What are you doing to include green strategies in your procurement process?

March 9th, 2011

Although many e-negotiation solution providers claim to have Standard Operating Procedures in place to support green sourcing, to much of that is just green wash?

A first step for companies is to develop an SOP that includes evaluating your existing and potential new sources supply. A good way to begin this process is to author a GREEN RFI prior to all e-negotiation events. Eliminate the suppliers that don’t seem to have any SOP’s in place based on their RFI responses.  Upon event completion hold low bid suppliers accountable by visiting those suppliers’ facilities prior to the actual award of business and base your final decision on RFI result confirmation. During the RFI process make insure that the following types of questions are included with which to evaluate your existing and new sources supply.

1. Please list all of your companies CSR initiatives.
2. Does your company support TBL reporting?
3. What environmental permits and certifications are in place?
4. Do you have readily available audit results? 
5. Please list all of your pollution prevention controls.
6. What are your hazardous materials handling process.
7. What is your waste management plan?
8. What do you do to insure clean air emissions?
9. Does your company maintain product formulas and content traceability?
10. Please list your product safety plans and certifications.
11. Do construction projects follow LEED?

Once suppliers have been retained or selected, offer to train them as to how to include this process with their own sources of supply and other business partners. This may include offering how your trace the overall benefits of being a green company to your bottom line (TBL) as well as other initiatives you have taken internally with associates and other stake holders to support your internal CSR initiatives.

We look forward to and appreciate your comments.

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What are ISO environmental standards?

March 2nd, 2011

ISO is a great place to review guidelines and standards to support your environmental programs and make sure that your suppliers are doing the same thing.

ISO has published a brochure providing a basic introduction, as its title indicates, to Environmental management – The ISO 14000 family of International Standards. The 12-page, color brochure is the most current edition of a successful publication first released in 1998, two years after the launching of the first standards in the ISO 14000 family

The International Organization for Standardization widely known as ISO, is an international standard -setting body composed of representatives from various national standards organizations. Founded on February 23, 1947, the organization promulgates world-wide industrial and commercial standards. It is headquartered in Geneva, Switzerland. While ISO defines itself as a non – governmental, its ability to set standards that often become law, either through treaties or national standards makes it more powerful than most non-governmental organizations. In practice, ISO acts as a consortium with strong links to governments.

The SafeSourceIt™ Supplier Database holds it suppliers accountable to many ISO standards including 14000, 7002, 9001 and 22000.

How do you hold your suppliers accountable?

We look forward to and appreciate your comments

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Collaborative Procurement: No Need to Wait to Buy

March 1st, 2011

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark writes about the advantages of collaborative events, buying now rather than waiting for a bigger spend.

Collaborative purchasing and co-op enterprises are concepts that are not new to the business world. 

For decades manufacturers, retailers and consumers have organized associations that allow their members to take advantage of lower pricing than they could normally get on their own due to the increase in the overall purchase amounts made by the collective group.

While this is a great advantage for smaller businesses and retailers, many companies think this is the only way to take advantage of this type of spend. 
Many businesses think that the amount of inventory they want to purchase is just too small to think about purchasing like this and so they wait for a period of time until they think they can justify the amount, all the while losing out on money they could have saved on the product they are currently purchasing.

Luckily for these companies, neither of these situations has to be true for them.   We are conducting regularly scheduled collaborative events, weekly, and are just waiting for these companies to join.  As with any collaborative spend, the more participants involved the better the savings will be and the bigger the opportunity for the suppliers involved.

We are routinely saving customers 10-20% on spends they had previously thought were too small for any type of reverse auction due to the fact we were able to include them in one of these collaborative events.

Call a SafeSourcing Customer Service representative today to see if any of your upcoming spends have associated collaborative events scheduled for the month of March.

We look forward to and appreciate your comments.

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Trying to make sense of product traceability!

February 28th, 2011

Does one back one forward traceability make our food supply chain any safer? In a word, NO.

The definition of traceability according to Wikipedia refers to the completeness of the information about every step in a process chain. Traceability is the ability to verify the history, location, or application of an item by means of documented recorded identification.

When we hear organizations like the FDA use the above term what they are referring to is the capability of bidirectional traceability or tracing products one step back one step forward. This means identifying the immediate supplier of the product and identifying the immediate recipient of the product, which is not the answer we need.
 
