What information should we know about our supply chain partners?

January 25th, 2011

Managing and keeping supplier information as fresh as possible is a constant challenge for all companies regardless of size.

With the number of food born illness issues during the last couple of years, one area that is difficult to keep up with is food industry safety.

The SafeSourceIt? Supplier Database has grown to over 380,000 global suppliers. During the same timeframe the number of certifications we monitor for these suppliers has also grown. In the food space three standards that are regularly adhered to are ISO 22000, SQF and GFSI? So, what?s the difference?

In essence, SQF and GFSI are programs administered by two separate organizations CIES and FMI that are supportive of each other and use ISO 9000 and its derivative ISO 22000 as standards guideline towards driving food safety in the global supply chain.

According to Wikipedia, ISO 22000 is a standard developed by the International Organization for Standardization dealing with food safety and is a general derivative of ISO 9000 which sets standards for quality management. As such, ISO 22000 guides food safety management systems – requirements for any organization in the food chain. Since food safety hazards can occur at any stage in the food chain from production to consumption it is essential that adequate control be in place that by the ISO are referred to as Critical Control Points or potential points of failure in the supply chain that when managed properly can mitigate the risk associated with the hazard ever taking place.

The ISO 22000 international standard specifies the requirements for a food safety management system which SQF and GFSI are that involves interactive communication, systems management and prerequisite programs and the principles of Hazard Analysis and Critical Control Points (HACCP).This is a systematic preventive approach to food safety which addresses physical, chemical and biological hazards as a means of prevention rather than finished product inspection which could be much more costly.

Think of the ISO as a standards creating body, and SQF and GFSI as programs that at a minimum focus on holding the entire food supply chain accountable to those and other standards.

We look forward and appreciate your comments.

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When should companies conduct RFI’s and how do you get started?

January 21st, 2011

This question keeps coming up and my answer is always the same; when you don’t know enough or want to know more about a company you are doing business with or might do business with.

E-procurement tools make it easier today to conduct requests for information or RFI’s in a hosted format than in the past, but the fact is this particular e-procurement tool is not used often enough.

RFI’s are kind of free flowing in their format, but generally the first data companies should want to capture is specific information about the company you are interested in. Any good supplier database should be able to provide the following data for you without even having to ask or develop a single question.

1. Company name
2. Company address
3. Parent company
4. Describe ownership and/or strategic partnerships of your company
5. Name and signature of the person responsible for the information contained in this RFI
6. Phone number
7. Fax number
8. E-mail address
9. Web site URL
10. Company location (corporate office; other offices)
11. Total number of employees (include breakdown per department, if possible)
12. Employee turnover rate
13. Employee satisfaction rating (if available)
14. Key employees names and employment contracts
15. Total revenue:
16. This year
17. Last year
18. Total profit/loss:
19. This year
20. Last year
21. When was your company’s initial year of operation?
22. Company Description:
23. Product categories offered:

Once you have collected this type of information the next step is to get product specific at a high level. And remember don’t turn your RFI’s into RFP’s, that’s the next step.

We look forward to and appreciate your comments.

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When should companies conduct RFI?s and how do you get started?

January 21st, 2011

This question keeps coming up and my answer is always the same; when you don?t know enough or want to know more about a company you are doing business with or might do business with.

E-procurement tools make it easier today to conduct requests for information or RFI?s in a hosted format than in the past, but the fact is this particular e-procurement tool is not used often enough.

RFI?s are kind of free flowing in their format, but generally the first data companies should want to capture is specific information about the company you are interested in. Any good supplier database should be able to provide the following data for you without even having to ask or develop a single question.

1.?Company name
2.?Company address
3.?Parent company
4.?Describe ownership and/or strategic partnerships of your company
5.?Name and signature of the person responsible for the information contained in this RFI
6.?Phone number
7.?Fax number
8.?E-mail address
9.?Web site URL
10.?Company location (corporate office; other offices)
11.?Total number of employees (include breakdown per department, if possible)
12.?Employee turnover rate
13.?Employee satisfaction rating (if available)
14.?Key employees names and employment contracts
15.?Total revenue:
16.?This year
17.?Last year
18.?Total profit/loss:
19.?This year
20.?Last year
21.?When was your company?s initial year of operation?
22.?Company Description:
23.?Product categories offered:

Once you have collected this type of information the next step is to get product specific at a high level. And remember don?t turn your RFI?s into RFP?s, that?s the next step.

