Freight Tendering 101!

November 20th, 2013

The cost of oil is dropping; there is a limited temporary driver pool; so how can companies reduce their freight costs?

Todays post is by Ron Southard CEO at SafeSourcing Inc.

This author has been in and around the freight business for years. Actually for 40 years. Just like the unrelated movie, I have seen it all. Planes, trains and automobiles (trucks really) to be sure but also ocean bound freight. The ships and planes get bigger, but at the end of the day the same issue exists. How do companies get their products to where they need to be efficiently and at a cost that is acceptable in order to satisfy customer demand?

This is not necessarily about your internal optimization models; it is more about the data that feeds your internal optimization models. That is of course if you even have one. The basis for collecting that information is not all of the math calculations and pivot tables; it really is the following types of data.

• Lane data in distance for your delivery model such as Plant to DC.
• Volume discount data from carriers
• Lane rate per mile
• Fuel Surcharge rate
• Human resources rates for loading and unloading (Lumpers in the US)
• 3PL storage rates
• Load balancing charges for LTL versus FL

There may be other data that is required for your individual model, but the above will cover most of what you need to come up with a well rounded format that freight companies can easily bid on. An example of other information may be questions such as “What is  your overall logistics strategy”. With the cost of rail down versus traditional freight lanes, are you thinking about developing a  rail hub service model. do you even know what this is?

Relative to who should be bidding; this authors recommendation conducting a three step process that includes a detailed RFI, followed by a detailed RFP and then ultimately the RFQ data compression piece or a reverse auction.

• RFI  – Incumbent and other participants selected from a quality sourcing database
• RFP – Participants include a reduced number from the RFI process
• RFQ – Includes all RFP participants unless otherwise indicated by the host.

The terms and conditions of the reverse auction or RFQ can cover the balance of information needed by providers that relates to quality, certifications, payment terms, safety, insurance etc.

If you want to get control of your freight costs, please contact a SafeSourcing customer services representative.

We look forward to and appreciate your comments.

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Just what is a Private Label product and where do you source it?

November 19th, 2013

Years ago we called them store brands. Today you’d be amazed at how many companies there are that can provide you products under your own label.

Probably the best source of information on private label or store brand products is the PLMA or Private Label Manufacturers Association. This is actually a global organization.

According to their website, their show this week ending today the 19th in Chicago  presented more than 2,000 exhibit booths, featuring food, snacks and beverages, household and kitchen products, GM, and health and beauty. Exhibitors range from large, well-known store brand makers to small and medium-size companies. More than 35 countries will be represented on the show floor, including ten national pavilions.

If you’re not happy with your current private label offering or have never had one, this show is a must. There are also a number of educational workshops. In fact, PLMA sponsors workshops throughout the world annually. You can find a little more information on these at their website http://plma.com/.

We look forward to and appreciate your comments.

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Sourcing Results and Supplier Participation

November 18th, 2013

When running sourcing projects are you getting the participation and results you need?”

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

When we help our customers run sourcing projects one of our mottos is that is must have participation and it must generate results.  Seldom will you get one without the other.  In today’s blog we will be taking a look at some of the ways you can begin laying the groundwork to cover both of these areas successfully. 

Understanding the results you need – The first thing that must be established regardless of what stage in the RFx process you are starting with, knowing the results you are looking to achieve is the first critical step.  This may come in the way of establishing who the key suppliers in a new category or for a new product of service.  During this stage another key piece may be to understand if there are any new technologies or services the suppliers are offering that you are unaware of.  Collection of data is an important result for a Request For Information stage.  Some results may deal with prices you need to see from the suppliers or a compression of current pricing that may result from consolidating disparate spends into a bigger opportunity.  Once you understand what type of results you need you can begin shaping where you begin in the procurement process.