However the process also requires some level of common sense. I’m a man of faith, but blind faith really gets us no where when we are talking about food product traceability. GS1 has created a certification for traceability in cooperation with a number of organizations such as FMI, CIES and BASF.

So from a common sense perspective one would believe that all products we consume are safe, that all produce and grain products are traced back to the seed level. Unfortunately this is not the case.

Let’s just examine milk products or byproducts. In a post from two years ago, this author discussed what is happening in China where 13,000 babies were hospitalized and over 53,000 babies affected and that it could happen in North America. As recently as last week we heard that this was happening again in China with another protein look alike other than melamine. We are talking over two year’s folks.

So what best practices does your company deploy to protect your customers and theirs?

We look forward to and appreciate your comments.

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Here are twenty steps to running high quality retail e-procurement events.

February 23rd, 2011

E-Procurement tools have been around since the late 1990?s. Reverse auctions are probably the tool that most companies are familiar with or have some knowledge of.

There are well established processes which when followed will create higher quality sessions for the retailer and their supplier partners, resulting in better savings or cost avoidance dependant upon the category and market condition.

Although brief, the list below provides a good framework by which to build your program and should get you headed in the right direction.

1.?Executive sponsorship is mandatory by the CEO,CFO and or the COO
2.?Get the entire buying organization together for a kickoff session.
3.?Provide an over view of what you are going to do and the impact it can have on the company. Use company financial models.
4.?Discuss and agree on success criteria.
5.?Every event is not a homerun. Singles and doubles score runs.
6.?Create a fun environment.
7.?Consider prizes for the most creative use of an auction.
8.?Use scorecards by department with percent of savings.
9.?Discuss the meaning and importance of corporate aggregation.
10.?Hand out event templates to gather existing product specifications.
11.?Put a time requirement on data collection.
12.?Gather an accurate list of your present suppliers.
13.?Work with your sourcing company to identify a top 100 list of events.
14.?Calendar the events.
15.?Prioritize by dollar value, date and strategic value.
16.?Conduct department level discovery meetings of 30 minutes to an hour.
17.?Investigate existing contract language.
18.?Look for auto renewal (evergreen) language roadblocks.
19.?Determine alternate sources of supply with your sourcing company.
20.?Develop an event rules and instruction template and post with each event.

Although these steps are not all encompassing, they provide a format for getting started that offers the best opportunity for reduction in capital expense, cost of goods, expenses and improvement in corporate earnings.

We look forward to and appreciate your comments.

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IT Sourcing and the Relationship Between Hardware and Software

February 22nd, 2011

Today?s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark asks " What came first? The Software or the Hardware"?

We live in a world that is moving so technologically fast that it is difficult to be an expert on everything that is happening.? Because many of us have businesses and responsibilities that have nothing to do with all of this emerging technology, we rely on 3rd parties such as consultants and sometimes our own vendors to help make decisions that relate to these areas.

One of the places that I consistently see businesses make mistakes on when they take direction from an outside source is to buy the hardware they need to go with the software they purchased from the software vendor.? While it can be cost-effective in some cases, generally if a software company is selling hardware they don?t manufacture, you are either paying too much for it now, or you will down the road when it comes time to upgrade or repair that hardware.

Many times vendors will claim that a company must get the hardware from them because it was made specifically for them.? Frequently this is just not the case, and when it turns out to be the case, it is probably time to evaluate the vendor/company you are using for that software.

I ran across a blog the other day that actually dealt with this very topic.? In the blog the author was discussing how important it was for the customer that they select software that is completely independent of the hardware used in it.? It also went on to detail that the best software will integrate with several types of hardware giving the customer the choice to select the products that fit them the best when it comes to features, functionality and price. As the consumers you have the power to demand these types of options, make sure you select vendors that will give them to you. Blog

We look forward to and appreciate your comments.

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Do you want your first Reverse Auction to be a success?

February 18th, 2011

Here are a couple of simple ideas to insure that your e-procurement bids are as successful as possible.

Competitive bidding is the process of inviting and obtaining bids from competing suppliers in response to documented specifications, by which an award is made to the best overall bid that meets or exceeds the specifications in areas such as price and quality. There are keys to understanding and making your bidding competitive and successful when using e-negotiation tools.

