How socially focused or responsible is your company.

July 7th, 2011

You say your company is triple bottom line accountable and that your CSR programs support that principle.

Well if that’s the case why not apply for B Corporation certification. In essence this would be putting your money where your mouth is. At this point there are no real hard financial incentives for a company to do this. At least four states  have passed or proposed B Corp legislation, but it is pretty clear that all will in the future.

So just what is a B CORP? I’m glad you asked. If you visit the Certified B Corporation website you’ll learn that Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.  B Corps are unlike traditional businesses because they:
        • Meet comprehensive and transparent social and environmental    performance standards;
        • Meet higher legal accountability standards;
        • Build business constituency for good business

SafeSourcing is going to add B Corporation certification to our database of supplier certifications and ask companies our customers’ partner with what their plans are to achieve B Corp Certification as part of their current or future CSR initiatives. We do the same for over 30 other certifications today such as Eco Logo, SQF and LEED.

If we do a small part and our customers do a small part and their suppliers do a small part, the parts will add up. Pay it forward and do your part.

We look forward to and appreciate your comments.

Ron Southard CEO SafeSourcing

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Who is reviewing your contracts? Are they missing anything?

July 6th, 2011

Many large companies have law departments, many small companies generally don’t. So which company is in better position to review and evaluate existing contracts?

The answer is neither or maybe both. The first important question for each is who is actually evaluating the contracts, and just because they have a law degree does not mean that contract evaluation is a specific skill set the individual possess. This author recommends choosing who will provide this function within your company and then makes sure they have the skill set to do their job and stay up to date.

There are any number of contract management certificate programs available from prestigious and well know institutions. To name a few, there is Villanova University, The University of California Irvine and St. Louis University. In addition there are organizations that also offer this training. Probably the most well know is, the National Contract Management Association or NCMA that has been around for over 50 years.

Many of these organizations offer on line courses that can be completed within a reasonable period of time. Many of the University and College courses are actually accredited as well as affiliated with NCMA.

Once you have resources that are certified, provide them with the tools they need to do their job. All companies have 100’s to as many as 1000’s of contracts and most do not have a contract management solution. These solutions today are available via the cloud in Software as a Service models for very little investment. Most of these providers will also assist you in the creation of your Meta data and database population. 

Contact SafeSourcing for more information.

We look forward to and appreciate your comments.

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Buyers; Soybeans are down and the Corn harvest will be up. So What?

July 1st, 2011

So you better pay attention in your negotiations and make sure you understand when this will impact your costs and consumer prices in your stores.

It appears as though the corn crops will be better than expected this year and as a result drive prices down on the supermarket shelves. The reason is because farmers planted more corn than usual based on what the futures market was telling them relative to other crops. Because they planted more and the yield will be higher futures actually went down. This should impact the price we pay for a variety of products impacted by corn.

If you don’t think that corn impacts many products, think again. Corn impacts beer, aspirin, livestock feed, carbonated beverages, Ethyl alcohol, textiles, soaps and hundreds of other products.

If you’re a buyer, you need to be aware of this as the impact in the market typically trails the crop by about 3 to 6 months. So while you are buying products you need to understand that costs should come down before year end and make sure the language in your contracts allows you to take advantage of this. Think de-escalator language on any contract between now and year end.

We look forward to and appreciate your comments.

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Health Canada, a tool for buyers in Canada that costs little yet contains a lot.

June 30th, 2011

During yesterdays post we discussed tools that cost little in the U.S. market that buyers can use to keep abreast of the plethora of changes in food safety.

In Canada, it’s as simple as visiting the Health Canada Website. According to Wikipedia Health Canada (French: Santé Canada) is the department of the government of Canada with responsibility for national public health. Here you can find news releases, speeches, media notices and research a variety of data related to health and food safety within Canada.

Just as yesterdays post  “Buyers; Do you need a great place to research product quality and recall issues” that talked about The U.S. Consumer Product Safety Commission  the Canadian Government has many tools that buyers can use that also cost nothing. You just have to spend a little time on their site.

Sometimes the best tools are the ones you don’t have to pay for.

