Are you spending enough time looking at your Indirect Spend?

November 7th, 2011

Better yet, do you know how valuable your indirect spend department is?

Today’s post is by Ryan Melowic; Director of Customer Services at SafeSourcing.

In the past not a lot of attention or respect was given to the buyer which was responsible for purchasing indirect spend items such as supplies and hired services.  Their products do not always have the high visibility that the spend of other departments do such as For-Sale items.

Today, businesses are realizing the cost reductions that can be achieved by the indirect spend departments. 

The indirect spend category can be just as complex and in some cases even more complex than the other categories.  An example of the complexity of the category is measuring value of the supplier and the service they provide.  The best solution for that complex issue would be a detailed understanding of the category or the market.

When given a category like Temporary Labor, buyers must understand how  fees are broken down.  As an example, some pieces of the fees cannot be controlled  or bid down as they are mandated by the State or Federal government.  If you break those fees out from the ones that can be compressed, however,  the end result of your total project will be cleaner and ultimately more successful. 

If you would like to know more about procuring Temporary Labor Services or other complex service categories, please contact a Customer Service Representative at SafeSourcing.

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When using e-procurement tools are you just driven by a reduction in price?

November 4th, 2011

If you are, savings may be short lived and you're not thinking in terms of total cost.

The real question you should be asking is just what makes up total cost to begin with. A good friend of mine who has been a fortune 100 retail CFO helped to crystallize my thinking in this area. As such we look at cost differently today than we did a year ago. So, when we run an RFX event for our customers at SafeSourcing we think of cost in the form of three basic dimensions that cause a different type of thinking during discovery and strategy. They are as follows.

1. Price: This is the unit cost. It is expressed as an amount per unit. Price involves vendor comparison and negotiation.
2. Use: This is the consumption of a product or service. This is driven by the activities or needs. Authorization and control processes are key elements. Without these, you may not derive all of the savings from negotiating price alone
3. Mix: This is the inclusion of similar products or services to achieve a similar result. Company policies support this.

Certainly there are many more aspects to running a successful RFX like making sure the T&C’s are clear and that the process is managed through the award and contract stages. These steps or KPI’s along with the ones mentioned above collectively serve to insure that your strategic sourcing strategy uncovers all of the clues that have or may cause leakage to your sourcing events. They also proved the basis of a scorecard system that can track progress over time

We look forward to and appreciate your comments.

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Executive Teams, are you thinking through e-procurement self service? Think Again!

November 3rd, 2011

I’ll bet your team thinks they can do it themselves and do it better than an e-procurement service provider?

Let’s also assume that you want to drive the greatest possible savings across the broadest range of categories in the shortest amount of time, like the next budget period; and have a sustainable process moving forward.

If all of the above is true, you should consider what constitutes developing full service events and whether you have the requisite headcount, specifications, strategy and research skills as well as new sources of supply to conduct the service yourself. Then there is always the question of what tool sets to use.

The question one needs to ask is; what type of event services can an e-procurement provider offer to help us get ready if we did want to do it ourselves? What we are talking about is to be 100% self-sufficient. A provider should offer readily available classroom education that can be conducted on-site in order to train your team in all the nuances of event creation and support. These skills are the foundation that allows e-procurement providers to support large volumes of events in a full service mode, which drive greater savings over the long term. They should be able to provide reference to where they have done it in the past and how much staff the reference needed to add. Ask the reference what their average savings were in year one versus what a full service provider can drive. Remember, knowledge transfer in this area is one thing; the passion, skill and headcount to carry out these practices on a day by day basis are what drive results.

This process is normally provided by people behind the scenes with a very specific skill set. If you plan to do self service it would be very wise to make sure you have them covered at the same quality level.

We look forward to and appreciate your comments.

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How to manage your budget by managing your print program

November 1st, 2011

Today’s post is by Danielle Begley, Account Manager at SafeSourcing.

As the end of the year is approaching, future budgets are discussed and analysis of current budgets are dissected. 

One of the most important questions for consideration is how you can reduce your costs? One sometimes overlooked area of the business that should be highlighted is company and employee printing; how much volume does an entire business print in a year, and how much does an individual print? 

Looking more closely, you may find yourself asking, “Have we currently implemented a managed print service program? “  If your answer is “no” and you want to decrease costs, such a program should be considered.

Numerous companies specialize in managed print services, of which any could assist in adopting an initiative for your company.   Such programs have proven to save companies millions of dollars within five years following implementation.  Think of the many ways you could use that saved money!

What are the steps for implementation?