Setting the definition of success – As critical as understanding what type of results you need is establishing the bar for which you will measure how successful the project was.  In the way of a request for information, that may mean having a list of 5 vendors who are able and experienced to handle a business like yours from which you will pick 2 to present.  Another definition for success is to not only understand what each of your locations is doing but also to understand the impact of running a procurement exercise to consolidate those 12 suppliers down to 3.  Part of understanding if the project is successful will be to understand which locations will be most effective with which of those 3 suppliers.  This requires a project that returns, by location, the current spend, incumbent, incumbent new pricing and pricing from the best of the 3 suppliers you are narrowing your choice down to.  The definition of success will create the structure of your event and the reporting that is output.

Bringing the suppliers – Part of the research of every event should be to understand the supplier landscape of a product or service.  There are some products with very little competition and there are others with great options for suppliers to participate.  Participation in any part of the RFx process is critical to achieving the results you are looking for.  Part of this process begins with screening the suppliers before the process begins through internal research or third party tools and processes.  Once you have the vetted list of suppliers you must work with them to make sure they are willing to complete the project whether in the form of an RFP response or participation in an online bidding event.  Some suppliers will present reasons why they do not want to participate and the challenge here is make sure the process does not end with the first response and if necessary raising the objection up the ladder so that they are aware that they will not get an opportunity to bid in the future if they do not participate in the beginning stages.   Supplier participation will make all the difference in obtaining the results you need.
There are many ways SafeSourcing can assist your company with getting your results and ensuring you have good supplier representation.  For more information on how SafeSourcing can assist you or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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You might think that suppliers understand that a reverse auction is a great opportunity for new business.

November 15th, 2013

Unfortunately most don?t and it is up to solutions providers and their business partners to educate them.

The easiest way to do this it to keep the communication open friendly and non adversarial. At SafeSourcing we have a training class for this that we have with our customers and for all new associates as the join our company.
A friend of mine that is a manufacturer said it this way. ?Openly communicate with our supplier?s because their relationships are important to us. Make sure they understand everything and are comfortable with it. Make sure they have no lingering questions.

Here although not all inclusive is a list of sample questions one might consider when inviting a supplier as a new participant.

1.?Does the supplier understand that there is no cost to them to participate?
2.?Do they understand they will be trained at know charge?
3.?Do they understand event timing and requirements?
4.?Does the supplier understand the terms being used and how they apply to a reverse auction event such as?
a.?Reserve Price
b.?Low Quote Indicator
c.?Max quote
d.?Funds
e.?Terms & Conditions
f.?Notes
g.?Extensions
h.?Matching quotes
i.?Event? rules
j.?Product specifications
k.?Samples
l.?Award of business
m.?Letter of Intent
n.?This is an opportunity for new business
o.?Event communication strategies

At the heart of it, it comes down to something we all know but don?t always practice and as such negatively impacts the sustainability of processes that just make good sense. That would be open clearly articulated communications.

If you’d like to know why SafeSourcing has a customer satisfaction rating greater than 99%, please contact a SafeSourcing customer services account manager

We look forward to and appreciate your comments.

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The Pitfalls of the P-Card

November 12th, 2013

Does your company know the risks (and rewards) of implementing a company-wide procurement card system?

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing. Mark asks

For the last 15 years or so the mainstream use of company procurement card programs has gained continued to gain momentum as companies look to improve the efficiency of their procurement process.  The attraction is understandable. 

P-cards can greatly reduce the amount of time it takes departments to get the frequent small spend items they need and can actually provide a clearer view of reporting on where the spend is being broken up and sent to, allowing procurement teams the capability to focus large aggregated spends into projects of their own.  Throw in intrinsic benefits such as improved relations with suppliers due to quick payment and allowing employees to feel more empowered in their purchasing decisions and it is easy to see why thousands of companies have employed such a program. 

In today’s blog we will be looking at the flip side to that coin and some of the things that should be considered and thus accounted for when implementing or revamping an existing p-card program in your company.

