and comes from, but only one step forward and one step back in the supply chain. This means we know who bought it and we know who sold it. Obviously this is not adequate.

Let?s take a look at another agency and the controls they have in place. U.S. Customs and Border Protection are requiring additional data from U.S. importers and carriers to support 10 + 2. The Importer is required to submit 10 additional pieces of information which are: Manufacturer, Seller, Consolidator, Buyer and Ship to names and addresses, Container stuffing location, Importer and Consignee record numbers, Country of origin of goods and the Commodity Harmonized Tariff Schedule number. The Carrier will need to submit 2 additional data sets which are: Vessel Stowage Plan (or BAPLIE), and Container Status Messages.

The CPB or U.S. Customs and Border Protection needs to be congratulated on this level of traceability. It is however time for this type of data to be part of one data stream. When a food born illness such as the St. Paul salmonella outbreak occurs, ten plus two data linked to one forward one back data might just result in much quicker resolution to the outbreak and save our investigators days and months of expensive investigation time.

We appreciate and look forward to your comments.

With a barrel of oil selling for less than it was during mid 2007, it may be time for retailers to take a look at their fuel contracts to see if they can save some money.

As another earnings season comes to a close, we continue to hear of the negative impact that high fuel prices have had on operating results for all types of companies. Traditionally the best time of the year to buy diesel fuel is during February and March. If we look back over the past two years, the average price of diesel during that time period in 2007 was $2.40 per gallon and the following year in 2008 a gallon of diesel during the same timeframe was $3.30 and increase of 37.5% which is about where the market is today.

According to the Energy Information Organization or EIO, the price of diesel fuel has dropped a little over 10% during the last three weeks from $3.659 to $3.288 per gallon while the price of a barrel of crude has dropped over 55% since the middle of the summer. The problem is that diesel fuel is still 13% higher than it was at this time last year and a barrel of oil is cheaper. But more on Oil Company profits while retailers struggle at another time.

What the above points out is that fuel is a volatile & complex market and generally one of the top spend categories for many retailers. The question is; what is the best way to keep costs down in the fuel category? Some companies advocate annual contracts. This author is aware of several companies that in fact practice purchasing their fuel this way, yet were also citing rising fuel costs as a reason for their results. Other companies advocate treating fuel like the commodity that it is and applying the internal discipline of watching the fuel costs in the markets they serve on a daily basis and buying during the fluctuations we see in daily prices. In order for this process to work, companies must have a number of suppliers providing them with pricing. This allows companies to monitor against daily rack rates from sources such as OPIS or the Oil Price Information Service which further allows companies to determine what suppliers are making what types of margin. This provides a good source of data for negotiations.

Most e-procurement companies provide this type of technology which is really no more than an extended reverse auction with multiple award points and the capability to monitor an industry price through web feeds such as OPIS which are known as rss or really simple syndication. These services which are offered in the form of software as a service can generally be turned on in a matter of hours. The key to driving results is having a good source of new fuel suppliers that want to compete for your business.

Whether you contract annually for a portion or all of your fuel or decide to blend your purchases through commodity tracking, now may be a good time to take a look at tools that will help you with next years purchases.

We appreciate and look forward to your comments.