We look forward to and appreciate your comments.

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Is it time to look at your paper purchases?

January 20th, 2011

If you pay attention to what drives the cost of paper you might want to take a look at your existing paper and paper related contracts and think about renegotiating your prices.

So what does drive the price of paper? Well it depends on the type of paper you?re talking about. In this case let?s talk about copy paper, receipt paper and the like. What drives the pricing here is the pulp market and specifically the hardwood pulp market. You probably buy a variety of paper products from the same distributor. Your supplier may buy it from a larger distributor who may in fact buy it from a mill.

What the mills buy to make copy paper is hard wood pulp. That market at present is becoming saturated which is a good thing for paper prices. We took an early hit last year due to Mother Natures impact in countries like Chile but global inventories and shipments are headed up which means your prices should be headed down.

Your contract probably has some sort of escalator or deescalator language in that that offers some protection, but excess inventory is always a reason for companies to be aggressive in their pricing.

We look forward to and appreciate your comments.

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Clean up in aisle three! What’s your CFL cleanup program?

January 18th, 2011

How many times have you been shopping and heard the first sentence from above?

Well if you hear it now, you might want to think twice before your curiosity kicks in and makes you walk on over to take a look. If you’re at home you should also exercise some caution.

The answer to the opening question is probably more times than you can count. However, this is where it is not quite as easy to be green as one might think. Although CFL’s are the green alternative to traditional lighting alternatives, last longer and offer a lower cost of ownership, they are not quite so easy to dispose of. That’s because the tubes are a hazardous waste item that contain a small amount of with mercury which can be released into the air when they break. This also makes it illegal to dump them in the regular trash when they’re replaced or broken.

Yesterdays edition of USA TODAY actually had an article titled EPA makes cleanup tips for broken CFL bulbs much more realistic by Wendy Koch. Although this article was focused on the home, many of the same issue need to be addressed in retail establishments that sell and use CFL’s. If you want to read the article please click here.

Some times it’s not as easy as just saying you’re green. Plan ahead!

We look forward to and appreciate your comments.

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Clean up in aisle three! What?s your CFL cleanup program?

January 18th, 2011

How many times have you been shopping and heard the first sentence from above?

Well if you hear it now, you might want to think twice before your curiosity kicks in and makes you walk on over to take a look. If you?re at home you should also exercise some caution.

The answer to the opening question is probably more times than you can count. However, this is where it is not quite as easy to be green as one might think. Although CFL?s are the green alternative to traditional lighting alternatives, last longer and offer a lower cost of ownership, they are not quite so easy to dispose of. That?s because the tubes are a hazardous waste item that contain a small amount of with mercury which can be released into the air when they break. This also makes it illegal to dump them in the regular trash when they’re replaced or broken.

Yesterdays edition of USA TODAY actually had an article titled EPA makes cleanup tips for broken CFL bulbs much more realistic by Wendy Koch. Although this article was focused on the home, many of the same issue need to be addressed in retail establishments that sell and use CFL?s. If you want to read the article please click here.

Some times it?s not as easy as just saying you?re green. Plan ahead!

We look forward to and appreciate your comments.

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Sustainable success with e-procurement programs is not based solely on financial models.

January 17th, 2011

Without a well communicated strategy to all internal associates, suppliers and other stakeholders your financial benefits may never occur.

Primary success with e-procurement programs is ultimately measured by cost reductions that should drop directly to a company?s bottom line. More than once I have heard; ?did we hit a home run?? Less emphasis is placed on cost avoidance and sustainability issues which can often lead to less of a companies total spend be assigned to these otherwise very effective tools then should be.

In order to ensure that results are sustainable; the strategies for all categories require consistent tool deployment across all departments throughout the company. This can be accomplished by utilizing a well planned repeatable process for category selection, discovery, supplier selection, and strategy communication that is well understood by all buyers and category managers through award of business.

Supplier selection and management is a critical stage that requires the understanding and participation of all sourcing professionals within an organization. One small mistake by anyone within the procurement organization could negatively impact the potential results of an e-procurement event. Historical long term relationships that drive behind the scene comments like; ?don?t worry we?ll be fine? to a long term supplier may drive inappropriate bid behavior and lack of ongoing credibility with your program. Not to mention the potential legal implications.

If you are not having the results you would like or have less than twenty percent your total corporate spend assigned to e-procurement tool?s that are offered in the form of? Software as a Service, ask your provider why?

