Primary success in e-procurement programs is ultimately measured by cost reductions that drop directly to a company?s bottom line. More than once I have heard; ?did we hit a home run?? Less emphasis is placed on cost avoidance and sustainability and as such can often lead to less spend be assigned to these very effective tools than should be.

In order to ensure that results are sustainable; the strategies for all targeted e-procurement categories require consistent deployment across all departments throughout the host company. This is accomplished by utilizing a well planned repeatable process for category selection and discovery, supplier selection, and a solid strategy that is well understood by all buyers and category managers for negotiation and award of business.

Supplier selection and management is a critical stage that requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone with the procurement organization could negatively impact the potential results of an e-procurement event. Historical long term relationships that drive behind the scene comments like; ?don?t worry we?ll be fine? to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your program. Not to mention the potential legal implications.

If you are not having the results you would like to or have less than twenty percent your total corporate spend assigned to e-procurement tool?s that are offered in the form of SaaS or Software as a Service, ask your provider why?

I look forward to your comments.

Ron

Have a wonderful extended weekend with your family and loved ones. Our blog will return on Monday July 7th.

In a USA TODAY article by Elizabeth Weise titled FDA adds up to 100 labs to help trace salmonella outbreak, David Acheson the FDA?s associate commissioner for foods posed a question as to whether pushing the food industry to move to computerized record keeping might speed investigations in the future. He went on to say ?In a digital age should we still be using paper and pencil to try to figure things out??

In the same article. Jean Halloran of Consumers Union called on congress to mandate traceability of fruits and vegetables back to their source.

We agree with both David Acheson and Jean Halloran. We would go one step further and suggest that all products have this level of traceability regardless if they are consumables or not.

Our company SafeSourcing Inc. www.safesourcing.com was launched on 5/12/2008 and is focused on safety and traceability in the retail supply chain. We can easily tell you how many farms there are in Mexico that process fruits, or how many meat processing plants there are in Nebraska in an instant with contact information. Our daily blog has a lot to do with safety in procurement and three blogs recently have dealt with the salmonella outbreak.

Part of what SafeSourcing does when providing data to retailers relative to their current suppliers or alternate sources of supply is to provide traceability content to the original source. While some of that work today requires paper, pencil and phone related work; once information is obtained it is included in our database for future reference. Think of it as a traceability RFI tool on demand for retailers. Our database presently contains over 187,000 North American suppliers and 26 targeted safety and eco focused certifications.

A journey of a thousand miles begins with one footstep. We look forward to your comments.

Ron

In the nation section of the Tuesday edition of USA TODAY is an article titled CDC widens its salmonella investigation. As you might recall, my blog post I say Tomato, you say Tomahto on June 10th discussed the fact that at the time there were 145 salmonella cases with 23 hospitalizations resulting from the current tomato scare. According to today’s article there are now 851 cases. That’s an astonishing 487% increase in less than a month.

In the same section of the paper under the wire reports section by Steve Marshall. There was a nice picture of a hippopotamus celebrating its 50th birthday in the Kiev Zoo. Evidently this is very old for a hippo as the normal lifespan is 40-50 years. The hippo’s present was a fruit basket. I could make out the bananas, but could not see if there were any tomatoes.

That’s unfortunate, because hippos might like tomatoes. As it turns out according to the above mentioned article, the recent salmonella outbreaks in the US may not have even been caused by tomatoes at all. And now there is news that the CDC is broadening the investigation. According to the article if in fact another food is found to be the culprit after the produce industry lost hundreds of millions with the tomato recall, the publics trust in the government’s ability to track food borne illnesses will be severely damaged.

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.

I look forward to your comments

Ron

In the nation section of the Tuesday edition of USA TODAY is an article titled CDC widens its salmonella investigation. As you might recall, my blog post I say Tomato, you say Tomahto on June 10th discussed the fact that at the time there were 145 salmonella cases with 23 hospitalizations resulting from the current tomato scare. According to today?s article there are now 851 cases. That?s an astonishing 487% increase in less than a month.

In the same section of the paper under the wire reports section by Steve Marshall. There was a nice picture of a hippopotamus celebrating its 50th birthday in the Kiev Zoo. Evidently this is very old for a hippo as the normal lifespan is 40-50 years. The hippo?s present was a fruit basket. I could make out the bananas, but could not see if there were any tomatoes.