Abusing the system – The number one downside of p-card programs is when they are implemented without the full controls necessary to control fraud and abuse of the program.  Because of the nature of p-card programs and the fact that they are meant to streamline purchasing without having direct approval of each transaction the potential for fraud and the time it can take to comb through transactions to find it make this a serious concern.  With proper controls in place such as purchasing from selected vendors only, spend limits and category purchase types, many of these concerns can be eased.

“Just buy it” – There are times when fraud is not at play but something just as damaging for a company comes into play in a p-card program; the attitude of buying without thinking because “it isn’t my money.”  In legacy procurement programs that require more red tape, people evaluate decisions much closer before making purchases because of the effort involved in making it happen.  The easier the process for purchasing items becomes, the more apt people will be to buy first and evaluate whether they really needed a product or service later.  This mindset can be just as damaging to a company and harder to control because the need of the products are often legitimate, just not always as critical as the purchase of it would make it seem.  Controlling this from a higher aggregate total will show the individuals and departments that are purchasing outside of the norm.

The Devil is in the Details – There are so many different meanings for this saying but I believe the most applicable to p-cards is the time suck that develops when people get their hands on granular detail they never had before.  Immediately you have people pouring through millions of transactions to analyze areas where the above two situations are happening.   This can cause inefficiencies in a company where the p-card was hoping to streamline the process.  Applying proper spending controls and developing a data analysis strategy in advance can help with this process and in ensuring the efficiencies created are kept intact as the program grows.
There are many advantages to p-card programs and with the proper foresight and controls built around it, they can be very successful while minimizing the risk for your company. 

For more information on how SafeSourcing can assist with ideas or p-card vendor suggestions or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments. 

 

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Execute better a little at a time.

November 7th, 2013

As you watch the training of Olympic athletes, class valedictorians, chess grand masters and concert pianists…

Today’s post is by Steve Schwerin, an account manager here at SafeSourcing.

I come across the thought quite a lot these days that the overnight success is a myth.  I’m left wondering if there was a time this saying was gaining force.  The idea of overnight success is everywhere, and yet it constantly proves untrue.  Certainly, some victories are decided in this fashion.  During some game or some battle, one party suddenly musters overwhelming force seemingly out of nowhere.  The end.  This is a horrible metaphor for business, yet it is embedded in the modern psyche.  As you watch the training of Olympic athletes, class valedictorians, chess grand masters and concert pianists, you come to realize that success is made up of a lot of incremental victories.  I venture to guess that all great entrepreneurs are in this same class.

What I see authors writing about these days is often the incremental changes over time that end up defining a great company or winning team.  For this to happen, companies need a willingness to learn incrementally, and who really wants to learn incrementally?  I know I don’t. 

Applying this thought to what we do here at SafeSourcing, procurement is a process.  A successful company isn’t defined by one purchase or the next big purchase for that matter.  Are you steering your company away from eProcurement, because you can’t see how it can work for your company or could you be looking for the quick, infallible plan?  As with most worthwhile pursuits, eProcurement is a process.  Procurement victory constitutes success over not one individual spend element, but a process over time that involved learning about what your company buys, why they buy it and from whom they can buy it.

Here at SafeSourcing, we know the risks of change which is why we offer risk-free trials in learning more about procurement with us.  Honestly, how much is procurement victory worth?  One answer is more than free.  Contact one of our customer service representatives at 888-261-9070 and start the process.

We look forward to and appreciate your comments.

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Selecting an IT VAR….More than just price! – Part 2 of 2

November 6th, 2013

When looking for a new IT Value Added Reseller are you learning everything they can offer you?

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

Yesterday we began looking at some of things that frequently get overlooked when preparing a Request for Information or Proposal for an IT Value Added Reseller sourcing project.  Collecting the individual pricing on items you frequently purchase, understanding the different category discount options and the value of collecting rebate program information were covered as important initial items to collect and today we will look at a few more areas to make sure to include when determining who the best IT VAR is for your company.