We look forward to and appreciates your comments.

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Buyers; Do you need a great place to research product quality and recall issues?

June 29th, 2011

Buyers are always looking for tools to use in order to make sure they are buying safe products. One you don’t have to pay for can be found at The U.S. Consumer Product Safety Commission website.

The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of injury or death from thousands of types of consumer products under the agency’s jurisdiction. The CPSC is committed to protecting consumers and families from products that pose a fire, electrical, chemical, or mechanical hazard or can injure children. The CPSC’s work to ensure the safety of consumer products – such as toys, cribs, power tools, cigarette lighters, and household chemicals – contributed significantly to the 30 percent decline in the rate of deaths and injuries associated with consumer products over the past 30 years.

 Recalls and Product Safety News can be found at the CPSC’s website and can be searched using a number of categories, dates and other criteria such as those below.

1. Recall Number
2. Company
3. Product Type
4. Product Description
5. Hazard
6. Country/Administrative Area of Manufacture
7. Recall Date
8. UPC

You don’t always have to buy something in order to get your job done. Sometimes just knowing where to find the information can be the hardest part of your job. Now you have one fewer places to look.

We look forward to and appreciate your comments.

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Rain, Wheat and Pasta!

June 28th, 2011

"What is going to happen to all of the products produced from the lowest U.S. planting level of durum wheat in 50 years?" Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.

For weeks, North Dakota and Montana, the nation’s two largest producers of durum wheat have been pounded with heavy rain that will likely mean a drop of up to 47% of durum wheat production. 

Durum wheat, or “macaroni wheat”, is the hardest of all wheat types and that together with its high protein and gluten content make it the perfect wheat to be used in the manufacturing of pasta.

Due to the heavy rains farmers have been unable to get crops planted and even now they are out of time to plant crops in time to avoid the pre-winter frosts and will likely have a little more than half of the durum wheat production as normal, affecting prices of related products all over the world.
Durum wheat was up over 52% in May and the May U.S. pasta prices were the most expensive on record while other durum wheat producers like Canada saw prices jump 47% in May.  With fewer acres of wheat being produced the pasta prices will be affected accordingly.

Companies producing pasta products like Kraft with their Macaroni and Cheese and Campbells with products ranging from noodle-based soups to Spaghettios, have already announced increases in many of their products due to the lack of durum wheat production and subsequent higher durum wheat prices.

In product categories such as this one it is more important than ever to make sure that you are doing everything you can to keep the cost of goods controlled with tighter contracts containing index terminology and keeping the pricing you receive as competitive as possible. 

When the supply of product takes a huge decrease in relation to its demand, the opportunity for competitive pricing events becomes a little more difficult, as vendors will have plenty of places to sell their product. 

This may be a time to get more creative in other ways as far as length of contracts, other services or products you may agree to take on, or other considerations that will allow you to get competitive pricing on a high demand product category.  It is hard to predict what climatic conditions such as all of the spring rain will do  to agricultural products, but smart procurement professionals can learn to leverage other techniques in order to keep their costs for products affected by these conditions under control.

For more information on SafeSourcing and how we can assist your company with sourcing these goods and services, please contact a Customer Service Representative for more information.

We hope you have enjoyed last week’s  Five Part Series and look forward to and appreciate your comments.

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Getting to know your specifications.

June 17th, 2011

Today’s post is by David Wenig; Senior Account Manager at SafeSourcing. David asks "As a procurement professional, how well do you know the products you purchase?”

Here is a challenge: Pick a product that you purchase and write out a specification. Be specific and include components and peripherals. Take it a step further and write down how many and how often you purchase. Finally, what is the price you are currently paying for this product? Is that the same price you agreed to pay when at the beginning of the contract?

This exercise may seem basic, but this knowledge is a vital component of the procurement process. Here is a list of potential red flags that may mean it is time to research your products.

     1. All of your product data is in the form of a vendor invoice.
     2. You are uncertain of your order volumes or frequencies.
     3. You have been placing the exact same orders for years.
     4. Your pricing fluctuates often.

