With the economy moving the public to lower cost products is it time to review your private label strategy?

October 10th, 2011

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.

Last week the Wall Street Journal published an article by Ann Zimmerman  titled Frontier of Frugality about how the economy is forcing consumers to consider lower priced stores and goods to save money.  With the landscape of retail changing to adapt to this trend many companies are changing their product mix to include more value and private label products.

In today’s blog we will be looking into some new areas of private label sourcing you might not have thought about previously.

Services – One of the areas that companies do not always think of for private label sourcing are services.  Many of these services deal directly with the design and marketing of the private label products themselves helping to develop campaigns for the retailer.  There are other services, however, such as Kosher services and product development services that can also be sourced.

Product Ingredients – In some cases the retailer manufactures or is considering manufacturing their own private label products and the raw materials needed for those products need to be sourced.  Flavorings, chemicals, fragrances, pharmaceutical ingredients and organic ingredients are just some of the items that can be sourced.

Supplies and Equipment – When it comes to private label products there are also unrelated equipment and supplies that are needed in order for the inventory to get to the consumer.  Advertising vehicles, pallets, shelving, signage, coolers and freezers, and doors and curtain systems are just a few of the many types of connected purchases which are necessary in order for private label products to be sold.

Not For Resale – This area of private label spend is growing larger every day as more retailers are beginning to offer food and/or beverages in their stores.  Towels, cups, bags, trays, paper products, and stretch wrap are all additional areas of private label products which can be sourced on a regular basis.

Whatever your private label Sourcing need is, the economy is quickly demanding that companies begin to pay more attention to the mix of products they source for their customers.  For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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The Holiday Season is right around the corner

October 4th, 2011

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

Christmas will be here before we know it.  While most of us as consumers wonder where the year has gone, retailers are feverishly planning in preparation for their busiest season.  In the retail industry, the short period from October to December can represent more than half of the year’s sales—which means that planning and implementation are crucial for success.

Retailers don’t panic; procurement services can assist you in your holiday preparations.  For novelty products that are traditionally sold such as gift cards, perfumes, and gift basket items, why not purchase products for the rest of the year?  This can help you have the inventory on hand and allow you to lock in a price—that can surely increase as the holidays ensue.  Planning to maintain appropriate inventory levels especially for Black Friday and beyond can help decrease your costs by not being subjected to inflated prices due to seasonality.

Don’t let the season sneak up on you, plan ahead to ensure you have the most successful Holiday.

For more information on SafeSourcing and how we can assist with this process, please contact a Customer Service Representative for more information.

We look forward to and appreciate your comments.

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What are the risks of e-procurement in a third world county? Part II of II.

October 3rd, 2011

Today’s post is by Lauren Finnessy; Account Manager at SafeSourcing.

This author wonders if the use of e-procurement practices could potentially help build an economy in a third world county, what are the risks to using e-procurement that could be challenging the process?  Since e-procurement is quickly becoming a standard business practice in developed countries to realize cost savings, improve efficiency, and control the bottom line what is stopping these companies from sourcing through third world countries?  This author believes that if there were not risks associated with this relationship that more countries would be taking advantage of a larger supplier network. 

Some of the risks that are preventing e-procurement in third world countries are:
  
   1. Some third world countries do not have enforced regulations that prevent the use of child labor.
   2. Many third world countries do not have any regulations in place for pollution control.
   3. By sourcing with a company in a third world country, a host company may increase the cost of their paid warranty claims.
   4. There may be a language barrier between the sourcing partners.
   5. Bribery and corruption can be in issue in come cultures and may be more prevalent in a third world country where the standard of living is lower and the split between economic levels is more drastic.

It is a risk for a company in a developed country to source items from a company based in a third world country that is found to use child labor or bonded labor.  This would have a considerable negative impact for the host company when their supply chain is analyzed and could potential ruin relationships with current or future business partners.