Incentives – Yesterday we mentioned two areas often overlooked by customers when negotiating IT VAR contracts, the first being rebate programs and the second being conversion incentives.   These are cash incentives suppliers will pay back to the customer merely for changing over their business from another company.  For the incumbent supplier this would be the amount of cash they would pay to keep the customer and possibly lock in a longer term contract.  This concept is not as frequently gathered as rebate program information but it is an area many suppliers are actively participating in to try and get/keep business.

Account Support – IT peripheral spend, like office supplies and MRO can be difficult to manage and ensure savings are being recorded once the agreement has been completed.  The IT VAR you should select should play an active role in helping you manage that spend.   Understanding what a supplier is going to provide for regular spend reporting, which includes getting samples from each supplier, as well as whether you can count on quarterly or monthly onsite account reviews to discuss the current spend and new technologies is critical to picking an IT VAR that can be a partner rather than just taking your orders.

Service Rates – A final area of information you should be collecting from your IT peripheral suppliers centers around the rates they charge to perform special value added services like installation, configuration, staging, warehousing, etc.  While many companies have internal staff and possibly existing 3rd party relationships already in place to manage these tasks, it is always good to understand where vendors in one area can cross over and provide back-up or even primary support in some other area than the they were initially contacted for.  For some items it may be less of a liability and cheaper in the long run to have your IT VAR handle the furnishing, configuring and installing, freeing up your team for other projects.

IT peripheral equipment spends for many companies can be hard to manage especially if they are being managed by a non-technical procurement staff, but taking some of these items into consideration will help you find a “partner” who can help you manage the items and ensure that your staff is staying compliant with the agreement.  For more information on how SafeSourcing can assist with helping find an IT VAR that fits your situation or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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Selecting an IT VAR….More than just price! – Part 1 of 2

November 4th, 2013

When looking for a new IT Value Added Reseller are you learning everything they can offer you?”

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

It is easy for a company to tender an RFP to the IT world of the top 3 or 4 Computer Peripheral Equipment Resellers and make a decision after reviewing the responses and conducting interviews.  In many cases companies will create a contract for nothing more than an agreement of category discounts that will apply to purchases moving forward.  Sometimes the catalog prices are furnished sometimes they aren’t, but many times changes occur to the catalog that never get reviewed by the customer once the contract/agreement is signed.  Today and tomorrow we will be looking at how much more there is to learning about the incentives and control your company should be asking for when deciding on a new IT VAR or in evaluating the current VAR you have today.

Price the things you buy – A surprising number of customer we deal take a look at the IT VAR category and immediately want to make sure they are getting the best category discounts available.  This is good information collect and negotiate with the vendors but upon digging into their actual spend, 75% (or greater)  of the spend tends to be from just a handful of items.  In these cases, beating the IT VAR up on a category discount for network equipment does not do you much good if laptops and docking stations make up half of your spend in this category.  Review the best historical data you have to determine what items you frequently purchase and make sure you capture individual pricing on those items.

Category Discount Options – Since IT VAR projects will inevitably include collecting category discounts, understanding the options the suppliers will bring you in advance will help shape what you collect and expect.  The first model is the traditional discount off of list price.  This requires a catalog to be collected in advance of the final agreed upon discounts and updates to be supplied in advance of any pricing reviews during the length of the contract.  The cost plus model is one that is increasingly popular with the suppliers because it is easier to show their costs and calculate the markup from there.  This gives visibility into the supplier margins and is one suppliers and their customers like.  The third option which is newer but gaining popularity is the discount off of published list pricing (usually their website) so that invoices can be audited at any time and so that customers can take advantage of special pricing that is offered to the public as well as their discount.

Rebates – There are two areas that customers frequently overlook when evaluating IT equipment suppliers.  Both things tie directly into business 101 principles.  The first, rebates, we will talk about today the second we will cover in tomorrow’s blog.   Suppliers like numbers they can factor into their own company’s revenue stream.  The more accurate the number the more willing they will be to give you better deals to get your business.  Many will also be willing to “sweeten” the pot for spends that exceed estimates in the way of Volume Rebate Programs.  Make sure you are either requesting each supplier’s rebate program, or define the rebate program to the suppliers that you are expecting.  These rebate models should be tiered based and should be linked the amount of business you do with the supplier, increasing with each higher level.