Be honest with yourself; is there room for improvement in product knowledge? I would encourage you to reach out to your strategic sourcing partner for suggestions. Aside from dollar savings results, you will also benefit from having a complete set of product specifications, vendor information and more at the completions of your strategic sourcing process. 

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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Do your buyers ever consider what type of auctions they need to run or the features they should use within each e- negotiation session?

June 16th, 2011

More than likely, they just do the same old thing over and over again. And it can be costing your company a lot of money in the form of lost savings

Today’s strategic sourcing platforms have incorporated many features within their overall offerings that are there to drive behavior in your favor. Most companies don’t use many of them.

Can your supply chain leaders tell you what a blind auction is? How about an RFQ or a turbo auction?  What about a Dutch auction? Can they tell you what a reserve price is? What about the difference between and RFI and an RFP. How about when to use and RFI,RFP or RFQ?

Today’s reality is that many supply chain professionals can not give you a clean definition of the many types of auctions or the tools used to enhance participation within the auctions. This is really too bad because most of the terminology has been adapted from traditional procurement practices and negotiation strategies. Understanding these terms and where they play in the negotiation framework can help procurement professionals whether they are negotiating with on line tools or in person.

If you are already using on line negotiation or e-procurement tools, your solution provider should have a checklist they go over with you for each e-negotiation sessiont. This checklist should cover all of the options available to you and your provider should be able to discuss the strategy behind the use of these features.

Don’t be blind to the opportunity to drive maximum savings by not discussing strategy with your solution provider on every session you run. If you are doing everything yourself  i.e. self service, it might be time for a one day work session from a leading provider in order to make sure that you have all your bases covered.

We look forward to and appreciate your comments.

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Procurement deserves more attention from the executive suite now!

June 15th, 2011

To many procurement departments are understaffed and rather than getting better, the situation is actually getting worse.

Procurement when looked at properly has the largest single impact on a company’s financial performance. In fact more than any other area of the company. The fact is that when additional sources of supply compete for a company’s business, it results in compressed pricing that drops directly to the bottom line and also often delivers better quality products or materials. Coupled with the prevention of possible disruptions in a company’s regular source of supply – like the situation businesses have experienced during the last several years, e-procurement tools offers many advantages that can not continue to be overlooked. Companies that are more profitable grow and companies that grow generate jobs.

The benefits to be realized in using e-procurement tools beyond savings include faster time to purchasing decisions and more effective supplier management. Today’s easy to use tools are a result of technology advancements, enhanced data mining techniques and data management best practices  driving significant improvements in the e-procurement process.

In today’s tight business environment, lowering costs through the use of e-procurement tools are proving to be a valuable aid to ensuring profitable operation.

If you are not using them, you should be. If you are reducing staff in your procurement area you should not be.

We look forward to and appreciate your comments.

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Is it possible to compress prices in this market? Commodity prices are rising aren’t they?

June 14th, 2011

Many companies think that because commodity indices are up that they should not even bother to try and compress pricing.

This is the precise reason why some companies are profitable and others are not. Just because the commodities that are the basis for products we buy are up, is no reason to not try and compress pricing through the use of e-negotiation tools or other more traditional methods. With that said e-negotiation tools will make the process much easier and insure compression in a much shorter period of time.

There is a lot that goes in to the products companies buy and maybe even more in the prices they pay. Two things are certain. There will always be suppliers that want to bid on your business. There will always be suppliers that are willing to invest to get your business. This dynamic is what will allow you to compress prices in an up market.

However, there is work to do on your part in order to make sure you are sourcing the categories or products that make the most sense at any given point in time. Here are two things you can and should do. Check your current contracts. Those that are over two years old with the same supplier will be more likely to drive savings. Check the commodity markets for specific commodities that will impact your pricing. As an example, the price of oil is up so freight will be more expensive. A great place to check commodity data is index mundi. You can check current and historical commodities and product related pricing.

Understanding everything about what you re buying and what drives its prcing and using the proper tools to leverage the supply base can and will result in price savings even in an up market.

We look forward to and appreciate your comments.

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