That?s unfortunate, because hippos might like tomatoes. As it turns out according to the above mentioned article, the recent salmonella outbreaks in the US may not have even been caused by tomatoes at all. And now there is news that the CDC is broadening the investigation. According to the article if in fact another food is found to be the culprit after the produce industry lost hundreds of millions with the tomato recall, the publics trust in the government?s ability to track food borne illnesses will be severely damaged.

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.

I look forward to your comments

Ron

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

I have 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?

I look forward to your comments.

Ron

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

I have 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?

I look forward to your comments.

Ron

On demand software or SaaS (Software as a Service) by its nature is an internet based application and as such is accessible from wherever you happen to be as long as you have a network connection. With today?s broad band offerings that literally means anywhere. So the first rule of thumb is that it provides easy access. In addition, since most of the newest versions of SaaS applications are native web based applications, they integrate very nicely with most office infrastructures. With Microsoft being the most deployed environment, data is easily exported or imported to formats that comply with their standards. In many cases these tools can also be made 100% available to you within days of contract signature

Most of us have horror stories about when our PC, Network, Application etc. went down and we were not able to complete tasks at work. When we call our internal service department, the response is normally less than what we would like or hurry up and wait. With a hosted software application, it is the responsibility of the SaaS provider to maintain the application. They know up front that if they don?t do a superior job of support and availability, that you the customer can go somewhere else to find a provider that will. This is not the case with internally installed corporate applications.

Your data at a SaaS provider is also often more secured than the data at your corporate office. Since this is the core business of a SaaS provider, the architecture of the application normally has multiple levels of redundancy, failover recovery and is backed up regularly.

Typically, SaaS applications are easier to change than traditionally installed corporate applications. There are not as many feature upgrade charges with every point release in a SaaS environment because the provider needs to provide these features to continue to attract new customers and to keep up with the pace of the industry.

Finally, the total cost of ownership is much quicker in a SaaS environment than traditional application software installations. Often as much as 100% faster. In fact there are many stories of breakeven ROI?s with your first series of e-procurement events. The biggest question you have to ask of your future provider is are you a true SaaS environment with the newest technologies available or are you a reengineered ASP provider. I?ll comment more on that later.

I look forward to your comments

Ron

In a reserve price reverse auction, the buyer establishes a ?reserve price?, the maximum amount the buyer will pay for the goods or services being auctioned. This is also sometimes called the desired price, or a qualification price. Careful thought is required on the part of the retailer in determining their reserve price. I personally have seen retailers try to just use their existing price from their last contract. This type of practice may set unreasonable expectations, particularly if the market has changed dramatically in an upward direction since the last award of business. In today?s market, fuel would be a great example of something that you would not set a reserve price based on a previous contract if you wanted incumbent or new suppliers to take you seriously.

Traditionally, if the bidding does not reach the ?reserve price?, the buyer is not obligated to award the business based on the results of the reverse auction. However once the reserve price is met, the buyer is obligated to award the business to a participating supplier or group suppliers based on previously published auction rules.

Additional pricing considerations can be given to adding other price points or qualifiers in a reserve price reverse auction such as entering a market price. In the case of fuel, this may be from a price index such as OPIS. This information can be visible or blind to the supplier, but let?s the retailer compare a suppliers mark up strategies. This also offers a nice opportunity to calculate cost avoidance during an up market.

I look forward to your comments

Ron

A question I often hear from retailers, is how many suppliers do you have in your North American supplier database? I sometimes want to blurt out a response that is number oriented because ours is the largest and most diverse. However I end up holding myself back in order to better understand the question that is really being asked. The discussion normally evolves along the line of quality and what data you have available in the database in order to make high quality supplier selections. Although reduction in cost may in fact be the ultimate goal, it in fact may not be the end point after the necessary due diligence required to pick the right supplier or suppliers.

Developing a plan that addresses the often conflicting objectives during your decision-making process and identifying the optimal list of suppliers requires significant amount of data in order to mitigate log term risk. Measuring your supply chain partners on cost only may cause you to miss many of the non-financial aspects that are so important such as:

1. Customer references
2. Product quality
3. Flexibility
4. Terms
5. Funds
6. Distribution
7. Responsiveness
8. Safety Focus
9. Eco Focus
10. Collaboration practices
11. Aggregated category opportunities
12. Experience

The risk of a new supplier performing poorly can negate any savings gained from direct product cost reductions. Driving sustainability in supplier improvement is one key to minimizing these potential risks within your company?s supplier base.

How your e-procurement partner addresses these questions is also key.

I look forward to your comments.

Ron