IT peripheral equipment spends for many companies can be hard to manage especially if they are being managed by a non-technical procurement staff, but taking some of these items into consideration will help you find a “partner” who can help you manage the items and ensure that your staff is staying compliant with the agreement.  For more information on how SafeSourcing can assist with helping find an IT VAR that fits your situation or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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Be careful when you let the foxes rule the henhouse! Or in this case the fishermen rule the certifications!

October 31st, 2013

We don’t like your certification so we’ll just create our own!

I was reading a blurb in the Financial Times recently titled Big buyers of seafood rethink eco-labels by Aaron Stanley. The article went on to describe how Alaska fishermen have stopped supporting eco-labeling routines from the Marine Stewardship Council because they were too costly and supposedly eroded their brand.

I’m all about brand image, so here’s a question for you. Have you ever been on a commercial fishing boat? I don’t care if it’s a long line boat, a crab boat or a lobster boat. If you have, I don’t need to say much more. And just how fresh is that fish that was caught on the first day of a ten day trip? I’m just saying! By the way, I grew up on the Atlantic Ocean and my brother in law was a commercial fisherman. I also have friends in the lobster business.

This is not a subject we have not posted about in the past.  We have covered the MSC on a number of occasions. In a 2011 post titled Getting to Know the Organizations Helping to Protect Us – Part 3 of 4 we discuss the MSC and they are also listed in our SafeSourcing Wiki. These people care about our oceans and our fisheries and their long term sustainability.

If you’d like to know what suppliers you can speak with that support the MSC eco-labeling schemes, SafeSourcing will be glad to find them for you in our SafeSourceIt™ Supplier Database where we hold suppliers accountable to safety and environmental certifications.  Or in this case you could visit MSC track- a- fishery program.

SafeSourcing supports our global environment, food safety and safe products.

If you’d like to learn more about SafeSourcing, please contact a SafeSourcing customer s services representative.

We look forward to and appreciate your comments.

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Procedure lists: Are they really worth your time and energy to create?

October 30th, 2013

Is it really beneficial to work from a procedure list when you’re already an experienced, efficient and organized individual?

Today’s post is by Dennis Nicoletti; Manager at SafeSourcing.

What is a Procedure List?

When you write down ten things you want to get done today and cross them off at the end of the day when they are done, that’s not a procedures list, it’s just a simple but rewarding — “checklist”.

Let’s consider a mechanic’s job…when a mechanic goes through a list of 50 things to check and evaluate on your car (and every other car they’re going to service); they’re using a “procedure list”. A procedure list highlights the things you need to do in a routine process to ensure that everything is done and nothing gets neglected or outright forgotten. Consider the following when creating your procedure list:

•  Is this step necessary?  Why is this step included?
•  Is this step in the right place?  Should it come sooner or later in the procedure?
•  Is each step a concrete action that can be completed and checked off?
•  Are the steps clear enough that I could give this procedure list to another person without explanation?

The last bullet above is extremely crucial.  Let’s take for instance you’re deep into a project, something unforeseen develops taking you away from the project. Can a coworker step in and take over as if you were still there, with no drop-off in project timelines and milestones?  Consider this carefully when creating your procedure list.

Why should you use a Procedure List?

We all are very busy and likely to be even busier. Making mistakes and forgetting steps even in tasks we’ve been doing for years is not uncommon.  Procedural lists serve as concrete reminders of what tasks we need to perform, what order we need to perform them in, and as springboards for fine tuning or adjusting our routines, making them more efficient.

We, at SafeSourcing, take great pride in the fact that we continually use our procedure lists and consider them to be a “best practice” which has kept our projects on plan. This practice has rewarded our customers with savings they would not have otherwise attained and in the timeliest manner. For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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