Within the United States and many other developed countries there are government regulated environmental restrictions.  The compliance with many of the regulations is what can attribute to a company’s carbon footprint.  Many third world countries do not require any kind of regulations on a business to take care of the environment.  By sourcing with a company in a third world country it could negatively affect the company’s carbon footprint as well as generate negative publicity from many of the environmental watch agencies.

Another growing concern for sourcing with a company in a third world county is the issue concerning warranty of the product you are selling or distributing to your customers.  Even though you may receive a large cost savings from the products you’re sourcing, the quality of the product may not be comparable and could cause issues with the overall quality of the product you are producing for your customers.  This could negatively affect the amount of warranty claims you will have to pay.

A language barrier could present an issue for the e-procurement process.  Many times companies in a third world country could be doing business in a second, or even third, language.  To avoid issues with this a host company needs to clearly outline objectives and terms and have a clear knowledge that the sourcing company understands them.

Corruption throughout a supply chain could affect the wages being paid to workers.  In order to overcome this challenge in a sourcing relationship, the purchasing company can require as part of the conditions of the sourcing relationship that the supplier sign a code of ethics that ensures that the workers are compensated for their efforts.

If a company from a developed country is interested in sourcing products or services from a company in a third world country there may be risks, but with the proper knowledge and steps in place to overcome them the benefits can outweigh the risks.  By including a company from a third world country in your supply chain you could be contributing to the global economy with a more positive impact.

We look forward to and appreciate your comments.

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When developing your terms and conditions don’t forget the potential for BARTERING!

September 29th, 2011

There is more than one way to skin the proverbial cat when it comes to payment terms.

According to Wikipedia: Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when the currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.

There are a number of companies that primary business model is to use bartering in part as their engagement model. Although the model is slightly different at each organization, the general theme is that a company can trade excess inventory for just about any category and receive credits that can be used in part to buy or acquire other products and services that they need for their business. An example might be to consolidate and eliminate backroom stock in retailer’s stores in exchange for credits and use those credits to buy supplies that are regularly used such as paper or plastic bags etc. This process can also have a positive impact on shrink as well as preserving cash.

A unique use of this process that I recently read about in the Arkansas Democrat Gazette discussed a company agreeing to pay for building renovations if they had their current contract extended. The article by Debra Hale-Shelton titled UCA trustees call off audit of vendor bid. The legality of this transaction is in question, but it is in fact a form of Barter.

If you are going to consider barter as a payment or terms option, make sure you understand its use and that it is an above board part of negotiation that is well defined in your terms and conditions.

We appreciate and look forward to your comments.

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Are you developing sustainable strategies with your office supplies purchases?

September 22nd, 2011

Everyone understands that correct paper products utilization should be part of any sustainable strategy. What about other types of office products?

Toner products are a great example of an opportunity to use a sustainable resource. At present, you are probably just buying toner products because you need them. Have you actually taken the time to look at more environmentally focused toner solutions?  

It’s a safe bet that your company is using laser printers. You may even have a thoughtful blue paper recycling container near the copier or even near every printer. You may even use recycled paper. The next step is a logical one; use environmentally friendly soy based ink for your laser printers.

SafeSourcing’s opinion is that the two best environmental reasons to use soy based ink are as follows. One, soy ink does not emit VOCs or volatile organic compounds. Two, soy ink is not petroleum based.  In a nut shell, you will be replacing a product based on a non sustainable source with one that is.

If you still need more reasons to switch? Assuming that you are already recycling paper, you will be glad to learn that soy based ink is said to make recycling the paper quicker and easier. Also, this option opens you up to new sources of supply. The next time you run an e-procurement event for toner, you will have more options, greater price compression and another notch in your environmentally friendly tool belt.

Once done with this project, you need to brag about it so that other companies take notice and follow your lead. If you have implemented the full array of green printing mentioned in this blog, you have earned the right. Your customers will be happy to hear that you have made the right choices.

If you would like to learn more about environmentally friendly practices for your business, please visit www.SafeSourcing.com and check out our blog archives and our sourcing wiki both full of useful information. 

We look forward to and appreciate your comments.

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Very complex e-negotiation events are not difficult to host.