Assessment is the most important step in this process.  The service provider looks into your current infrastructure.  The next steps require a design plan that identifies the opportunities to reduce costs, improve performance and create efficient operations.  Next, implementation begins with support provided during the entire transition process.  After implementation is achieved, the service provider will manage and monitor your program remotely, assisting in repairs, achieving supply levels, etc.

After implementation how do we achieve cost savings?
  • Reduction in operational costs
  • Standardization through device models and a networked platform
  • Optimization of all print assets
  • Reduced administrative tasks
  • Increase employee productivity

Managed print services not only leaves room in your budget, but it increases efficiency and provides the ability to regain control.  

If you would like to know more about managed print services providers, or how to involve companies who can help you reap the benefits of a larger budget through cost savings, please contact a Customer Service Representative at SafeSourcing.

We look forward to and appreciate your comments.

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Retailers: Want to increase your sales and reduce liabilities? Implement a mystery shopping program. As with any process, it pays to get it right.

October 27th, 2011

Today’s post is by David Wenig; Senior Account Manager at SafeSourcing.

Mystery shopping is a service that retailers often use to determine if their locations are consistent with their compliance efforts, product displays, customer service, sales and more. Mystery shoppers will “shop” the stores and follow a set procedure or checklist and will then report on their findings. Among the findings will be areas for improvement at the locations that are very beneficial to retailers.

One example of the benefit of these services is in compliance. If a retailer is selling alcohol or tobacco products they are required to be compliant with age verification laws. Mystery shopping can identify locations that are not consistently checking ID. Another example is in sales. Retailer may find lost opportunities for revenues based on missed up sell attempts or lacking product displays.

Here are four steps to get the most out of your program.

1. Shop the shoppers. There are hundreds of companies that offer mystery  shopping services. You and your sourcing partner will need to evaluate the field. This is a critical first step and is best addressed with a thorough Request for Proposal (RFP).
2. Set your evaluation criteria. In order to evaluate the providers, you need to have a well thought out plan. What are the most valuable attributes of your ideal mystery shopping provider? Share these with your sourcing partner as a basis for your RFP. Likewise, what are the most important service offerings or capabilities?
3. Evaluate. Now that you have completed your RFP, you will need to evaluate the responses. Your sourcing partner will assist with this process as well. By setting your criteria in step two, you have already set the stage for a simple review process. Your reporting will be centered on what matters the most to you.
4. Finalize your selection. Of course, once you have chosen the vendors that will remain under consideration, you will have the option to host a reverse auction based on the pricing collected during the RFP. This will ensure that you are getting the best provider at the best possible price.

If you are new to mystery shopping programs or if you would like to give an existing program a new start, your strategic sourcing partner has the expertise to guide you through these four steps.

We look forward to and appreciate your comments.

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Contract Management 101.

October 25th, 2011

Contract Management 101 is as much a foreign language as Spanish 101.

Beyond storage, understanding  and alerts of the Meta data that will mitigate your risk relative to contract leakage, understanding the terminology in your contracts and how they are organized is a daunting task.

There are many law dictionaries available in hard cover and over the internet that can help, but remember just having one does not make understanding these documents any easier. Here is a list of many of the most popular.

1. Anderson’s Dictionary of Law (1893)
2. Bouvier’s Law Dictionary 1856 Edition
3. Criminal Justice Today Glossary
4. Criminology Today Glossary
5. Criminal Law Glossary
6. Canadian Bankruptcy Glossary
7. Divorce Law Dictionary
8. Duhaime’s Law Dictionary
9. Everybody’s Legal Glossary
10. Glossary of Commercial Fraud
11. International Law Glossary
12. INS Glossary of Immigration and Naturalization Law
13. Law Glossary
14. Merriam-Webster’s Law Dictionary
15. Legal Lexicon’s Lyceum
16. Merriam-Webster’s Law Dictionary
17. Oxford Law Dictionary Top of Form

Certainly one could argue that some of these might be eliminated for business use, and this author would agree. However others might argue that separating from an unfavorable contract or supplier relationship  can be as difficult as a divorce so maybe we should leave that one on the list.

If you’d like to eliminate your contract leakage, give SafeSourcing a call.

We look forward to and appreciate your comments.

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Twenty steps to running higher quality e-procurement events.

October 20th, 2011

Failure to plan is the same thing as planning to fail. It’s no different with e-procurement.

There are rules which if followed that will create higher quality e-procurement events for the companies and their suppliers?

Here are twenty you can begin with and then refine with others that your own team comes up with.