We look forward to and appreciate your comments

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Is the economy really sick?

January 14th, 2011

One measure that if understood that would be sure to create arguments is the not to well understood Debt-to-GDP ratio.

According to Wikipedia in economics, the debt-to-GDP ratio is one of the indicators of the health of an economy. It is the amount of federal debt of a country as a percentage of its Gross Domestic Product (GDP). A low debt-to-GDP ratio indicates an economy that produces a large number of goods and services and probably profits that are high enough to pay back debts.

So what does that say about the economy when our debt to GDP. The forecast GDP for June of 2011 is $15.1T and our dept is about $13.9T which means our forecast ratio is
about 91.4% which is an improvement from the same time period in 2010 when the ratio was about 98.4%. Although this represents an improvement, a healthy economy with limited risk should have a ratio in the mid 60?s at the most. IT was not to long ago that we were there.

A cool site where you can play around with the numbers if you can handle it is the government spending site.

We look forward to and appreciate you comments.

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Do you want to stop CONTRACT leakage?

January 13th, 2011

If you are asking questions like where is a copy of our contract? Or go find me a copy of a contract, you have leakage.

And it does not really matter who signed it or whether they had authority to do so in the first place.

Fortune one thousand companies can have as many as 100,000 contracts. Most of these companies do not have contract management software, maybe as few as 15%.. We also know that companies that do use contract management solutions have compliance ratings significantly higher than companies that do not. It is a well known fact that these solutions can reduce administrative overhead by up to 30%. Those savings although significant from an ROI perspective pale in comparison to the loses associated with a contracts in evergreen status or auto renewal that may include price increase language that required written notice to terminate or renegotiate a contract already in place. Just imagine a bulk fuel contract for millions of gallons with a single basis point escalator above a current Platts, OPIS or Gulf coast index if the contract evergreens. Ouch.

The good news is that a contract management solution like SafeContract? can solve this problem and provide a near instantaneous ROI. SafeContract? is offered in the form of Software as a Service or SaaS which makes it much more affordable than an in-house solution. The good news is that the data is yours and you only use as much of the system as you need.

Don?t wait any longer to reduce your administrative costs, manage discounts and rebates, make your auditors happy with improved compliance and eliminate ever greening.

Contact SafeSourcing? today.

We look forward to and appreciate your comments.

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As in other areas, in procurement it’s not easy being lean.

January 12th, 2011

Most procurement professionals are stretched beyond belief. That however is not waht we mean by being lean. Has your company developed their lean procurement practices yet?

A lean supply chain implies that there are lean procurement practices because the act of buying products and services means you have to collaborate with your trading partners.

The term “lean” as it applies to our subject was coined to describe Toyota’s business during the late 1980s by a research team headed by Jim Womack, Ph.D., at MIT’s International Motor Vehicle Program. According to lean.org; the idea behind lean organizations is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.

In Lean Thinking, by Jim Womack and Dan Jones, the authors suggest that companies or organizations think about three fundamental business issues.
1. Purpose: What customer problems will the enterprise solve to achieve its own purpose of prospering?
2. Process: How will the organization assess each major value stream to make sure each step is valuable, capable, available, adequate, flexible, and that all the steps are linked by flow, pull, and leveling?
3. People: How can the organization insure that every important process has someone responsible for continually evaluating that value stream in terms of business purpose and lean process? How can everyone touching the value stream be actively engaged in operating it correctly and continually improving it?

So, how does this apply to the procurement process?

A typical misconception is that lean is suited only for the manufacturing process.  This is not true. Lean applies in any and all businesses for any and all processes. Some areas you might consider relative to a lean procurement process would certainly include but not be limited to the following.

1. How many internal resources are dedicated and at what cost to procuring products and services for resale or internal use.
2. How much time do these resources spend to review and renew contracts?
3. How many new sources of supply are vetted regularly to insure you are receiving the best possible product at the best possible price?
4. How long have you been doing businesses with existing suppliers in every category?
5. What are your Procurement Key Performance Indicators and how often do you review them?
6. Do your Procurement KPI’s link directly with your corporate KPI’s

Ultimately a lean organization understands both internal and external customer value and focuses its key processes to continuously improve both. Your solutions provider should have tools to help you evaluate your current process and suggestions as to how to reduce cost and infrastructure to support a lean procurement organization.

We look forward to and appreciate your comments.

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