September 20th, 2011

According to Wikipedia, in general usage, complexity tends to be used to characterize something with many parts in intricate arrangement.

 

So how does one define a complex e-negotiation event? On the surface it may be an event with a large number of line items within a particular product set such as MRO or Fleet Maintenance in the distribution space or raw materials used to manufacture components that require special handling, shipping and standards adherence. The amounts of the total spend for an event really has nothing to do with the complexity of the event. The complexity is determined by the data points requiring management in order to drive the best possible value to the buyer and the supplier.

This author would suggest that any event including multiple market baskets, thousands  of  SKU’s all with different specifications, order quantities, delivery locations, multiple suppliers not bidding on each line item, a split award of business and the size of the spend qualifies as a complex event. Adding to the complexity may be the overall strategy required when sourcing the right mix of suppliers to compress pricing properly and drive early and consistent bid activity. This can be further complicated by trying to determine the correct decile based sourcing strategies for the event and including product affinities where they make sense.

The above example would qualify as organized complexity where there is a non-random, or correlated, interaction between most of the parts. In order to support  complex events, your e-procurement provider needs to have an understanding of the specific market place and practices and processes in place that allow them to drive these activities and bring complex events to market  in the shortest period of time. Generally this should occur within less than two or three weeks from event notification to event completion.

Last year, this author tried to define the relative complexity of the retail environment and its potential impact on the use of e-procurement tools. Specifically we identified the following areas of interlocking complexity.

1. Supply Chain complexity.
2. Rate of change in the global supply chain.
3. Long term inherited supplier relationships.
4. Lack of retail procurement staff.
5. Lack of time.
6. Multiple sources of supply.
7. Limited view of new sources of supply.
8. Confusion as to who’s the customer and who’s the supplier
9. Sales People
10. Third Party Providers
11. Collaboration complexity.

Being comfortable that your solution provider understands your market place and has a well defined process for hosting Complex e-negotiation events insures that they are not difficult to host.

We appreciate and look forward to your comments.

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What you should know about sourcing Cloud Computing Alternatives

September 19th, 2011

What are some of the different solution alternatives available when sourcing cloud computing?

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.

One of today’s industry buzzword / concepts is that of “cloud computing”.  Cloud computing is a generic labeling that has been applied to just about any hosted service that is accessed via the internet. It is one of the most rapidly growing technology areas in all business sectors today savings promises associated with a reduction in computer hardware  needs andn the related manpower associated with the same versus a company doing everything internally.

Today we are going to be focusing on three main categories of cloud computing that are available and the types of services that can be procured for your company in each one.

Software-as-a-Service (SaaS) – The most common category of cloud computing is the Software-as-a-Service model.  In this category are software packages that are physically hosted by another vendor in their environment, on their hardware, and supported by their resources.  The obvious advantage of this approach is having full-time support of an application that is maintained and upgraded by a staff you do not have to employ.  These models are usually priced on an as used basis making the ROI much easier to measure.  Examples of this model would be Retail Loss Prevention, POS and Pricebook applications such as those offered by companies like Retail Anywhere.

Platform-as-a-Service(PaaS) – For those who are a bit more advanced and have some internal development resources  in their IT department, the Platform-as-a-Service model provides them the capability to design, test and deploy their own software applications in an environment over the internet.  With database, design studio and web engine license fees being so expensive in order to stay current , this provides a way for companies to develop and stay current with their tools without bearing the exorbitant fees required to do it internally.  Currently the Google Application engine is one example of successful offering using this model.

Infrastructure-as-a-Service(IaaS) – The final category of cloud computing is Infrastructure-as-a-service delivering all of the hardware, network components, memory, hard drive space and processing power for a business and as such, effectively becoming the major component of an organization’s IT infrastructure.  The advantage of this approach is the capability to quickly and easily scale the model to fit a company’s needs without the major investment in the equipment and software.  This model can be as simple as providing data centers for your company or as complex as being responsible for almost everything an IT department represents in a company.  Amazon Web Services is one of the larger and more well-known offerings in this space.