One of the most important elements and most overlooked is that of incumbent supplier communication once a bid has been authorized. This means that your entire company is on the same page. That page is agreeing to not setting any false expectations with your incumbent suppliers. Because you already have a relationship with these companies you will most likely receive calls, emails, IM?s and texts wanting to know what is going on. Your company line has to be that ?We value our relationship and encourage you to use this process as it is the only process by which we will review bids?. Do not indicate that everything will be ok or that things will work out just fine or any similar language. If you are using a 3rd party, instruct your incumbent supplier or suppliers to provide any questions or communications they have through the third party only.

To make it simpler, be honest, be thorough and don?t set any expectations. Keep this in mind and all suppliers will feel like they were treated fairly and want to bid to win your business again.

We look forward to and appreciate your comments.

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The experts say that the price of everything is going up! Can NAFTA offer a clue as to how to control this?

February 16th, 2011

Understanding what drives these costs up and how to leverage the pressure points can still allow savvy buyers to save plenty.

As oil heads north of $100 per barrel again, the resulting higher fuel costs will again force global trade to focus on such as USA, Mexico and Canada versus the Asia Pacific region which is more than 7500 miles away.

Hopefully we learned our lesson less than three years ago? If so, we should all be aware of suppliers that will not require us to buy goods from so far away that transportation and logistics costs will kill our P&L.

Let?s remember that the North American Free Trade Agreement or NAFTA allows us to not just near shore many of our purchases but to localize them. This reduces transportation expenses. North America is made up of the United States, Canada and Mexico. Although NAFTA is primarily focused on agricultural products traded between North American Country?s it also represents one of one of the most successful trade agreements in history and has contributed? significantly to increases in agricultural trade and investment between the United States, Canada and Mexico. There are plenty of opportunities in the regional low cost manufacturing bases could have a related regional impact on keeping? costs lower on many types of retail products.

Finding tools that can aide our search in finding new sources of supply is imperative as demand rises and causes strain on commodities. Are you aware that a tool like this already exists which can provide data at a glance on 928 general merchandise suppliers located in Mexico, 1,585 Grocery Suppliers located in Canada, and 1,940 Pharmaceutical suppliers located in the United States. If not, please visit the SafeSourceIt Query Tool to learn more. Your P&L will thank you and so will your customers when you don?t raise their prices.

We look forward to and appreciate your comments.

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Ready for Valentine’s Day? What about the other 364 days of the year?

February 14th, 2011

Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark asks "What can St. Valentine’s Day teach us about the sourcing process"?

Today hundreds of thousands of people will be out in force going to malls, grocery stores, jewelry stores and flower stores looking for that item in the 11th hour that they will likely pay too much for in order to show someone how much they value them.

It sounds crazy but this same craziness is exhibited all over the world in the purchasing departments of companies who pay a premium for inventory after a contract expiration date has passed, keep incumbent vendors even though they are getting overcharged because it is easier and waste perfectly good excess inventory just because they have no plan for how to control it.
Like spreading the effort of St. Valentine’s Day over 365 days instead of just one, what if companies began to put the plans in place to help them source smarter and safer?

What if companies began leveraging reverse auction tools and services that allowed for the review of the BEST vendor instead of settling for an incumbent because they think it will take too long to find another vendor?
What if companies employed contract management tools that would allow them to be alerted by email so that they never miss important contract dates?

What if companies used a 3rd party to help them move their excess inventory instead of wasting it?

They may find that they end up asking themselves why they weren’t doing it all along!

We look forward to and appreciate your comments.

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Is the inclusion of freight in an e- bid or reverse auction equal to the net landed cost?

February 9th, 2011

The simple answer is no, and quite often this can be the most complicated part of any e-bid, reverse auction or traditional procurement process.

If you are looking to break out all of the other costs associated in a product bid, just asking to have freight included or free freight within a certain radius or other similar language will not accomplish net landed cost or allow you to manage it going forward.

Quite often the terms net landed cost, haul back, FOB and others come up during the logistics portion of a sourcing event. Some times they are bid on separately and or delivered by a third party. When a company says they want a net landed cost what they are referring to is the cost of a product or products plus all of the relevant logistics costs, such as transportation, warehousing, handling etc. In other words, what?s my cost when it gets here or where we want it?

If you want to drive the best pricing and service possible you need to understand the terminology and make sure it is clear in your specifications and terms and conditions.

We look forward to and appreciate your comments.

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