1. Executive sponsorship is mandatory
     a. This is required at the CEO and CFO level
2. Get the entire buying organization together for a kickoff session.
3. Provide a detailed over view of what you are going to do and the financial impact you expect it to have on the company.
4. Determine who your Subject Matter Experts are.
5. Conduct detailed data discovery sessions with all who have spend authority
6. Set specific success criteria.
7. Under stand that every event is not going to be a homerun.
8. Remember that singles and doubles score runs.
9. Create a fun environment.
10. Use scorecards to reinforce results attainment
11. Hand out E-RFX templates to gather existing product specifications.
12. Develop a standard timeline for event completion.
13. Gather an accurate list of your present suppliers.
14. Calendar your categories.
15. Prioritize by dollar value, date and strategic value.
16. Investigate existing contract language.
17. Look for auto renewal (evergreen) language and other roadblocks.
18. Determine alternate sources of supply with your sourcing company.
19. Develop a standard T& C document.
20. Assign an overall project owner
This list simply provides a format for getting started that offers suggestions that will help to create the best opportunity for reduction in cost of goods, expenses and improvement in corporate earnings. Be sure to combine this with a business partner like SafeSourcing that understands your business.
 
We appreciate and look forward to you comments.

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What’s the most cost effective action that companies of all types and sizes can take to help reduce the number of food born or airborne illnesses?

October 18th, 2011

This can be a simple statement posted in your building washrooms and reflected in your company’s socially responsible language.

I was reading USA TODAY (I do this every day). I love their Snapshots at the bottom of each section. Today’s front page USA TODAY Snapshot was titled Has news coverage on airborne/foodborne illnesses prompted you to wash your hands more by Rachel Huggins and Veronica Bravo.  The snapshot sites Bradley Corps Healthy Hand Washing Survey and indicates that 54% of those surveyed said NO and 46% said YES.

Personally I find these results disturbing. Just think about how often you shake someone’s hand and then think about what they were doing in the 15 minutes before you met. Maybe Howie Mandel has it right by just doing the fist bump.

If the answer to this survey were 100%, it would be interesting to see what the impact on these types’ illnesses would be. As a result, this author will continue to write about food safety and strategies that companies can take to reduce them

Go wash your hands.

We look forward to and appreciate your comments.

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Back To The Future!

October 13th, 2011

Does watching the futures market help procurement professionals determine what products should go to market and when?

Companies and individuals enter into contracts based on the future price of a market or commodity. Manufacturers that use a variety of commodities in their manufacturing process constantly balance the swing of many commodities in order to drive blended costs that most benefit their future needs. Futures can be monitored on future markets like Bloomberg amongst others.

A very simple example of how this data might be useful to a buyer is that of a retail real estate – construction buyer that is looking at construction of new stores for the upcoming year. If we continue with the Bloomberg example, they report futures prices on energy, agriculture, industrial metals etc. If a buyer were to look at the future price for lumber within the agriculture category based on 1000 board feet, as of this report the cost for this commodity is down 3.46%. This reduction in price might be used as a negotiation point for upcoming stick builds versus prefab on concrete structures that are in your plan for the particular future month being sold. It does not take very long to look at these reporting tools in order to understand trending in commodities that affect your sourcing. Another example would be looking Diesel futures as they impact your distribution costs and those of supplier’s providing products to you.

A simple step you can take is to pick three market views such as Bloomberg, CME etc. Pick a half dozen commodities that impact the products you are sourcing. Now take 10 minutes per day to review them so that they become second nature to you.

If you’d like help in this process or are interested in track a commodities price versus your particular purchase points, please contact SafeSourcing.

We look forward to and appreciate your comments.

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Comparative advantage suggests we should be looking to Brazil for our future sourcing needs?

October 11th, 2011

Comparative advantage in developing economies is a significant process to understand when evaluating your future offshore practices?

Comparative advantage is a theory that advances that in a free marketplace, each entity or country such as the EU or NAFTA or trading countries will ultimately specialize in activities where it has comparative advantage. Examples of such might be technology, natural resources,   local workers skill sets, agricultural advantages, transportation benefits etc. In an  article published this past March at Bloomberg Businessweek titled BG (BG Group Plc, (the UK’s third- largest natural-gas producer), to Export From Brazil as Nation Becomes Key Oil Source, it would sure seem as though Brazil has the natural resources piece down.

Many people are not aware that Brazil is the world’s seventh largest economy. When you think about the relatively untapped natural resources in this country, their impact as an economic power will only continue to grow.

Now let’s just hope that we don’t create and unnecessary trade agreements that eliminate the comparative advantages that we both have and could build upon.

We look forward to and appreciate your comments.

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