With an ever increasing competitive landscape for many businesses where the call for reducing expenses is constant, these types of services will continue to gain increased favor while providing great value to those companies that can determine the best ways to leverage their collective or individual power. 

For assistance in sourcing these categories for your business, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

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How do your buyers and category managers keep up with all of the product and safety recalls?

September 16th, 2011

Were you aware of the current listeria outbreak associated with cantaloupes?

The amount of information we are all required to be aware of today is simply mind boggling. As such a simple and effective tool that looks at the many sites providing this information and consolidating it in one location is your best bet to event try and stays aware of this information.

Most organizations like the USDA, FDA, EcoLogo, Kosher Council and the Consumer Product Safety Commission all offer RSS feeds of their most recent recalls and alerts. At SafeSourcing we consolidate over 50 of those companies so that you don’t have to. When you reach our site, the RSS fed alerts and recall section is located in the top right hand corner of the page. If you had been logged on to our system today you would already know that the listeria outbreak associated with cantaloupes has already killed four people and has spread to multiple states. What is listeria you ask? Visit the SafeSourcing Wiki to learn about many procurement related terms.

Are you aware of the Tylenol recall?

We look forward to and appreciate your comments.

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What is Sustainable Procurement and Why You Should Care About It?

September 14th, 2011

Today’s post is by Lauren Finnessy; Account Manager at SafeSourcing

In general, procurement refers to two different factors, price and quality.  For a company these factors are obviously important to the bottom line, but there are other factors that should apply for the bigger global picture.  Sustainable Procurement has a wider agenda by looking at a company’s “triple bottom line” which includes the impact the company has on the environment, the economy, and the social implications.  This indicates that a supplier will be evaluated on many more levels than just the product they are selling.

Environmental concerns are the dominant issue for sustainable procurement since humanity is currently putting such excessive demands on the available resources the environment offers.  A company that focuses on purchasing their goods and services from environmentally friendly companies is considered a “green procurement” company.

Economic concerns are another area that companies can focus on for a more sustainable procurement process.  In many situations a company that engages in sustainable procurement has the opportunity to offer assistance for smaller and/or ethnic minority-owned businesses.  By focusing on economic concerns a company may be more likely to purchase fair trade certified products which allows extra investments to be channeled towards developing countries.

Sustainable procurement can also be addressed through social policy and responsibilities.  In the United States, most companies are already conscious of the social responsibilities that influence the global supply chain.  The social implications include whether or not a company promotes equality and diversity among its work force. 

The overall goal for sustainable procurement is to ensure that goods and services purchased for a company are designed, manufactured, delivered, and used in an environmentally and socially responsible manner.  Why is this so important for you?  The answer is simple;  the more environmentally and socially responsible each of us is individually, and within our company or organization, the better off we will all be in the long haul.  In a global marketplace where people are becoming more and more concerned with the legacy their company can build and leave, it is becoming increasingly important that we leave positive footprints to be filled by future generations.

For more information on SafeSourcing and how your company can become more of a Sustainable Procurement partner, please contact a Customer Service representative.

We look forward to and appreciate your comments.

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What are some benefits for businesses of reverse auctions?

September 7th, 2011

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

In today?s highly competitive world, businesses often find difficulty navigating and negotiating? with the savvy and skilled sales person.? This process can be lengthy, and prohibit implementation, quality and monetary gain associated with negotiating new contracts.?

E Procurement tools streamline and automate this process for businesses, often returning surprising ROI?s and returning valuable time to understaffed purchasing departments.? In fact, numbers don?t lie.? Savings of 5-15% from e procurement services can improve profitability by up to 100%.?

ROI, however, is not the only reason to use e-procurement services.? The transparency of data provided to the buyer allows them to streamline their purchasing process both internally and maximize their relationships with potential vendors while also evaluating meaningful trends.?

Based on the above, these types of hosted solutions are undoubtedly amongst the most cost effective and useful tools your business could use.?

If you are interested in learning more about how these tools could benefit your company please contact a SafeSourcing Customer Service Representative.

We look forward to and appreciate your comments.

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